Investment goes where there is opportunity and, for one Ukrainian investment fund, the opportunity is in Russia, war or no war.
Ukrainian venture fund Chernovetskyi Investment Group, founded by former Kyiv Mayor Leonid Chernovetskyi, on Sept. 9 closed a $1 million deal to invest in Russian online service Busfor, which sells bus tickets over the Internet for routes around the world.
“For us it’s an absolutely normal investment amount. Our standard deal size ranges from $300,000 to $3 million depending on the stage the project is currently on,” Volodymyr Kryvko, a managing partner at CIG, says.
The last time CIG invested such a large amount was in September last year, when Zakaz.ua, a Ukrainian groceries delivery service, received $2.5 million from the fund.
Busfor is the key product of Gill Business Systems, a tech holding founded in 2010 by Ukrainians Serhiy Kremeno, Olena Khimichenko and Russian Ilya Ekushevskiy. Kremeno and Khimchenko no longer participate in the holding’s business operations and act as shareholders only, while Ekushevskiy is now the chief executive officer at Busfor.
The service was developed in Russia, with development tasks now split between its offices in Kyiv, Moscow and Bangkok.
According to Ekushevskiy, Busfor is the leader in online bus ticket sales in the Ukrainian and Russian markets. “We’re like the booking.com (the online hotel booking service), but we sell bus tickets,” he says.
In 2014, Busfor sold tickets for bus routes operated by 800 Ukrainian carriers, and it provides ticket sales services for 5,000 carriers around the world, with ticket sales in the tens of thousands in 2014. The service sells bus tickets for carriers in 26 countries.
For the bus carriers, services like Busfor are a very convenient way to reach customers globally. Using Busfor, customers can order bus tickets in another country without even leaving home.
“Earlier people would have to go to a bus station to buy tickets two or three weeks before their trip. Now you can buy tickets simply by using computer, wherever you are,” Ekushevskiy says. “Of course every bus station has its own website where it sells tickets, but we aggregate many more destinations than just one bus station can offer… We’re helping to shift bus ticket sales services from offline to online, which is more convenient for people.”
There’s also plenty of room for growth in this niche: In Ukraine only 1.5 percent of bus tickets are sold online, while in the United States the figure reaches 40 percent. In Germany and France it’s up to 20 percent, Busfor specialists say.
Busfor takes a cut of from 10 percent to 25 percent of the value of the tickets it sells on behalf of bus carriers.
Until 2014 the company was operated by a team of 12 people, each of whom already had some entrepreneurial or tech experience. Around $1.5 million was invested into the company’s development by the founders themselves.
Last summer the company received $3 million in financing from InVenture Partners, Intel Capital and Finsight Ventures investment companies. Then staff number shot up to about 100 employees.
CIG’s Kryvko says that it took over a year to close the deal with Busfor. “We visited all of the company’s offices, and talked to the heads of the offices and other employees. We also studied the financial reports of the company very closely. But the most important thing was realizing the fact that the company’s founders are very constructive people, who can listen, reach conclusions, and accept pieces of advice,” says Kryvko.
Kyiv Post staff writer Bozhena Sheremeta can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by AVentures Capital, Ciklum, FISON and SoftServe.
