Funding for startups: from bootstrapping to first investment

A complete guide to raising capital in Bulgaria and abroad

Funding is the lifeblood of every startup. But in Bulgaria, the path to the first investment is specific – a small local venture capital market, a limited number of active funds, but also unique opportunities such as European grants and growing interest from international investors.

In this final article in the series, we will look at all financing options - from your own savings to Series A. You will see real examples, specific steps, and practical tips on how to prepare and conduct a successful fundraising process.

The Venture Capital Landscape in Bulgaria (2025)

Active funds and investors:

Early stage (Pre-seed/Seed):

• Eleven Ventures – €100-200k for 6-13% share
• LAUNCHub – €200-700k
• Innovation Capital – €50-500k
• Vitosha Venture Partners – €100k-1.5M
• BrightCap Ventures – €500k-3M

Later stage (Series A+):

• Morningside Hill – €2-10M
• PostScriptum Ventures – €1-5M
• BlackPeak Capital – €3-15M

Business angels:

• Vasil Terziev (Telerik)
• Svetozar Georgiev (Telerik)
• Hristo Hristov (Payhawk)
• Ivaylo Kirilov (Obecto)

Statistics and realities:

• Total investment volume 2024: €150M+
• Average pre-seed investment: €150k
• Average seed investment: €800k
• Number of transactions per year: 40-60
• Fundraising success rate: ~5-10%

Funding Stages – The Roadmap

Stage 0: Bootstrapping (0-12 months)

Sources of funding:

• Personal savings: €5-50k
• Family and friends: €10-100k
• First customers (revenue-based)
• Credit cards (be careful!)

Advantages:

• 100% control
• Without dilution
• Customer focus
• Rapid adaptation

Disadvantages:

• Slow growth
• Personal financial risk
• Limited resources
• Cash flow stress

Examples from Bulgaria:

• SiteGround – without external funding to date
• Kanbanize – 7 years bootstrap, now $10M+ ARR

Stage 1: Pre-seed (6-18 months)

Size: €50-250k Dilution: 5-15% Valuation: €500k-2M

What you need to have:

• MVP with first users
• Validated hypothesis
• Core team (2-3 people)
• A clear path to revenue

Sources:

• Accelerators (Eleven, LAUNCHub)
• Business angels
• Micro VCs
• Grants (see below)

Stage 2: Seed (12-24 months)

Size: €300k-1.5M Dilution: 10-25% Valuation: €2-8M

What you need to have:

• Product-market fit
• €10-50k MRR
• Team of 5-10 people
• Growth metrics

Sources:

• Seed funds
• Syndicate of angels
• International VCs
• Crowdfunding

Stage 3: Series A (24-36 months)

Size: €2-10M Dilution: 15-30% Valuation: €10-40M

What you need to have:

• €100k+ MRR
• Proven business model
• Team 20+ people
• International expansion plan

European grants – free money

EIC Accelerator (formerly SME Instrument)

What it offers:

• Up to €2.5M grant
• Up to €15M equity investment
• Free coaching

Requirements:

• Innovative product (TRL 5-9)
• Scaling potential
• European dimension

Process:

1. Short application (5 pages)
2. Full application (30 pages)
3. Pitch in Brussels (12 minutes)
4. Solution in 2-3 months

Success rate: 5-8%

Innovation Fund Bulgaria

Programs:

• Seed Finance: up to €50k (100% grant)
• Equity Finance: up to €200k (70% grant, 30% private)
• Growth Finance: up to €500k

Specifics:

• Applying in Bulgarian
• Easier process
• 3-6 months to a decision

Other options:

• Horizon Europe – R&D projects
• Digital Europe – digitalization
• OPIC – competitiveness
• Norway Grants – green technologies

Preparing for fundraising

Documents you will need:

1. Pitch Deck (10-15 slides)

Structure:

1. Title slide - name, logo, tagline
2. Problem - what is it and how big is it
3. Solution - your product
4. Market - TAM, SAM, SOM
5. Business model - how you make money
6. Traction - metrics and growth
7. Competition - positioning
8. Go-to-market - strategy
9. Team - why you
10. Finance - projections
11. Ask - how much and for what
12. Contacts

2. Financial model (Excel)

At least 3 years ahead:

• P&L forecast
• Cash flow
• Unit economics
• Scenarios (baseline, optimistic, pessimistic)
• Use of funds

3. Data Room

Organized folders with:

• Legal documents
• Financial statements
• Customer contracts
• IP documentation
• Cap table
• Team CVs

Valuation – how to determine the price

Early-stage methods:

1. Berkus Method:

Strong Idea: €500k
Prototype: €500k
Quality Team: €500k
Strategic Connections: €500k
Sales/Traction: €500k
-------------------------
Max Valuation: €2.5M

2. Scorecard Method:

• Find average valuation in the region
• Adjust according to:
  • Team: 0-30%
  • Market: 0-25%
  • Product: 0-15%
  • Sales: 0-10%
  • Competition: 0-10%
  • Marketing: 0-10%

3. VC Method:

Exit valuation / Expected ROI = Post-money valuation

Example:
Exit after 5 years: €50M
VC wants 10x return
Post-money: €50M / 10 = €5M

Realistic valuations in Bulgaria:

• Pre-seed: €500k-2M
• Seed: €2-5M
• Series A: €8-20M

The step-by-step process

Phase 1: Preparation (4-8 weeks)

• [ ] Finalize the pitch deck
• [ ] Prepare a financial model
• [ ] Organize a data room
• [ ] Determine target valuation
• [ ] Choose a lead investor strategy

Phase 2: Outreach (2-4 weeks)

How to reach investors:

1. Warm contact (most effective)

• Intro from another entrepreneur
• Intro from an existing portfolio founder
• Meeting at an event

2. Cold contact

Subject: [Company] - [Traction] seeking €X

Hi [Name],

[1 sentence what you do]
[1 sentence impressive metric]
[1 sentence why this investor]

We're raising €X to [use of funds].

Deck attached. Would love 30min to discuss.

Best,
[Your name]

Where to find them:

• LinkedIn (search for "Partner at")
• AngelList
• Crunchbase
• Twitter/X

Phase 3: First meetings (2-4 weeks)

30-minute first conversation:

Structure:

• 2 min: Introduction
• 10 min: Problem and solution
• 5 min: Traction and metrics
• 5 min: Team
• 5 min: Ask and use of funds
• 3 min: Next steps

Red flags from investors:

• They ask for too much information before the term sheet
• They can't explain their investment thesis.
• Bad reputation among other founders
• Too long process (>2 months)

Phase 4: Due Diligence (2-6 weeks)

What will they check:

Legal DD:

• Corporate structure
• IP ownership
• Employment contracts
• Litigation risk

Financial DD:

• Accounting reports
• Bank statements
• Customer contracts
• Burn rate analysis

Technical DD:

• Code review
• Architecture
• Security
• Scalability

Commercial DD:

• Customer calls
• Market research
• Competition analysis
• Go-to-market strategy

Phase 5: Term Sheet and Negotiations

Key terms in the term sheet:

Valuation: €3M pre-money
Investment: €1M
Post-money: €4M
Share: 25%
Option pool: 15% (post-money)

Liquidation pref: 1x non-participating
Anti-dilution: Broad-based weighted average
Board: 2 founders, 1 investor
Vesting: 4 years, 1 year cliff
Drag along: Yes, at 50%+
Tag along: Yes
Right of first refusal: Yes

What you can negotiate:

• Valuation (±20%)
• Board seats
• Liquidation preferences
• Vesting conditions
• Anti-dilution protection

What is difficult to change:

• Option pool size
• Due diligence conditions
• Legal structure

Phase 6: Closing (2-4 weeks)

• [ ] Final legal documents
• [ ] Shareholders' Agreement
• [ ] Board resolutions
• [ ] Bank transfer
• [ ] Announcement
• [ ] Celebration! 🎉

Alternative financing models

Revenue-based funding

How it works:

• You receive €100k
• You return 5-10% of monthly revenue
• Until reaching 1.5-2x cap

Suitable for:

• SaaS with predictable revenue
• E-commerce
• Businesses with positive unit economics

Suppliers:

• Pipe
• Capchase
• Clearco

Crowdfunding

Equity crowdfunding platforms:

• Seedrs
• Crowdcube
• Republic

Reward-based:

• Kickstarter
• Indiegogo

Advantages:

• Marketing and validation
• Community building
• Less pressure from investors

ICO/Token Sale (crypto)

Attention: Highly regulated!

Requirements:

• Utility token, not security
• Legal structure outside Bulgaria
• KYC/AML procedures
• Whitepaper and tokenomics

Mistakes that can cost you dearly

Mistake 1: Diluting too early

Problem: You give 40% for €100k pre-seed Consequence: In Series A you have <30% and you lose control Solution: Better bootstrap or a smaller amount

Mistake 2: Optimism in financial forecasts

Problem: "We will have €10M in revenue year 2" Consequence: Loss of trust Solution: Conservative base case, optimistic upside

Mistake 3: One investor = salvation

Problem: You stop after the first "yes" Consequence: Lack of BATNA Solution: Always have 3+ options

Mistake 4: Ignoring the conditions

Problem: Focus only on valuation Consequence: Bad conditions can kill the company Solution: Lawyer up! (€5-10k well invested)

Mistake 5: Fundraising as a goal

Problem: 100% time in fundraising Consequence: Business suffers, metrics fall Solution: Maximum 30% since CEO time

Stories from Bulgaria

Payhawk: From €1M seed to €215M Series B

• 2018: Eleven €125k
• 2019: Seed €1M (Earlybird)
• 2020: Series A €12M (QED)
• 2022: Series B €100M ($1B valuation)
• 2024: Extension €100M

Key factors:

• Strong international team
• Perfect timing (expense management)
• Aggressive international expansion

Gtmhub/Quantive: $120M Series C

• Bootstrap first 2 years
• Series A: $9M (2019)
• Series B: $30M (2020)
• Series C: $120M (2021, Index Ventures)

Lessons:

• The OKR market is exploding
• Product-led growth
• US market focus from day 1

Telerik: Bootstrap to $262M exit

• 2002-2008: No external funding
• 2008: Summit Partners minority stake
• 2014: Progress Software $262.5M acquisition

Model:

• Developer tools = recurring revenue
• Community building
• Organic growth

Pitch deck checklist

Slide 1: Title

• [ ] Logo and name
• [ ] Slogan (1 sentence)
• [ ] Contacts

Slide 2: Problem

• [ ] Specific and measurable
• [ ] Who it concerns
• [ ] How much is it now?

Slide 3: Solution

• [ ] Clear and simple
• [ ] Screenshots/Demo
• [ ] Unique value

Slide 4: Market

• [ ] TAM calculation
• [ ] Bottom-up approach
• [ ] Growth rate

Slide 5: Business model

• [ ] How do you win?
• [ ] Pricing
• [ ] Unit economics

Slide 6: Traction

• [ ] MRR/ARR
• [ ] Growth rate
• [ ] Key metrics

Slide 7: Competition

• [ ] Honest assessment
• [ ] Your differentiation
• [ ] Why now?

Slide 8: GTM strategy

• [ ] Customer acquisition
• [ ] Sales process
• [ ] CAC and LTV

Slide 9: Team

• [ ] Relevant experience
• [ ] Previous successes
• [ ] Why you

Slide 10: Finance

• [ ] 3-year forecasts
• [ ] Key assumptions
• [ ] The path to profitability

Slide 11: Ask

• [ ] How much are you earning?
• [ ] For what (use of funds)
• [ ] What stages

Useful resources

Books (required):

• "Venture Deals" - Brad Feld
• The Mom Test - Rob Fitzpatrick
• "Secrets of Sand Hill Road" - Scott Kupor

Online resources:

• YC Library – startup advice
• First Round Review – VC insights
• NFX – network effects bible
• SaaStr – SaaS metrics

Bulgarian resources:

• BESCO – Bulgarian Startup Association
• Endeavor Bulgaria – mentors and network
• Fund of Funds – information about programs
• StartUP.bg – news and events

Law firms:

• Specialized in VC deals
• Experience with international transactions
• Fixed fee for standard deals (~€5-15k)

Financial consultants:

• Due diligence preparation
• Financial model audit
• Valuation opinions

Conclusion: When to recruit and when not to

Raise funding when:

✅ You have a clear use of the money (hire, marketing, product) ✅ You can grow 3-5x with the capital ✅ The market is ready and the timing is right ✅ You have a track record and momentum ✅ You are ready to give up control

DO NOT raise when:

❌ “Everyone is doing it” ❌ You don’t have product-market fit ❌ To extend the runway without a plan ❌ Valuation is too low ❌ You are not ready for 10x growth

Final tips

From entrepreneurs who have been along the way:

"Fundraising is a means, not an end. Focus on the business."

"Better smart money from a good investor at a low valuation than the other way around."

"The first offer is rarely the best. Always have alternatives."

"Due diligence works in two directions – check out the investors."

Remember – 90% of unicorns are bootstrapped for the first 18 months. Don’t rush into external funding unless you really need it for growth, not survival.

Good luck on your journey! Bulgaria has all the prerequisites to create the next European unicorn. Maybe it will be you?

This was the last article in the series "Practical Guide for IT Entrepreneurs" by BIC Innobridge. Thank you for following us on this journey!

📊 The entire series: Find all 6 articles on our blog at www.innobridge.org

🚀 Ready for the next step? BIC Innobridge offers mentorship, investor relations, and support for your fundraising process.

For contact:
BIC Innobridge
tel: +359 (0)82 825 875
email: info@innobridge.org

Note: The publication was prepared with the help of generative artificial intelligence, which assisted in structuring and formulating the content. The final text is the result of the expert contribution of the author, which guarantees its accuracy and practical focus.