Sergii Sosnov’s 10-year journey started from a local bank in Luhansk in eastern Ukraine to the Goldman Sachs office in London, and from there to a bootstrapped startup in the hot British financial technology industry. Today he is the CEO and founder of Zen Assets. Opening for business in February, the wealth management firm offers customers transparent and inexpensive tools for personal investment.
Customers coming to the startup’s website are offered a
series of questions that help determine their risk tolerance. Based on the
result, the client is offered one of 11 investment portfolios tailored by the
team in advance to fit people with different expectations. The sales pitch is
that Zen Assets “allows to earn up to an additional 40 percent in net-of-fees
returns when compared to a bank/traditional wealth manager’s performance.”
Unlike many other similar ventures, Zen Assets has never raised
outside funding and has no such plans as of yet. It also is a prize winner at
last year’s IDCEE conference but never received anything but a minute of fame
and a nice piece of glass to look at.
In a Skype interview, Sosnov told the Kyiv Post how he ended
up in London and why local smart money for a startup might be not smart enough.
Philologist turns banker
Although today Sosnov sounds like someone born to work in
the financial industry, he actually graduated from Luhansk University majoring
in Romano-Germanic philology and worked there for a while, teaching English to prospective
economists. He would later receive a Master’s degree in Finance, and
subsequently left academia to join the local branch of Ukrcommunbank.
“Somewhere in 2002, I was preparing for the CFA (Chartered
Financial Analyst) exam and stumbled upon the term MBA, which I didn’t know at
the time,” he said. “After some research I realized that was what I needed —
and started preparing for the program.”
During the three years of preparations, Sosnov moved to
Kyiv. He got accepted to the Wharton School at the University of Pennsylvania
and qualified for a scholarship covering 50 percent of the tuition fee and a
student loan, which was an essential prerequisite for a Ukrainian without
significant savings moving to the U.S.
The MBA program and subsequent work at Goldman Sachs in
London brought him into plenty of contact with industry professionals, some of whom
Sosnov persuaded to join his startup years later, in 2013.
Searching for Zen
While working at Goldman Sachs, Sosnov started to monitor
technologies that were emerging and that could change how things work in the
financial world.
“I wanted to address some questions and issues that people
had. Usually clients dislike low-tech solutions: in bigger investment banks,
many things are often done manually or their automation is not good enough,”
Sosnov said.
To bring his idea to life, Sosnov built an investment team
of three people including himself with a track record in wealth management, and
managed to get on board Chief Technical Officer Pavlo Sidelov, one of Ukraine’s
most experienced specialists in online payment systems.
No-nonsense approach
After almost two years of working on the startup, from its
first prototype to the current version, Sosnov has formed a strong opinion
against most activities that are normally considered typical for entrepreneurs.
First of all, he prefers not to attract venture capital funding,
trying to bootstrap the business to profitability.
“When you’re building a self-funded business, you always try
to do everything as fast and efficient as possible,” he said. “And of course,
you always have the final say on things.”
In particular, Sosnov, although having good relationships
with Ukrainian venture capital funds, never looked at them as potential
investors.
“Simply speaking, U.S.-based VCs fear missing the next Uber
or Dropbox, so they would invest at the minimum viable product stage plus
traction; European VCs are more conservative, they’d like to jump in at a more
advanced stage.
“Ukrainian VCs want to see you almost breaking even [before
they invest]. But if you’ve broken even, it’s not a VC type of business [anymore],”
he said.
And sometimes money from the country might just not be
“smart” enough for Zen Assets.
Sosnov continued: “Value that an average Ukrainian or
Russian VC can provide is rather limited because I’m already in the UK, I don’t
need help in establishing a company. What will be the value added? They’ll just
give me money…”
As a second rule, Sosnov doesn’t frequent startup
conferences and similar events anymore, even though he, as a first-time
founder, had attended plenty of them, and Zen Assets made quite a successful appearance at IDCEE in Kyiv last
year.
“Theoretically, we won something and received a piece of
glass but that was it,” he said.
The prize he received at the event was six months of
mentoring and media support from Apex Ventures, though Sosnov isn’t sure that
would have been really valuable for the startup.
“Anyway, if I saw not only the push from our side but also a
pull from theirs, we’d gladly [use the mentoring],” he said. “But despite our
attempts to contact [Apex Ventures], we didn’t see any enthusiasm from their
side and I let it go.”
Crowded space
Working in a pace typical for startups in the niche of
wealth management, Zen Assets is slowly getting traction in the first months of
business. The main obstacle is that people — unsurprisingly — tend to be quite
conservative in where to invest their money, and newcomers aren’t as welcome
here as they would be, say, in video game development.
Until the necessary level of trust is achieved, Sosnov
focuses on alternative sales channels, including wholesale opportunities.
“For example, we can provide some kind of a back-end
solution and make use of the credibility that certain long-established players
have,” he said. “Pumping millions in marketing and advertisement is not a
proven strategy yet, it’s not enough to acquire many clients in this industry.”
Freelance writer Andrii
Degeler can be reached at [email protected].The Kyiv Post’s IT coverage is sponsored by AVentures Capital, Ciklum, FISON and SoftServe.
