Winter is coming sooner for Bionic Hill, Kyiv’s vaunted innovation park that was supposed to open its doors in 2015.
In August, the developer of the technology cluster, UDP, said it was halting construction because Kyiv authorities didn’t build a road to the park’s location and failed to connect power lines. The property developer’s main shareholder, member of parliament Vasyl Khmelnytsky, said the project was first “suspended” in May before a decision was made to “freeze” it altogether.
Options for moving the high-technology hub to either Lviv or Kharkiv are now being explored, said the project’s spokesperson Dmytro Zverev. And the park’s president, Viktor Galasyuk, earlier this month left his post to become the economic adviser of Radical Party leader Oleh Lyashko earlier this month.
Once the darling of Kyiv authorities for its potential of becoming Ukraine’s Silicon Valley, the ultimate future of the initiative is unclear.
Initial vision
Bionic Hill is the brainchild of Khmelnytsky’s UDP, a property developer. Plans were announced in 2011 and started to receive substantial government support in 2012. In the first two years of its existence, it was included into the national project Tehnopolis, the aim of which was to establish infrastructure for high technology companies by building five “innovative development complexes” across Ukraine.
It was supposed to emulate similar projects in the Silicon Valley, Israel, or even much closer, in Russia and Belarus. The main goal was to create a huge complex around the four-fold concept of living, working, studying and relaxing in a compact, eco-friendly area.
Specifically, the project included a research and development center, hi-tech manufacturing facility, two office buildings, two residential communities, a hotel and sports center. Normally, resident companies of cluster communities also receive certain tax benefits.
Lost chances
In early interviews, the cluster’s team said Bionic Hill would create 35,000 jobs, while its residents’ yearly revenue was expected to reach $1 billion.
Its closest neighbor, Skolkovo in Moscow, Russia, and PVT in Minsk, Belarus are public-private initiatives, with at least 50 percent of financing coming from the state.
The pride of Russian Prime Minister Dmitry Medvedev, Skolkovo has been under construction since 2010 and is supposed to see about $3.36 billion in funding. More than 1,000 companies have become the hub residents. Among them are R&D centers of bigger companies like ABBYY, Parallels and IBM, as well as promising startups including remote working platform Workle and even Ukraine-born Jelastic, each of them having attracted no less than $3.5 million in funding to date.
The oldest of the three, Belarusian PVT, was created — on paper, at least, — in 2005, although real work began only in 2011. As of June 2014, PVT had 139 residents, including an R&D center of IBA Group and the developers’ team of the well-known mobile-oriented instant messenger Viber.
According to PVT’s data, its residents paid $30 to $50 million in direct taxes and raised $85.3 million in direct funding in 2013. With this in mind, Bionic Hill’s team forecasted that once the hub is at full capacity, residents would pay $160 million in taxes. Some say the figure is unrealistic.
What separates Bionic Hill is that it is a strictly for-profit enterprise funded mostly by a private company.
Red tape
The city allocated land where a military base had once stood for the hub. According to UDP’s Khmelnytsky, the city promised to build a road to the area and connect power lines. Back in May 2013, the city administration allocated Hr 9 million to order the required paperwork from the Project Bureau Kyivproekt. As of September 2014, the paperwork had passed the conceptual design stage and moved to the contract documents phase, Kyivproekt’s director Vitaliy Nischota told the Kyiv Post.
“[R]oad construction has not started yet,” Galasyuk said. “It’s not a question of specific people. Fundamentally it’s about lack of government policy and leadership.”
The Department of Economy and Investment told Kyiv Post that in February 2014 the Kyiv City Council earmarked Hr 12 million to build a road and connect power lines to the hub. In the summer, however, the allocation was cancelled, so currently there is no money in the budget reserved for this project.
Dmytro Zverev, a spokesperson for Bionic Hill, said that UDP spent “tens of millions dollars” on the project, mostly on architecture, foundation documents, design, and team salaries. However, the company has no intention of suing the city.
“We’re still interested in the realization of this project, but without support from the Kyiv authorities it’s not possible,” Zverev added. “We do respect the authorities, and are not interested in destructive actions.”
The leftovers
Despite the halt in construction, Bionic Hill is moving ahead with the educational aspect of the project. Based in the Kyiv Mohyla Academy, the Bionic University offers study programs in tech skills, soft skills, entrepreneurship and leadership. About 1,000 students are enrolled in these programs every year. In addition, the programs are financed by Khmelnitsky’s charity foundation, offering many free courses.
The innovation’s team remains intact as well, with the exception of its former president Galasyuk departing. At the moment the team is exploring the possibility of building a smaller-scale hub in Odesa, Kharkiv or Lviv, with the last two being the more likely candidates.
Should the move take place, it would show the nation’s capital city what it has lost but still has chance to get.
Andrii Degeler is the Kyiv Post’s information technology reporting fellow. Degeler has been covering the IT business in Ukraine and internationally since 2009. His fellowship is sponsored by AVentures Capital, Ciklum, FISON and SoftServe. He can be reached on Twitter (@shlema) or [email protected].
