Some prominent venture-capital, Internet-development and computer firms have recently increased their stakes in Ukraine’s growing, but underdeveloped Internet market. Several firms have announced plans to provide support, know-how and millions in capital investment through the establishment of Internet incubators, also known as project support and development centers, and project-financing schemes.
The most recent firms that plan to increase operations in the sector include the Kvazar-Micro Corp. (www.kvazar-micro.com), a 10-year-old, Kyiv-based computer and peripherals retailer; Euroindex (www.euroindex.com.ua), a Kyiv marketing and public relations firm with eight years experience in the publishing, exhibition, advertising and consulting industries; and Red Stars (www.redstars.com), an international venture capital company specializing in information-technology projects from Eastern Europe.
Atlanta Capital (www.atlantacapital.com), a U.S. securities and investment firm, and A. Partners, a Russian venture capital company, also have announced they will open Internet incubators in Ukraine.
Local analysts say that it’s just another sign of increased interest and activity in the Ukrainian Internet.
“It’s just the start of what I believe will be a large increase in foreign investment into the Ukrainian Internet,” said Felix Starovoytov, general director of Dom.com (www.dom.com.ua), an Internet consulting firm.
“The Ukrainian securities market is no longer as attractive so many investors are turning to new ventures like the Internet.”
Kvazar-Micro President Yevhen Utkin told Ukrainian News that his company’s Internet incubator is being created to implement Internet projects and create new programming backup. He added that Intel has already agreed to provide technical support for the project, and the venture’s price tag will exceed $1 million and mirror similar projects in Russia and Lithuania.
Euroindex President Valery Pekar said his company’s incubator aims to create actual Internet businesses.
“We will not be involved with those aiming to make money on banners,” Pekar said.
Euroindex is currently developing three Internet projects: a government telephone directory, a restaurant guide, and a project named Ukrainian Hotels Online. They will be launched in October, Pekar said.
Meanwhile, Imre Brenzovich, Red Stars company director for eastern and southern Europe, said that his company is presently considering about 40 Ukrainian Internet projects and intends to choose about two or three of them and spend between $100,000 to $2.5 million on each.
Red Stars’ funds now stand at $25 million, but the firm hopes to raise its capital to $100 million.
“Investors have noticed that Internet projects can be sold easily once developed,” Starovoytov added. “While these investors are not ready to take on full responsibility of owning these ventures, by setting up incubators, they are providing the resources and services to develop the projects.”
“And this is good development since there are a lot of talented Internet specialists in Ukraine and this sort of activity keeps them home, busy and at work.”
According to the State Statistics Committee, there are currently about 500,000 people in Ukraine with access to the Internet, and about half are active users.
