Is the Ukrainian space industry attractive to venture investors? Business magazine Capital has identified examples of successful startups and asked local and international VCs to comment on the matter.
There already are space startups at universities in the country. Nanosputnik PolyITAN, developed by students at Kyiv Polytechnic Institute as part of the international program QB50, is an example. PolyITAN-1 was launched into orbit on a Dnepr rocket on June 19 and last month the project received investments of 500,000 hryvnias (just over $32,000) from the Academic V.S. Mikhalevich Fund.
Developed by Kiyv (Kiev) students, the first Ukrainian CubeSat PolyITAN-1 was launched successfully in June 2014 on a Dnepr rocket (SS-18 “Satan” by NATO classification) from the Yasny facility in Russia.
Also this year, Ukrainian Pavel Tanasyuk launched a sputnik into orbit as part of the Space BIT project, which makes it possible to issue electronic money and complete operations with it outside the jurisdiction of any country.
The Ukrainian eFarmer project, which gives farmers access to maps of fields, is a resident at the startup incubator of the European Space Agency.
These startups, designed to use space to solve earthly problems, are easier to develop because of the low level of risk associated with them.
Mark Watt, a partner in the American-Ukrainian asset management firm Noosphere – which has just invested in commerce platform Prosto.ua – said the search for such projects is mainly conducted in universities. “The criteria, as with most startups, is viability, scalability, the commercial element and the team,” he said.
Currently, Noosphere aims to evaluate whether or not it is possible for Ukraine to catch up after 20 years when the space industry was not given due attention by the government or investors.
The company is working with Dnepropetrovsk National University, where it opened a School of Engineering. A Space Research and Technology Laboratory is opening soon as well.
Noosphere has been considering proposals for investment in projects involving plasma engines and minisputniks. “But so far it is too soon to say anything specific. We have just started,” Watt said, adding that much will depend on the future situation in Ukraine and its social, political and legislative microclimate.
In Ukraine, space startups can also be based at enterprises in the rocket-building sector, such as Yuzhmash, TA Venture analyst Sergey Kravets said. But it is not clear at present how innovative and competitive their technology is for new projects.
Space technology development requires large investments of capital, mainly for R&D, Kravets said. According to Kravets, those investments have a lengthy payback period and high risks, as exemplified by the recent Virgin Galactic rocket ship crash and the failed launches of SpaceX’s rockets.