These views weren’t surprising because of the Russian propaganda that displayed the war with the purpose to scare off all business people and investors.
“So how is it in Ukraine? What’s going on with businesses? What was it like before the war?” – these were the first questions I was attacked with. So I told the story straight and fact-full.
Despite the EuroMaidan Revolution, the annexation of Crimea and the start of the war last year, Ukrainian IT and startup community managed to get 60 venture deals. This year we have had over 20 deals signed so far.
The delegates couldn’t believe it first. “Who were the investors? Are they nuts? Ukraine is in war! What deals are you talking about?”
They wanted figures and names. So I was open, starting with Torben Majgaard, the founder of Ciklum, Digital Future Fund, SMRK, Almaz Capital, Fison, Sikorsky Challenge innovation park and other investors who made the list of 10 new investors that entered Ukrainian market in 2014.
Now Ukraine can be compared to Israel, well-known for its booming IT sector, but even more – for the difficult geopolitical situation and the ongoing war threat.
Like Israel, Ukraine has limited internal software market. Over 90 percent of its product companies target the global market.
We have over 2,000 startups, about 100 global R&D centers, more than 500 outsourcing firms and 100 e-commerce companies. All of them add up to over $5 billion industry’s volume worth as of late 2014. The figure could be higher if it wasn’t for the economic downturn.
Creating an enterprise software startup with 20 people on the team working for at least 2 years would take $10 million if it was in the U.S. In Ukraine, the same team for the same time span will cost 10 times less. Just think about it. It is possible to raise $1 million in the U.S., develop the product here and then return with the developed product to sell it in the U.S.
Last week I had two guys from Europe asking for my help in finding CTOs. One of the delegates was also interested in finding a co-founder with a background in tech.
Despite the stereotypes, Ukraine is actually the place to find a co-founder, not just a beautiful bride☺ There are successful cases of such cooperation and one of the examples is Paymentwall, a payment platform for games, virtual goods, and web services available in 200 countries with $2 billion in revenues. It started out from a cooperation of the American Honor Gunday and the Ukrainian Vladimir Kovalyov. Now it faces a prospect of IPO within 3-5 years.
Another trend I bump into quite often is corporate sector employees leaving their high-paying jobs in favor of starting tech startups.
They choose tech because it promises a faster return on investment, fewer entry barriers and fewer roll-out costs.
The nature of Ukrainians is that they are hard-working people. When they see opportunities, they are not afraid to spend the capital they have to develop own business.
With such tendencies combined, I predict that Ukraine will have around 5,000 startups in several years.
I’m not the only one who sees the prospects. When Sir Richard Branson visited Kyiv in April for the Forum One conference, he expressed his strong belief in the Ukrainian tech industry.
I asked him if he would co-invest with a local VC community and he sad that his investment team has been already looking at deals and his main investment people will be visiting Ukraine now every month.
Such trends make a firm soil for investors and a chance for Ukraine to become a “startup nation”. Ukrainian young generation, however, will become a “startup nation” in a sense that everyone will be doing startups. It will become a Ukrainian dream.
Our youth gets inspired by Jan Koum, the founder of WhatsApp, and Max Levchin, the co-founder of PayPal and Yelp. Both of them have Ukrainian origin and were selected to the rating of Europe’s top 50 tech entrepreneurs of 2015 by Financial Times. They are YGL of WEF too.
There are more than 50 Ukrainian companies with valuation of $20-100 million that operate globally.
All of them came out of the blue They bootstrapped and worked hard. This is all about the Ukrainian spirit and entrepreneur culture.
The community of investors and people in government form a strong team to advance the business climate and implement long-term development strategies too. By my initiative with Natalie Jaresko, Finance Minister and the former CEO of Horizon Capital, for instance, last year the Ukrainian Venture Capital and Private Equity Association (UVCA) was founded and 37 members teamed up (planning to reach 50 members this year) with the total assets of $23 billion.
UVCA has already come up with the road map, introduced to the government, on how to build the investment climate in Ukraine and to fight the corruption.
The EuroMaidan Revolution ended over a year ago, and now Ukraine is a dynamic country. The spirit of freedom is carried by talented and educated people, who were being robbed for too long. Now, when opportunities are scarce, they are ready to create opportunities themselves.
By the way, one of the YGL Marc Turell has already visited Ukraine for the third time since the event. Impressed by the first visit, he’s now building a new tech company with Ukrainian team. It`s just a beginning of success and an example for many new entrepreneurs, inspired and excited to work on their business network and found global companies here. Together we build a new Ukrainian dream and a “New Ukraine” to become a startup nation.
