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

1. UKRAINIAN IT UNIVERSE
“UA-NET” OVERVIEW
October 2013

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. 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. 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. 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. 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. 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. 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. $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. 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. 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. 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. 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. 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
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