The total amount of venture capital investment in Ukrainian or Ukrainian-founded IT companies reached its peak in 2017 totaling $259 million. This is three times more than a year before, says the 2018 edition of annual Overview of Ukrainian investment market released on May 17 by Ukrainian Venture Capital and Private Equity Association (UVCA) in partnership with Deloitte. The number of deals — 89 — remained unchanged since 2016.
The report for the first time covers two additional segments, such as private equity deals and ICO.
“2017 was an exceptional year for private equity investments due to a relative rise in activity, compared to the last three years, when the average number of deals did not exceed four,” reads the official press release.
Meanwhile, the value of private equity deals in Ukraine totaled $ 126.7 million for 14 deals, which remained, however, undisclosed.
“A remarkable year for Ukraine”
“According to the UVCA Survey, 59% of investors met their expectations for 2017. Besides, 76% of current investors are expecting new private equity and venture funds to emerge in Ukraine in 2018,” commented Olga Afanasyeva, Executive Director of UVCA.
“On behalf of the association’s members, we continue to showcase investors’ enthusiasm for Ukrainian companies. We do this both within the country, and globally — presenting at international industry events, and expanding our network for effective deal-making by our members,” she added.
According to Afanasyeva, “2018 is already promising to be a busy year for the VC industry.”
The report also features the map of regional distribution of investments within the country.
Thus, the majority (56%) of the deals (excluding aggregated ones) were made in the Kyiv (Kiev) region. The deals account for 77% of the whole VC investment volume of the country.
According to Vladimir Yumashev, Partner, Tax and Legal, Deloitte, “2017 was a remarkable year for Ukraine, with a record amount of investments from venture funds for the past 8 years and a high activity in private equity.”
“This means that Ukrainian startups, professionals, and products, which are in demand worldwide, are competitive on a global scale. An ample evidence is Grammarly, an online grammar checking service based on AI technologies. This Ukrainian startup raised $110 million in 2017,” he added.
ICO and crowdfunding grow in popularity in Ukraine
According to the report, ICOs have become a massive new channel to attract investments on the local startup scene. Thus, 19 local projects managed to attract the total of $160 million through ICO in 2017. Besides, 2017 marked the emergence of a number of crypto-focused funds, “establishing stronger ties between private capital and the Blockchain technology.”
The top three ICOs originating in Ukraine include Neuromation ($71 million), Dmarket ($19,1 million), and Propy ($15,4 million).
Besides, the report indicates that crowdfunding platforms and grant programs have gained momentum in the local startup community. Thus, $2.1 million in total was raised by the tech and Internet sector startups through over 16 crowdfunding campaigns in 2017, while as much as $429,000 were provided through the main grant programs. These include Vernadsky Challenge (four grants) and Horizon 2020 (six grants).
This past spring AVentures Capital, a Kyiv-based venture fund, in partnership with local industry associations UVCA and UAngel as well as Ukraine Digital News, published the latest edition of “The Dealbook of Ukraine.”
- Earlier this year East-West Digital News and Ukraine Digital News released the first-ever extensive look at startups in the 24 countries of Central and Eastern Europe (CEE), including Ukraine. The report is available for free download.