IDCEE 2013: Ukrainian IT universe - Yevgen Sysoyev (Managing Partner @ AVentures Capital)

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An investment professional and entrepreneur, Yevgen has been the driving force behind the new venture capital fund at AVentures Capital.
In 2011, he co-founded DashBoard Systems, a software startup. From 2008 to 2010, he was a Vice President at ICON Private Equity, one of the leading private equity funds in Russia and Ukraine. At ICON, Yevgen was responsible for the fund’s deal flow and portfolio management. Previously, as an investment banker at Concorde Capital and co-founder of his own investment boutique, he originated and executed transactions in Ukraine and Russia with a total value in excess of US$250M.

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IDCEE 2013: Ukrainian IT universe - Yevgen Sysoyev (Managing Partner @ AVentures Capital)

  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 TECH • $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 600 150 150 150 250 100 200 100 4
  5. 5. UA-NET IN NUMBERS 17m 1.8% eCommerce penetration 13m internet users daily users 90% cash-ondelivery 40% internet penetration #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 5% 10 9 eCommerce, $B 8 Sport goods Other Online/Total sales, % Shopping clubs 4% Laptops 7 Air 3% Books 6 Cameras 5 4 1.8% 1.5% 3 2 Jewelry 1.5 2.0 Online Hotels shops 2% Phones 1% Events Appliances 1 0 0% 2010 2011 2012 2013e 2014e 2015e 2016e 2017e 2018e 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 way too small, while huge 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 success stories out of Ukraine are global niche plays. The local market is way 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 over 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, Top5, 2x growth than market 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 2. Ukraine already plays important role in global ecosystem 3. #1 in CEE and #4 in the world by number of technical specialists 4. Ecommerce market to grow from $2B to $10B in 5-6 years 5. Software technology companies with R&D in Ukraine can become global leading companies in their niches 6. Venture capital ecosystem is extremely underdeveloped, yet this is changing fast 7. Lot of interesting startups 8. At least 2-3 IT company to go IPO/exit for “hundreds of million US dollars” during next 4-5 years Y E V G E N S Y S O Y E V M a n a g i n 14

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