Martin Danovsky is an economist with over 20 years of experience in the business sector and public administration. He holds a master’s degree in economics, specializing in marketing and strategic planning, from the University of National and World Economy, and a master’s degree in engineering and technical sciences, specializing in land use planning, from the University of Architecture, Civil Engineering, and Geodesy.
From October 2015 to March 2021, he was an advisor to the Deputy Prime Minister for European Funds, responsible for economic policy, investment, innovation, and financial instruments. During the same period, he participated in the establishment of and was a member of the Management Board of the Financial Instruments in Bulgaria Fund EAD, serving as its chairman from 2016 to 2021.
In 2021, he structured and headed the State Agency for Scientific Research and Innovation at the Council of Ministers, holding this position until March 2022. During the same period, he was head of the Managing Authority of the Program for Research, Innovation, and Digitalization for Smart Transformation, whose priorities include the digitalization of the public sector, reform in the field of public data, and cybersecurity.
Until January 2025, he will hold the position of Deputy Minister of Finance.
Mr. Danovsky, we cannot but start with one of the most important topics for Bulgaria at the moment, which is undergoing dynamic development. Will we be part of the eurozone on January 1, 2026?
Personally, I believe that the convergence report will clearly and accurately show that Bulgaria meets the criteria and will be invited to join on January 1, 2026. The government is making every effort in this direction. It is very important for people to obtain information on this topic from reliable sources that have direct links to the European institutions and can provide the most accurate information.
Joining the eurozone is also an opportunity for businesses to become more competitive, to be an attractive destination for investment, and to enjoy greater predictability and international trust. The sooner this happens, the better.
The statistics are very telling: in all countries that have adopted the euro as their currency, there has been an average increase of between 15 and 20% in foreign direct investment in the first three to four years.
Can you clearly state what the benefits for business will be from adopting the euro?
In addition to more investment, predictability, and stability, which are definitive, we can expect an improvement in Bulgaria’s credit rating. Businesses will be financed on better terms, with much easier access to capital—in terms of accessibility, speed, guarantees, and interest rates.
But there is another effect, which is more in the realm of economic psychology. At the moment, we compare ourselves with different countries in Europe purely in quantitative terms – how much we earn here and how much in other countries; what we can buy here and what we can buy elsewhere. However, we do not compare purchasing power in any depth.
When we start comparing ourselves in the same currency, and when we see that we are already at 65-75% of the average purchasing power in Europe, we will have a stronger psychological push to reach 100% of the average European levels.
For me, this is a purely psychological moment that we will witness.
Let’s return to the focus of the Ministry of Innovation and Growth – small and medium-sized enterprises. What are the main policies you are developing to support them?
Our task at the Ministry of Innovation and Growth is to ensure so-called smart growth for the Bulgarian economy. This means guiding and supporting industry, business, and services toward growth based on a higher-tech foundation, with more added value, more and better profits, and better margins.
And to have more of all this, business must be focused on knowledge. Our task, together with the Ministry of Education and Science, is to support those units and institutions – academic and research – that develop knowledge products.
But most important of all is to have a fast, adequate, and effective transfer to the economy and business – something that, unfortunately, has been slow in recent years.
This logical matrix includes the key policies for which the ministry is responsible. We are responsible for the country’s overall innovation and investment policy. We are responsible for how investors feel. We are also responsible for some very important sectoral policies that have become extremely relevant recently – not because they are fashionable, but because they are necessary. We are talking about space policy, hydrogen technologies, part of the artificial intelligence policies, etc.
Are you working on any legislative changes or strategies?
We are working mainly in two directions. On the one hand, we are working to create a legislative, administrative, and legal environment, and on the other hand, together with the agencies under the ministry – the Bulgarian Investment Agency, the Agency for Small and Medium-Sized Enterprises, including the Fund of Funds, and Sofia Tech Park – as instruments, we are implementing these policies. Thirdly, we need to provide capital for these otherwise good policies.
We provide capital mainly in two ways. One is through European Structural Fund programs – the Competitiveness and Innovation Program (CIP) and the Research, Innovation, and Digitalization for Smart Transformation Program (RIDIT). The second program really gives meaning to the whole general policy on research and innovation. And this is one of the key policies in the country that will transfer technologies that will actually reach businesses. It funds joint projects between businesses and academic and research circles. That is why this program was designed – to stimulate this integration and, above all, to stimulate synergy and technology transfer.
PNIDIT projects always seek partnerships and consortia that bring together businesses and research institutions. As recipients of funding under the program, research units, such as Centers of Excellence, Centers of Competence, and others, always seek partnerships with businesses so that the end product created through this process can be implemented and put to use.
Conversely, some of the measures for enterprises that we are launching under the program require that the innovation be developed jointly with a research infrastructure.
We are not talking about someone simply deciding to buy, say, a license for a new product or technology. Such measures are included in the other program – PKIP. That is the difference between the two.
Can you give an example of collaboration between business and science?
In Bulgaria, a key link and the most recent example of such collaboration is the work of INSAIT (Institute for Computer Science, Artificial Intelligence and Technologies), which is the only one of its kind in Central and Eastern Europe, as far as I know. It focuses on knowledge in the field of artificial intelligence, but also performs tasks for businesses. Its business partners include several global and Bulgarian corporations.
Bulgaria has sufficient computing power for its needs. In addition, we will upgrade it with the new AI factory (BRAIN++), which will be built in Sofia Tech Park by the end of 2026. The project is worth €90 million.
What procedures does the ministry plan to support small and medium-sized businesses?
There are indeed many procedures for businesses that we are opening and are about to open. Before taking up this post, I had an overview of European funds and their implementation, and I can say that over the last two to three years, the pace has not been very fast for a number of reasons that are far beyond the control of the governing bodies.
But now we are making every effort to pick up the pace significantly by the end of the year. We have prepared quite a few procedures for launch.
Under the Competitiveness and Research, Innovation, and Digitalization programs that we manage, I can say that we are working on two fast-track measures and three important ones. We call them fast-track not because they are not important, but because they deliver good results very quickly. They are highly recognizable by businesses and there are many candidates for them.
One measure is for the digitization of enterprises – for the introduction of all kinds of digitization systems in an enterprise, such as e-shops, ERP systems, CRM systems, etc. This is a measure that quickly raises the overall level of business performance. We will be opening this measure for applications very soon. It is worth BGN 80 million and everything has been prepared for it.
The second quick measure is for business energy efficiency – renewable energy sources, building renovation, installation of heat pumps, etc. Over BGN 120 million has been earmarked for this.
We are applying the simplified cost approach to both measures. In other words, we say what expenditure we can cover under the program, and the beneficiary decides how much money they will spend on building their system – if they so choose, they can cover anything above the eligible expenditure. This means quick reporting and quick monitoring. This approach ultimately results in fewer financial corrections.
Speaking of important measures, by the end of the year, again under the Competitiveness Program, we will finance technologies within the Industry 4.0 concept. This is a very important measure, which has undergone quite intensive and very active public discussion.
In principle, this concept is more for large enterprises, but we have managed to convince the program that this procedure also makes sense for small and medium-sized enterprises. Its budget is around BGN 100 million. It is literally ready and is about to be launched with a priority on small and medium-sized enterprises.
We are developing a special measure to support innovation in Northern Bulgaria, as regional disparities are beginning to increase there and special support is needed. We are also developing a measure to finance small and medium-sized enterprises, which is, however, part of the so-called integrated territorial investments.
With regard to the financial instruments under the PKIP and PNIIIDIT programs, several are also expected to be launched this year on a fairly large scale. I would like to remind you that in this programming period, financial instruments account for about 40% of the total resources of the Competitiveness Program. This amounts to over BGN 1.2 billion.
We have two main procedures in an advanced stage, which are awaiting approval by the financial intermediaries at any moment. There is another one that is under development.
The Innovation Fund is one of the two main procedures, which has three components. The procedure has been completed and we expect the results to be announced within the next month or two. There are administrative phases that need to be completed, there are appeals, etc.
The other main procedure is under the Regional Development Fund, which involves the evaluation of candidates.
As for the future, I can say that 2025 will be the year in which we will unlock all the instruments for financing the technology transfer process.
We have a measure for grant funding for a new network of physical offices for technology transfer in the country. This activity may sound complicated and perhaps incomprehensible, but it is something that has long been established as a model around the world. Technology transfer is a multi-step process involving various types of specialists who can evaluate a knowledge product, and the business that wants to bring it to market can reach an agreement with the organization that can create it.
Within these technology transfer offices, agreements will be reached between the parties involved – who will take on what in the future implementation in terms of risks, opportunities, financing, and benefits from the entire development.
You would be surprised how difficult this process is in Bulgaria at the moment, and we really need it. For example, if you are looking for a specific technology or material that is expensive to produce in another country, you could find a partner through these offices and develop it here in Bulgaria at a much more affordable price.
This model also includes an intellectual property evaluator who validates which participants are involved in the process and in what capacity, so that a successful partnership can be established.
How is this process financially supported?
It will be financially supported by the Research Program. The amount is not large, around 10 million euros, but the goal is to create a basic network of such offices, which must have a high level of expertise for a sufficiently long period of time.
What is the second measure for technology transfer?
The second instrument is the Technology Transfer Fund, which is part of the Fund of Funds. It was conceived back in 2021, the documentation for launching the procedure was ready, but then the pandemic hit and we had to redirect some of the funds to support businesses. Now, our colleagues have developed new documentation for a Technology Transfer Fund, which should support the process.
This is essentially a venture capital fund with a special focus on technology transfer. It actually takes on the high risk, because the more advanced the technology, the higher the risk for developers and the more expensive failure is for businesses.
We critically need a normal technology transfer process because we have invested and continue to invest in many areas that need to create knowledge products—we have 14 centers of excellence and competence; we have 10 research universities that have been funded. We are in the most active phase of investing in research universities, which means that there must be research units, research programs, i.e., knowledge products, and if we do not create the conditions for them to enter the market, what are we doing at all?
You said that 40% of the financial resources under the CIP are already financial instruments. Are we moving towards this model of financing and what is happening with grants?
I would say that the share of financial instruments will increase steadily and permanently. This is a key horizontal European perspective, but no country has ever been told how much of its resources it should allocate to grants and how much to financial instruments.
In Bulgaria, the share of financial instruments in the total European funding is quite high. We are among the top five countries in Europe. In addition, we have increased the share compared to the previous program because financial instruments are those managed by the Fund of Funds, but also those managed by the European Investment Fund. These are the JEREMIE and JESSICA funds, their two extensions, and others.
Bulgaria is often cited as a good example of their use in the European Commission’s forums on financial instruments. However, in my opinion, there is a limit. Each country sets its own limit, beyond which financial instruments, as well as grants, begin to distort policies.
Grants also have their role and tasks. For example, they perform many key functions within cohesion policy.
The more mature the relationships between market participants, the more financial instruments there will be.
Is the benefit of financial instruments recognized?
In Bulgaria, they are most appreciated in the area of risk financing, where a large part of them are used to finance start-ups and innovation. Without financial instruments, Bulgaria would not have such a well-developed ecosystem.
They are also very evident in regional development funds, because they are an alternative instrument and many municipal and business projects are financed through them. They have found their place between traditional bank lending and the instruments of the EIB and the EBRD.
Of course, every business wants to receive grants, but sometimes the dependence that develops on them is not understood, which is a problem.
You said that the entrepreneurial and start-up environment is improving…
I think it is improving and this is visible, including in various rankings by international organizations. There are many more funds and start-ups, and in some sectors their presence is already becoming more noticeable. The environment is improving, but it has several different dimensions.
If we talk about the regulatory and administrative part of the environment, we, the public authorities, are responsible for making it better, more inclusive, easier, and more intuitive.
At the ministry, we maintain an open and honest dialogue with representatives of the startup communities. We have an Innovation Board attached to the Minister of Innovation and Growth, which includes a significant number of representatives of the Bulgarian Startup Association and other people from the entrepreneurial ecosystem. This is where we get useful feedback.
For example, one product of such collaborations is the so-called start-up visa – something for which the ministry is responsible, which is an additional tool for attracting start-ups from countries outside the European Union. Similarly, together with the startup community, a special variable capital company was developed. These are things that help the sector to be flexible.
It seems that Bulgarian startups are struggling to grow in Bulgaria and are looking abroad to grow and eventually become „unicorns“…
We are all familiar with the idea of „unicorns“ in the startup environment (a startup with a market capitalization of $1 billion – ed.), but if we take a more pragmatic view, I have always said that I would rather have dozens of companies with a market capitalization of €300, 400, or 500 million than one unicorn worth €1 billion.
Our environment is increasingly mature, it is not small, it has everything – startups, venture capital, regulation that not only does not hinder but is improving. There is also an entrepreneurial spirit that can be felt and is reviving, especially with the coming new generations.
But what is perhaps lacking are large strategic and financial funds and investors. When we talk to fund managers, they very clearly articulate Bulgaria’s limitations as a market, but these are the realities we have to work with. It is very difficult to attract the capital we need to enable startups to grow here. For now, I don’t see a critical problem, but it would be limiting if we remained only an incubator and were only able to attract funding in the early stages of startups.
In your opinion, can science be a business in Bulgaria?
Reading and discussing with colleagues, my impression is that we have quite good scientists and researchers, especially in fields such as chemistry, physics, and mathematics. But what I see is that it is more difficult for strong local teams to develop and become a „gravitational center“ that attracts scientists from outside.
If we go back to the INSAIT concept, that is exactly what happened there. They raised the bar very high and are now attracting talent from all over the world. Part of science must necessarily lead to business.
Do you always include a green component in the instruments developed by the Ministry of Innovation?
I wouldn’t say in every procedure. But I can say that technology-oriented businesses naturally include a green component when they change their processes. That’s just the trend.
In this vein, under one of our measures, „Innovation in Enterprises“ in the „Competitiveness“ program, perhaps 30% of applicants are in the „Clean Technologies“ thematic area. In other words, every third applicant is applying for funding in areas related to the circular economy and clean technologies. This is a sign, to some extent.
So, businesses are seeking green solutions themselves, rather than being forced to go through the procedures?
We are already at a stage where green equals high efficiency, lower costs, less energy, fewer other resources, and easier recycling. So, since we finance technologies, everything falls into place by itself.
How do you view the Clean Industrial Deal? Some say it’s just rebranding…
I think it’s a pretty good way to transform the European Green Deal through the clean tech industry. It shows that there’s a desire to make the whole European deal more realistic and focus on the parts of our lives where we can actually see the measures being implemented and their impact.
I am not a supporter of so-called „green extremism“ and do not believe that it would bring us any benefits. From this point of view, I see some sense in bringing things down to more practical, measurable, real results.
Източник: Economic.bg
