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To our humble opinion, the results of 2019 are the most successful for the venture industry in Ukraine.
We talk to startups and investors, you get the value.
In 2019, there were more than a dozen of large investment deals, in which companies with Ukrainian roots participated (this is market specificity: it is impossible to talk about completely Ukrainian startups as the majority of them, or even all of them, are incorporated in Estonia, Israel, the US or other jurisdictions out of Ukraine).
The first place in terms of attracted investments, takes the project with Kharkiv roots named Gitlab, which received $ 268 million in 2019. The product of the project is an online service for developers that allows them to work with the general code and its versions from different places in the world. Dmitriy Zaporozhets, its founder, has been attracting investments for the second year in a row, and the last valuation amounted to $2.7 billion, which makes the project a Ukrainian “Unicorn” (jumping a bit ahead, we want to note that Gitlab is not the only “Unicorn” in our list). In its history, Gitlab has attracted investments for $426 million in total, and there are more than ten thousand active users. In their plans for 2020, there are such points as entering the broker’s board, which will be a logical step in company development.
The second in the rating list is Grammarly. The product of the company corrects context and orthographic mistakes, common grammar mistakes, offers more suitable lexical options as well as a range of the most widespread quotes and sentences. In 2019, the project attracted $90 million investments from two venture funds — IVP (Institutional Venture Partners) and General Catalyst. It’s not the first time when these two funds invest in Grammarly — in the first investment round in 2017, when Grammarly received $110 million, besides two mentioned funds, Spark Capital, SignalFire and Breyer Capital also participated in the deal. After this investment round, Grammarly valuation also exceeded $1 billion, and this makes the company the second “unicorn” in our list.
The honourable third place by the amount of attracted investments takes People.ai, founded by Oleg Roginskiy, who was born in Ukraine. The service analyzes the work of sales managers using mail data, calls, CRM, messengers, and helps them work more efficiently. By learning the working process of a particular manager, the program creates individual recommendations on how to find new clients and conclude more deals for him. The company has attracted $60 million from a pool of 8 investors with IQONIC Capital private fund being the head investor. After this investment round, the valuation of People.ai amounted to $500 million; in venture business, there is no name as “half-unicorn” (there is a less-widespread name for startups with a valuation from $100 million — “Centaurus”).
The next investment round that attracted the company with Ukrainian roots, is almost twice less — $35 million in the third round of financing; it is on the account of Very Good Security (VGS) from Goldman Sachs and two other funds. The platform eliminates risks of corporate clients being hacked by transferring the whole infrastructure to the “cloud”.
Another remarkable event for the company happened on January 16, 2020 — they attracted more $15 million from Visa Ventures together with Goldman Sachs, Andreessen Horowitz, Vertex Ventures US, Max Levchin (PayPal co-founder) and Nick Bilogorsky in the framework of Series B round. So let sceptics talk more about how difficult it is to attract finances in January.
And finally, another company connected to material security, rounds out our top five investment deals — Ajax Systems. Company products are sensing systems that allow to detect door break-ins, the process of opening windows or movements in the apartment. The company attracted $10 million from Horizon Capital fund. It is the first investment round in the company of Alexander Konopitskiy, after seed money from SMRK VC Fund that amounted to $1 million.
We should note a few concluded deals of the previous year that somehow have already influenced or will influence the further development of the market.
In November 2019, the news broke out that Playrix company had bought Ukrainian game-developing company Zagrava Games. It is obvious that this entails the reinforcement of the company’s core team. The price of the concluded deal amounts to “modest” $1 million.
Edu.ua, a delivery service that is now included in the Armenian company, called Menu Group, changed the owner in July 2019. The price of the concluded deal is confidential but experts value it to €2.5–5 million. It is also known that the new owner plans are to invest ₴100 million more for the development of the service.
In May 2019, DOC.ua also changed its owners, it was sold to “Effective Investments” company. So to say, in January 2020, the company attracted investments from Quarter Partners venture fund to develop on the international markets. The price of the concluded deal is confidential.
In April 2019, an Israeli company Perion bought a Ukrainian company Captain Growth, which allows automatisation of the marketing analytics and finding insights with the help of AI. The price of the concluded deal amounts to $3.8 million.
In March 2019, another Israeli company, Yael, bought Acceptic, an outsourcing company founded by Dmitriy Kharchenko in Kharkiv, for $2 million.
Also, in March 2019, Murka Entertainment Ltd., another game-developing company with Ukrainian roots was bought; it came to hold to American Blackstone company for the unknown sum, which, however, can be amounted to $100 million, regarding the known data.
Among large concluded deals, we can mention the purchase of Ciklumoutsourcing company in February 2019, that came into the hold of Dragon Capital investment company.
And the “cherry” on our cake is undoubtedly the story of Victor Shaburov’s success, who managed to sell his companies to Snapchat twice. In 2015, Snapchat bought his Looksery company for $150 million, and in 2019, Al Factory came into the hold of Snapchat for $166 million.
For those who managed to read the article to this point, we suggest to recollect two amazing stories of the Ukrainian venture market.
In September 2019, the word leaked out that in Nimses startup, that was on everyone’s lips thanks to their vision, there are troubles both with attracting money and the team. So to say, the difficulties were noticeable from the beginning of the year, but they started a public conversation about it only in Autumn. Salary delays appeared in January 2019. At first, they paid off in full or in part, but by last summer, payments to employees had ceased. There are also delays with payments to partners who place their goods on the Nimses platform and sell them for nims, the virtual currency of the system.
At this point, we can finalise summing up 2019, if not to take into consideration events that happened in Ukraine: for example, the resignation of Unit.city managing team, a speech, delivered by Ukrainian President Volodimir Zelenskiy on iForum, and also, transformations in governmental segment, which are connected both to real digitalization, and “digitalization”, that barely gets through even in halls of Ukrainian parliament (in the network, there are photos of printed “paper mountains” with comparison charts of draft bills).
In the next part, we will find a magic crystal ball and will try to find out the future of the venture industry in Ukraine in 2020. Stay tuned!