eVenture Capital Partners

Internet market development in Ukraine
Internet Ukraine 2009

Kiev, April 23th, 2009




      ...
Agenda




         • General internet market overview

         • Internet business development




                     ...
Ukraine is still behind large European and CEE countries in terms of internet
users and penetration but fastest growing
CO...
With current growth rate of about 80% Ukraine can reach German level of high
speed internet access in 5 years
HIGH SPEED I...
E-Commerce market in Ukraine is still in its initial phase of developing but
showing stable growth at about 60%
ECOMMERCE ...
E-Commerce in Ukraine is a fast and exponentially growing market and has
reached nearly one-sixth of Russian e-Commerce vo...
Ukrainian online advertisement is the rapidly growing market and expected to
 continue growing at least for 20% in 2009 op...
Ukrainian online advertisement has a huge opportunities for development, fed
 by increasing user base and internet busines...
Agenda




         • General internet market overview

         • Internet business development




                     ...
Proposed systematization of Venture deals according to revenue generation
         and underlying technology
     CLASSIFI...
There are many business models in transaction category types either not
 existing at all on the UA market or presented ver...
As advertisement market on it early stage of development it is still demand
 for innovative approaches and new advertising...
Subscription area is the most underdeveloped and poorly presented by very
 a few models
SUBSCRIPTION: CATEGORIES          ...
Social communities are the most developed area in Uanet, however
 community based services are still in demand
COMMUNITY A...
Thank you for the
   attention!




                    Page 15
eVenture Capital Partners GmbH


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Ua Internet Market Development Internet Forum

  1. 1. eVenture Capital Partners Internet market development in Ukraine Internet Ukraine 2009 Kiev, April 23th, 2009 This report is solely for the use of client personnel. No part of it may be distributed, quoted, or reproduced outside the client organization without the prior written approval of eVenture Capital Partners GmbH . This material was prepared by eVenture Capital Partners GmbH for use during an oral presentation; it is not a complete record of the discussion
  2. 2. Agenda • General internet market overview • Internet business development Page 2
  3. 3. Ukraine is still behind large European and CEE countries in terms of internet users and penetration but fastest growing COMPARISON OF INTERNET USAGE IN UKRAINE VS. LARGEST EUROPEAN INTERNET MARKETS Number of Internet users 2008, Mio Internet Penetration 2008, % - European countries >35m inhabitants - UK Germany 55 71 Germany 67 43 UK Spain France 67 40 France Russia 65 38 Italy Poland 52 28 Italy Spain 49 27 Russia Poland 27 20 Ukraine Ukraine 22 10 09e 10e 09e 10e Page 3 Source: Internetworldstats Dec 2008
  4. 4. With current growth rate of about 80% Ukraine can reach German level of high speed internet access in 5 years HIGH SPEED INTERNET ACCESS IN UKRAINE High speed internet access in Ukraine by lines (DSL, F2B, Cable) • Since 3Q2007 number of private high speed internet users by lines Germany – 23mln* grew by 79% Connections, 43% • Main driver of high speed internet mln. 39% 38% Penetration on market development is private 37% 36% 36% 1,6 internet users customers segment that reached 34% 33% 1,4 1.130.000 people. 1,2 • Penetration of high speed 1 broadband internet in Ukrainian 1,29 0,8 1,13 households are grew from 2,8% in 0,94 0,86 1Q2007 to 6,4% in 3Q2008. Private 0,6 0,74 connections 0,63 0,55 0,4 • On average 2.6 user use one high 0,49 0,2 Business speed access 0,24 0,21 0,20 0,19 0,15 0,18 0,16 connections 0,13 0 4Q08 * • Keep on rapidly growing Ukraine 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Year can reach German level of high *Forecast Bitcom for 2008; speed internet development in 2013 users per connection on avg 2,6 users Page 4 Source: iKS-Consulting, http://www.iks-consulting.ru/adocs/en/2458336.html; http://www.golem.de/0805/59788.html
  5. 5. E-Commerce market in Ukraine is still in its initial phase of developing but showing stable growth at about 60% ECOMMERCE MARKET Revenue from e-Commerce in Ukraine, 2008 mln.$ • E-shopping is still in the incipient evolving phase. It is 600 considered risky by a half of those who heard about online shopping 500 60% (50-55%), what is also mirrored by the fact that the payments are in 400 400 most cases made in cash (~60%). 56% • Growth rates of Ukrainian e- 60% 300 commerce market is about 60% 250 p.a. It is expected that growth rates in 2009 will slow down but 200 160 the volume will increase. 100 • Online shoppers are about 30% 100 of current Ukrainian internet users (~3,5 mln. people) 0 2005 2006 2007 2008 Page 5 Source: www.prostobiz.com.ua; http://www.kontrakty.com.ua/show/rus/article/34/07200810049.html, http://www.limenet.kiev.ua/news/news27.html
  6. 6. E-Commerce in Ukraine is a fast and exponentially growing market and has reached nearly one-sixth of Russian e-Commerce volume in 2008 ECOMMERCE MARKET E-Commerce revenue, 2008 bln.$ 5 31 • In comparison to Germany with its the 3,9 4 current numbers of internet users (about 55 mln.) Ukrainian e- 3 commerce revenue would only be 2,4 ~2$ billion which is 1/15 of current German e-commerce volume 2 1 0,4 0 Ukraine Russia Poland Germany * e-Commerce revenue Germany on 11.2008 about 19,3 € billions reported by www.versandhandel.org; exchange rate EUR /USD 1,47 (2008) Page 6 Source: www.prostobiz.com.ua; http://www.kontrakty.com.ua/show/rus/article/34/07200810049.html, http://www.limenet.kiev.ua/news/news27.html
  7. 7. Ukrainian online advertisement is the rapidly growing market and expected to continue growing at least for 20% in 2009 opposite to other media ADVERTISEMENT MARKET Revenue from internet advertising in Ukraine mln.$ 200% 25 Growth, % 150% • Even 150% taking into account current 20 21 economical situation 20% of growth in 2009 is expected opposite to other 100% 15 100% which will scale back (from -10% media 75% 12 to -30% depends on type) 67% • Ukrainian advertisers will increase 10 50%share of online advertisement in their budgets from 1,6% to 3% in 2009 6 5 0% 3 0 Year 2005 2006 2007 2008 Page 7 Source: www.prostobiz.com.ua; http://www.kontrakty.com.ua/show/rus/article/34/07200810049.html, http://kontrakty.ua/content/view/6905/39/
  8. 8. Ukrainian online advertisement has a huge opportunities for development, fed by increasing user base and internet businesses ADVERTISEMENT MARKET Revenue from internet advertising CEE and EU countries, 2008 26% 29% mln.$ 4.745 4.389 700 50% 592 600 Main drivers of online advertisement: • More internet users 500 • User activeness • Increasing number of internet 400 shops 300 • More and more companies switching marketing budgeters in 12% 200 favour of internet adverts 132 75% 100 21 0 Ukraine Poland Russia UK Germany Page 8 Source: www.prostobiz.com.ua; http://www.kontrakty.com.ua/show/rus/article/34/07200810049.html, http://kontrakty.ua/content/view/6905/39/
  9. 9. Agenda • General internet market overview • Internet business development Page 9
  10. 10. Proposed systematization of Venture deals according to revenue generation and underlying technology CLASSIFICATION: MAJOR ONLINE AREAS Other1) Subscription Community Transaction Advertising •Transaction brokers •The web advertising •Users are charged a •The viability of the •As business bring buyers and sellers model provides content periodic (daily, monthly or community model is based models in together and facilitate most often (but always) for annual) fee to subscribe to on user loyalty Internet keep INTERNET •Users have a high transactions. free and services (like a service. developing, here •Usually a broker •Often sites combine free email, IM, blogs) mixed we mean all the investment in both time content with “premium” with advertising models, not charges a fee or and emotion messages. •There are several ways of fitting to the other commission for each content, that should be •Advertising may be the 4 groups transaction it enables paid for monetizing communities •Merchants/Shops are •Subscription and major or sole source of •Revenue can be MOBILE revenue. retailing goods and advertising models are based on sale of •The advertising model services. Sales may be frequently combined additional products made based on list prices works best, when the and services or or through auction volume of viewer traffic voluntary •Affiliate model provides is large or highly contributions; TV specialized. •Revenue may be purchase opportunities wherever people may be tied to contextual or surfing by offering media advertising financial incentives to •Subscriptions for affiliate partners (pay-for- premium services performance) are also possible 1 Includes Gaming, MVNO etc. Page 10
  11. 11. There are many business models in transaction category types either not existing at all on the UA market or presented very poorely TRANSACTION: CATEGORIES Transactions Advertising Subscription Community Others Categories Examples Comments Shopping portal amazon.com, tut.ua • Very few shopping portals offer good Special shop asos.com, topok.com.ua quality service, they are relatively small with Category killer yoox.com, rozetka.ua product range focused mostly on Private shopping vente-privee.com, kupiVIP.ru electronic goods, so there is a big potential for newcomers which will offer good and Live shopping woot.com, naboki.de trustful service. Mass Customization zazzle.com, prostoprint.com • Private shopping, live shopping, social Bit vendor apple.com/itunes/, shopping (for some segments), wigdets, Social shopping polyvore.com, mydeco.com SaaS, affiliate networks are Auction ebay.com, auction.ua underdeveloped areas Virtual market place etsy.com, uaprom.net • Internet shopping enabler segment has Classifieds hh.ru, job.ukr.net great potential in Ukraine as e-commerce market is rapidly growing and there are very Affiliate networks tradedoubler.com, zanox.com a few e-commerce service Shop enablers paypal.com, portmone,com.ua provides, logistic, pickup service, shop Widgets widgetbox.com, musestorm.com platform, etc. SaaS demandware.com xxx – somewhat developed segments, xxx – poorly presented at the market, start-ups observed Page 11
  12. 12. As advertisement market on it early stage of development it is still demand for innovative approaches and new advertising models ADVERTISEMENT: CATEGORIES Transactions Advertising Subscription Community Others Categories Examples Comments Portal yahoo.com, i.ua, ukr.net Search google.com, bigmir.net SEO seo.com, seo-studio.com.ua • Banner advertisement is the most News spiegel.de, korrespondent.net developed, context consist only of about Social bookmarking delisious.com, sigcess.com.ua 30% Maps/Geoservice yandex.maps, mapia.com.ua • Despite the fact that most of the categories presented with big players like google, bigmir, Comparison/Reviews alatest.com, price.ua yandex, meta, begun there still demand for Advertising networks doubleclick.com, begun.ua innovative approach and new advertising Mobile marketing admob.com, jump.ua models, as market is rapidly growing Incentive marketing payback.de xxx – somewhat developed segments, xxx – poorly presented at the market, start-ups observed Page 12
  13. 13. Subscription area is the most underdeveloped and poorly presented by very a few models SUBSCRIPTION: CATEGORIES Transactions Advertising Subscription Community Others Categories Examples Comments • Most developed “person to person” models are dating services, but still no video services offered Product/service subscription napster.com, bookclub.ua no premium accounts, paid reliable Person to Person friendscout.de, onona.ukr.net service Service providers webex.com, sightspeed.com • Subscription models for services or products are not developed but in some segment could be an interesting business model (bags, TV, accessories, clubs) xxx – somewhat developed segments, xxx – poorly presented at the market, start-ups observed Page 13
  14. 14. Social communities are the most developed area in Uanet, however community based services are still in demand COMMUNITY AND OTHERS: CATEGORIES Transactions Advertising Subscription Community Others Categories Examples Comments • Most developed are “social networks”, biggest players: Social networks facebook.com, connect.ua Russian networks (vkontakte, Advice/Recommendations holidaycheck.com, turpravda.com odnoklassniki) Blogs livejournal.ru, blox.ua Ukrainain (connect.ua, profeo) Media Sharing flickr.com, fileshare.in.ua International (linkedin, facebook) Open Source/Content wilipedia.org, openoffice.org • Open source/content and advice/ recommendation – a few movers only Gaming bwing.com, sgames.com.ua • Gaming portals are the most developed area in Ukrainian internet xxx – somewhat developed segments, xxx – poorly presented at the market, start-ups observed Page 14
  15. 15. Thank you for the attention! Page 15
  16. 16. eVenture Capital Partners GmbH Office Hamburg Office San Francisco Office Kiev Hohe Bleichen 21 600 Montgomery Street, 43rd Floor Bassejna 19 D-20354 Hamburg San Francisco, CA 94111 01004 Kiev Germany USA Ukraine T. +49 40 30 99 795 - 90 T. +1 415 - 347 - 3320 T. +38 050 84 771 – 22 F. +49 40 30 99 795 – 40 F. +1 415 - 347 - 3321 M. info_hh@evcpartners.com M. info_hh@evcpartners.com M. info_sfo@evcpartners.com www.evcpartners.com This report is solely for the use of client personnel. No part of it may be distributed, quoted, or reproduced outside the client organization without the prior written approval of eVenture Capital Partners GmbH . This material was prepared by eVenture Capital Partners GmbH for use during an oral presentation; it is not a complete record of the discussion

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