Amid the coronavirus quarantine, Ukrainian IT businesses and startups continue delivering innovative solutions, even if they remain uncertain about their future.
Some tech companies appear to be losing clients and cutting salaries to avoid layoffs throughout the COVID-19 crisis, one report from April 21 suggests.
But the IT sphere is also considered to be an area that can bounce back quickly. Plenty of indicators point to strong performance in Ukraine’s information technology sector through 2019, and many observers now expect further investment growth as soon as the global economic situation stabilizes, Volodymyr Yumashev from Deloitte Ukraine said.
In 2019 Ukraine’s IT and startups have attracted a record $510 million volume of investment money, 1.5 times higher than the last record year of 2018, according to a review by the Ukrainian Venture Capital and Private Equity Association (UVCA).
Ukraine-founded software developer platform GitLab raised $268 million for growth. Another Ukrainian “unicorn” Grammarly attracted $90 million; $60 million was invested into the growth of tech startup People.ai founded by Ukrainian Oleg Rogynskyy and $21 million into the online marketplace JiJi.ng.
The top Series A deals included Ukrainian startups Allset ($5 million), Unstoppable Domains ($4 million), MyCredit ($3 million), and AllRight ($1.5 million).
The top 10 investment deals of Ukrainian startups in 2019, according to the Ukrainian Venture Capital and Private Equity Association (UVCA) survey published on April 23.
Overall, Ukrainian IT businesses finalized 111 deals compared to 115 in 2018. According to UVCA, 90% of the attracted investments came from the USA.
The volume of Angel Investments has increased by 7 times and reached $6.1 million compared to $900,000 in 2018.
The study reveals that software companies have been leading in the number of deals and their volume in 2019, moving the “online service” sector to second place.
For the first time, UVCA analyzed gender diversity among startup CEO. It has found that 26% of companies have at least one woman among its founders.
This is 7% more than the global average, the study indicates.
Furthermore, an M&A report by the KPMG auditing firm has also found that international investor confidence in Ukraine’s companies was on the rise in 2019.
For the first time in three years, foreign M&A exceeded domestic transaction values and was mainly focused on the communications and media, real estate and construction sectors. According to the report, the M&A volume in 2019 grew by 29% and reached $2.35 billion.
The largest deal of the year was the $734 million acquisition of Vodafone Ukraine by Azerbaijan’s Bakcell. It was also the 25th largest deal across the CESEE region.
As compared to foreign investments, domestic M&A has gone down by 17% totaled $945 million. The biggest domestic deal was the purchase of Kyivoblenergo and Odesaoblenergo by DTEK for $250 million from VS Energy, a controversial firm that is linked to the Russian politician and close ally of Vladimir Putin, Alexander Babakov.
The transparency level in Ukrainian M&A has raised to 59% in 2019, just slightly more than in the previous years and far below the levels seen in Western Europe.
Other deals have focused on the innovation and technology sector, pharmaceutical industry, agriculture and related infrastructure.
