What the Balkans Taught Me About Its Next Growth Story

A year can be enough to challenge some of the assumptions you arrive with.

When Calash opened its Sofia office a year ago, our internal expectations were modest. We are an international strategy and M&A advisory firm with more than two decades of work in energy, industrials and infrastructure, a profile that doesn’t always map neatly onto a market still associated, from the outside, with software outsourcing and a relatively young venture capital scene. We thought local appetite for our work would build slowly.

It hasn’t. Demand has been considerably stronger than we projected.

More importantly, the past twelve months have changed some of my assumptions about where the most interesting opportunities in the Balkans are likely to emerge.

Over that period, we’ve supported leading innovators in telecom, the Internet of Things and the employee benefits space — companies building real product moats and going up against well-funded incumbents. At the same time, we’ve had meaningful exposure to our traditional sectors here: infrastructure, industrial and energy businesses that are actively looking for strategy, solutions and technology to expand margins, sharpen operations and unlock new revenue streams.

That second category, in my view, is where the more interesting Balkan story is being written, and isn’t being told nearly enough.

The talent dividend is real

One of the first things that became clearer from being on the ground was just how much the region’s talent base has evolved.

Anyone who has spent time in Sofia, Athens or Bucharest in the last two years will recognise what I’m describing. The diaspora is coming back into the orbit. Senior operators with a decade or more at international scaleups, banks and corporates are showing up as advisors, founders and operating partners. The local capital base — VCs, growth equity funds and family offices — has matured in parallel.

A founder building in Sofia today has access to a support network that simply didn’t exist five years ago.

Bulgaria now has more than 10 active VC funds, alongside accelerators, founder networks and a growing base of experienced operators recycling their knowledge and capital back into the ecosystem. Locally established VC funds were managing around €500 million by 2024, while Sofia itself accounted for 86% of the country’s startups.

This is the foundation of the optimism I keep hearing in meetings, and it’s earned. After a year of those conversations, however, I’ve also become increasingly convinced that optimism alone isn’t enough.

It isn’t, by itself, a strategy.

The over-rotation toward SaaS and AI

Most of the headline activity, most of the pitch decks and most of the media oxygen in the region is concentrated in SaaS and, increasingly, generative AI plays. That’s a global phenomenon, not a Balkan one.

The complication is that these are precisely the business models with the highest risk and no clear commercialisation path. Even among mature 2017-vintage venture funds tracked by Carta, only a portion have begun returning meaningful capital to their LPs, and most pre-2021 funds are running close to empty on dry powder.

International capital is rewarding cash-flow positivity and capital efficiency in a way it hasn’t for a decade, and that shift is not a passing mood.

The longer we have worked in the region, the more relevant a different question has become: where are the cash-flow-positive opportunities the Balkans are actually well-positioned to win?

What the region is good at, and isn’t selling hard enough

Industrials. Infrastructure. Energy. Marine. Defense. MEP. Manufacturing.

These are sectors with deep, multi-generational roots in Bulgaria, Greece and Romania, with skilled labour, established supply chains and a real cost-to-quality advantage compared with Western Europe.

Over the past year, we have seen this not as an abstract investment thesis, but in the businesses themselves. Local industrial companies are adopting — as well as spinning out — their own automation, predictive maintenance, IoT-enabled monitoring and energy-management software, not as headline “digital transformation” projects, but as practical margin levers.

The output is companies with growing EBITDA, defensible market positions and the kind of asset-backed, repeatable cash flows that international infrastructure and growth equity investors are actively hunting for in 2026.

This, in my view, is where the next wave of internationally relevant Balkan transactions will come from.

It is also the segment where Calash has spent most of its time globally, across more than 700 projects and $35 billion of cumulative enterprise value advised, so the bias is admitted up front. But a year of working locally has strengthened rather than weakened that conviction: some of the region’s greatest advantages sit precisely in the sectors receiving less attention from the broader technology and venture conversation.

A more uncomfortable observation

A year on the ground also means seeing some of the ecosystem’s structural weaknesses more clearly.

It’s worth being candid about one feature of the local capital scene. Bulgaria’s venture ecosystem was kick-started by the European Investment Fund’s JEREMIE programme in 2012, and successive EIF-backed vehicles have provided a steady supply of capital ever since.

The benefit has been enormous, as Sofia wouldn’t be the regional hub it is today without it. But abundant capital paired with relatively light LP discipline has, at times, allowed commercially marginal businesses to be funded on optimism rather than unit economics.

The scoreboard reflects it: over 13 years, more than €1.5 billion was raised and deployed across 30+ fund vehicles in Bulgaria’s VC ecosystem, doing an estimated c.1,000+ investments, with approximately 80–100 recorded exits. Of these, fewer than 20 have a confirmed or estimated valuation at or above €50 million.

I don’t make this point to be ungenerous. If anything, seeing how far the ecosystem has developed makes the question of what comes next more important.

The market has changed, and the funds and founders who internalise that earliest will be the ones who attract the next round of international capital.

What good looks like from here

So what has a year in the region ultimately changed?

Not my conviction that the Balkans have significant potential, but my view of where that potential is most likely to translate into durable businesses and internationally relevant transactions.

For founders, that means being honest about unit economics from day one and resisting the temptation to dress a traditional business in AI clothing because it’s the easier raise this year.

For local investors, it means leaning harder on commercial and operational diligence, particularly in sectors where the asset base, customer concentration and regulatory exposure can’t be assessed from a deck. And for international LPs looking at the region, it means widening the lens beyond software.

The Balkans have an enormous untapped market in the sectors that are, frankly, less fashionable but more durable. After a year on the ground, I’m more convinced than when we opened the office that the opportunity here is real. But I’m also more convinced that the region’s next internationally relevant growth story may look different from the one outsiders expect.

It may be built as much in factories, energy infrastructure, industrial supply chains and established businesses adopting new technologies as in the next generation of software startups.

That is perhaps the biggest shift in perspective from our first year in Sofia: the Balkans do not need to replicate someone else’s technology ecosystem to produce globally relevant companies. Some of their strongest opportunities are already rooted in what the region has been doing well for decades.