Ukraine IT universe by Yevgen Sysoyev, AVentures Capital #idcee2013

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Comprehensive overview of Ukrainian IT sectors and venture capital ecosystem as of late 2013. Presentation by Yevgen Sysoyev, AVentures Capital at IDCEE 2013.

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Ukraine IT universe by Yevgen Sysoyev, AVentures Capital #idcee2013

  1. 1. UKRAINIAN IT UNIVERSE “UA-NET” OVERVIEW October 2013
  2. 2. UKRAINE IT UNIVERSE OVERVIEW OUTSOURCING •  $2B+ in revenue •  50,000+ engineers •  500+ firms •  25-30% CAGR late 90s R&D GLOBAL CO •  $ billions created •  5,000+ engineers •  100+ centers •  30-40% CAGR early 2000s INTERNET •  $2B local market •  Thousands employees •  100+ companies •  40-50% CAGR SOFTWARE •  $1B worth total •  Thousands engineers •  1,000+ startups •  50-100% CAGR mid-late 2000s 2
  3. 3. SOFTWARE OUTSOURCING Premier outsourcing destination High quality engineering pool #1 Top30 in CEE by # developers and $ volume 2008 2010 2011 2013 outsourcing destination by 2nd Gold 20% most certified IT professionals in the world 4th Silver Top10 cheaper development versus Russia and Belarus 2013 2011 2012 2013 2012 2013 1st 2nd Finalists Outsourcing volume over the next 3 years $4B $2B 2013 2016 3
  4. 4. 100+ R&D CENTERS IN UKRAINE AMERICA EUROPE CIS ASIA 750 ppl 300 300 1100 600 150 250 150 250 100 200 100 4
  5. 5. UA-NET IN NUMBERS 17m 1.8% eCommerce penetration 13m internet daily users 90% cash-ondelivery 40% internet penetration users #1 in Europe by avg. time spent online 20% broadband growth 5
  6. 6. CONSUMER INTERNET $2B 1.8% market penetration Electronics, apparel and ticketing are the major categories 5x rise over the next 5 years ($USD B) 4.6% 11 10.0 10 9 eCommerce, $B 8 5% Other Online/Total sales, % 7 4% Air 3% 1.8% 1.5% 3 1.5 2.0 2% Phones Events Appliances 0 0% 2010 2011 2012 2013e 2014e 2015e 2016e 2017e 2018e Online Hotels shops 1% 1 Jewelry Books Cameras 5 2 Shopping clubs Laptops 6 4 Sport goods Electronics Other Other Apparel Tickets Auto parts Personal care Groceries Other 6
  7. 7. UKRAINE IS NOT RUSSIA Several $100M+ success stories, dozens of growing $20-50M+ companies $10B Yandex and Mail.ru, several $1B success stories Success stories – mostly global stories play (“Israeli” model) Success stories – both local consumer play and global $1B stories Underdeveloped VCs (first VC funds in 2011, still only 2 Series A funds) Developed VC ecosystem, 50+ funds Large army of high quality software engineers •  As in Israel, in Ukraine the local market is too small, while big army of engineers is capable, and is witnessed, to create world class global technology leaders •  AVentures team argues that number of $100M-1B success stories in Ukraine will increase with the development of VC ecosystem 7
  8. 8. VENTURE ECOSYSTEM IN LATE 2013 TICKET Local Global INVESTORS’ GEOGRAPHY Pre seed and seed Round A Round B Few angels with local residence or roots FFF is still predominant funding method hundreds deals/year $15-50k ticket Several Ukrainian startups are residents Number of global VC funds screening deals, though only Intel closed 2 deals 50 deal/year $15-100k ticket 10-15 deals/year $1-3m ticket Screening market, $5-10M 8
  9. 9. $1B+ WORTH STARTUPS Mobile eCommerce Software CIS Global MARKET UA Online services SECTOR The largest Ukrainian success stories are global niche plays. The local market is too small, and Ukraine is deploying “Israeli” model – building global/US IT companies with R&D locally 9
  10. 10. MAP: UKRAINIAN IT STARTUPS (1/2) GoalEurope (eng) http://goaleurope.com/2013/06/04/ukrainian-it-startups-everything-you-need-to-know/ Forbes.ua (rus) http://forbes.ua/business/1348494-ukrainskie-it-startapy-samye-privlekatelnye-obekty-dlya-investicij 10
  11. 11. MAP: UKRAINIAN IT STARTUPS (2/2) GoalEurope (eng) http://goaleurope.com/2013/06/04/ukrainian-it-startups-everything-you-need-to-know/ Forbes.ua (rus) http://forbes.ua/business/1348494-ukrainskie-it-startapy-samye-privlekatelnye-obekty-dlya-investicij 11
  12. 12. LIQUIDITY EVENTS Image recognition Dating Outsourcing Outsourcing Outsourcing $45mm by Google $250mm MCap* $0.4B MCap $0.9B MCap $1.6B MCap M&A IPO M&A IPO IPO – “Ukrainian angle” – “CIS (Russia, Belarus etc) and Ukrainian angle” 2-3 companies to go for IPO in the next 5 years * – late 2012 12
  13. 13. DEPOSITPHOTOS: CEE SUCCESS STORY 2016-18: IPO/exit TOP5 GLOBAL MICROSTOCK $12m sales 16m photos $6m revenue, top-5 globally Series A $3m TMT 3m photos Launch 2009 2010 2011 2012 2013 2014 13
  14. 14. KEY TAKEAWAY & CONTACT DETAILS 1.  Multibillion IT industry in Ukraine exists today YEVGEN SYSOYEV 2.  Ukraine already plays important role in global ecosystem Managing Partner AVentures Capital www.aventurescapital.com ys@aventurescapital.com 3.  #1 in CEE and #4 in the world by number of technical specialists Twitter @YevgenSysoyev http://ua.linkedin.com/in/ysysoyev 4.  E-commerce market to grow from $2B to $10B in 5-6 years 5.  Software companies with R&D in Ukraine can become global leaders in their niches 6.  Venture capital ecosystem is extremely underdeveloped, yet this is changing fast 7.  Many interesting startups 8.  At least 2-3 IT companies to go IPO/exit for “hundreds of millions US dollars” in the next 4-5 years 14

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