Despite its political woes, Ukraine is country of technology talent with a plethora of startups going through local and global acceleration programs and receiving support from investors.
One of Ukraine’s largest institutional venture funds, TA Ventures, has been around for some six years, and is active on both local and international markets.
“We focus on startups with global potential in such sectors as fintech, digital health, big data, cloud computing, and online marketplaces,” said the fund’s founding partner Viktoriya Tigipko.
“Despite the fact that there are still very few local startups that meet our investment criteria in the above sectors, I am happy to note that the quality of startups that we’ve been looking at has been improving, and this makes me optimistic that our local deal flow will be on the increase in the coming years.”
“Currently, we have 10 projects in our portfolio that are, more or less, connected with Ukraine. Some of them have Ukrainian founders or developers based in Ukraine, and the strategy is to increase the number of companies somehow connected to Ukraine. At the moment, we are in final negotiations with two very promising Ukrainian startups that have good potential to become successful players both locally and internationally. Moreover, we have more than 15 projects from Ukraine in our pipeline.”
“Impromptu occasion”
Recalling how TA Ventures started off, Tigipko says she has always been sincerely interested in innovations and technology, but never had an opportunity to chip in, in a meaningful way. It changed in 2010, when an acquaintance of hers decided to move his business from India to Ukraine after having had a successful experience of working with Ukrainian developers.
“I had a wide network of personal contacts, so I helped him to find reliable partners,” she said. “This was the start of our cooperation, which eventually led to launching the fund, initiating the IDCEE conference, as well as building five in-house companies from scratch (one of them now has a 6-digit EBITDA).“
Since then, TA Ventures’ portfolio has grown to more than 90 companies from 12 countries, while it achieved 18 exits. Its average performance metrics for venture capital funds, according to Preqin, are 1.24X cash-on-cash multiple and 16% internal rate of return (IRR), Tigipko said.
Investing in the community and Ukraine’s image in the venture capital industry, Tigipko took over organisation of the IDCEE conference and made it one of the biggest tech startup events in Central and Eastern Europe. Over the years, it constantly attracted more than 2,000 attendees from 45 countries, but was put on hold temporarily in 2015.
This, however, doesn’t mean Tigipko has given up on the local entrepreneurial community.
“In order to make our contribution to the development of the local startup and VC ecosystem, we have been providing advice and assistance to all startups that reach out to us, by holding weekly office hours and by launching our investment club (iClub), members of which are provided with an opportunity to co-invest with our fund,” she said. “We hope that this will be conducive to increasing the number of attractive tech ventures in Ukraine. Moreover, all our portfolio companies get access to our network of contacts – over 500 co-investment partners, and we help them with raising next financing rounds.”
Still on the radars
Although one of the reasons for Tigipko and her team to cancel IDCEE 2015 was the meltdown of the investment climate in Ukraine, due to the political and economic turmoil, she believes that the country won’t disappear from the tech innovation map.
“I think the growth will resume after the resolution of the military conflict in the east of Ukraine, which will reduce the risks of investing in Ukrainian companies,” Tigipko said. “Foreign VCs are especially sensitive to such risks. However, Ukraine remains on their radar, and they continue monitoring the situation in the country.”
“We are also supporting the closed investor platform iClub. It is an initiative for private investors to invest in Ukrainian, and global, promising tech startups. Also the members of iClub support different charity projects. During last year we have closed 3 deals with the participation of UAngel club, so the prospects of the angel investors are positive in Ukraine.”
Even more than that, Tigipko reckons that the innovative industries have the potential to become the key for Ukraine’s future.
“I have no doubt that high tech will be the strongest driver of Ukraine’s economic and social modernisation in the age of knowledge economy,” she continued.
80 coding clubs for kids
“Examples of other countries vividly demonstrate that without innovation, social and economic modernisation is impossible. Therefore, Ukraine should capitalise on its abundance of high tech resources to achieve its social and economic prosperity. Moreover, if you take a look at the MGI digitalisation index, agriculture is the least digitalised sector of economy, which is one of the GDP generating sectors in Ukraine. And so, I definitely expect the economic growth from further tech developments having more than 100,000 tech specialists in Ukraine.”
In order to help grow the digitalisation trend over the country, together with partners from the IT industry, TA Ventures has already opened more than 80 coding clubs for kids within a global volunteer project Code Club.
“We continue opening 3-4 clubs per week,” Tigipko said. “Also we are starting the pilot project of Apps4Good initiative in Ukraine: volunteers will teach coding and the fundamentals of the digital world, while also developing skills in problem solving, creativity, communication and teamwork.”
Commenting on pros and cons of building a venture business in Ukraine, Tigipko emphasized that despite all the issues one can face, it is still a viable place for a home base.
“We are based in Ukraine not because of the business and legal environment, which regretfully is not quite conducive to VC business, but because we want to prove that it is possible to successfully operate internationally. Leveraging our global network of co-investment partners, and at the same time invest in local startups with global ambitions, leveraging Ukraine’s vast pool of technical talent. So, being based in Ukraine provides us with an opportunity to tap into this pool of technical talent, and use it as one of our major value-add for our portfolio companies.”
This interview is an excerpt from the soon-coming new edition of “The Dealbook of Ukraine,” a report by AVentures Capital and Ukraine Digital News about venture and statup activity in the country. To receive your free copy, or to inquire about advertising opportunities, please write us at jane[at]uadn.net.
