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Bulgarian business climate

For the period 2001-2009 the economic climate in Bulgaria has improved. As a result of the accelerated development of the country’s economy a significant rise in GDP has been observed, which left far behind that of the European Union. The accelerated pace of economic development during this period generated a large amount of free capital to seek its purpose. Most traditional forms of investment are no longer preferred and investors look for alternatives to bring good returns at a moderate risk.

On the other hand, at present the Bulgarian business is experiencing an increasing need for fresh capital to help make realize its ideas and overcome the global financial and economic crisys. The access to external financing is a major factor for the successful development of small and medium enterprises, particularly in terms of increasing competition after the accession of Bulgaria into the European Union. At all other conditions being equal, the access to finance turn out ot be the factor that determines the rate of competitiveness of companies. Recent business surveys indicate that most of the Bulgarian bank credit remains unavailable due to serious bureaucratic obstacles and sometimes insurmountable requirements of credit institutions. On the other hand, the stock exchange still remains  an “exotic”  means of raising capital in since most of the Bulgarian companies are not ready to become public and the procedure of preparing a prospectus and the issurance of stock is too complex and expensive.

On this background comes hte necessity for alternative sources of funding as perhaps the only “life preserver” for the Bulgarian business. The equity investments could be considered as a means of raising capital. This is a relatively new for the Bulgarian market type of investment, which allows to acquire part of the equity capital of a company and the investor can rely on decent return and from the viewpoint of the entrepreneur it is an ideal opportunity for raising funds. According to recent data the capital employed in equity financing in the world has increased by enormous rates for the past three decades, including about three times only for the last 2-3 years. In this sense, the experts see in equity investments a major future generator of the global economy and a national economy regulator.