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When people plan a vacation in a new country, they usually check at least the country’s Wikipedia page to learn some basic stuff about it, like population, languages, major cities, currency exchange rates and so on. If you’re not Ukrainian and attending IDCEE 2013 this week, I’d advise you do the same; but what also makes sense to know when going to a conference is what does the tech business and startup ecosystem of the host country look like.
If you agree, check out this (significantly) shortened alphabet of all the basics you need to know about the entrepreneurial ecosystem in Ukraine, partially inspired by Michael Libes’ definition.
A — Accelerators and incubators
An important part of the startup ecosystem, accelerators and incubators boomed in Ukraine in 2012, when their number increased from two to seven; in 2013, one more was launched. Most of them are located in or around Kyiv — GrowthUp, Polyteco, EastLabs, Happy Farm, IT Launchpad, and iHUB, — and the eighth, WannaBiz in Odessa.
Ukrainian accelerators work in the same way as their Western counterparts, providing entering startups with a variety of things like working places, trips to Silicon Valley, business expertise, mentorship, sometimes money, and support after they finish the program.
A few accelerators invest $15-20K in all their startups, while others prefer to only pour money into the best ones or not to do this at all. Incubators of the latter kind introduce their proteges to a pool of institutional and angel investors instead, but also take much smaller shares in startups than the investing ones. Generally, startups give up a share from 3% to 20% for entering an incubation/acceleration program; the only exception is iHUB, which takes no equity (and gives no money).
E — Education
This part of the ecosystem is a complex one and has at least two aspects — adequacy of higher education to the requirements of tech business, and additional education for people already working on start-up projects.
For the first part, it’s important to note that Ukraine is often perceived as a country of tech talent, and this is well deserved. There are plenty of universities that deliver thousands of freshly graduated engineers and scientists eager to work in the industry. The latter, however, is not that happy: according to many interviews in trade publications, oftentimes fresh grads are not ready for demands of the real world (be it a big corporation or a startup) and need quite a bit of time to learn.
In the non-tech part, the situation may be worse, as there’s no university where one can study building a business from scratch and get skills in project management, marketing, and customer development that every entrepreneur needs. That’s where the second aspect of startup education comes into play.
In addition to educational programs run by accelerators and incubators, Ukrainian entrepreneurs and startup teams can participate in a wide variety of separate workshops and lectures on virtually any aspect of their work. If you look at an event board at Ukrainian tech business trade publication AIN.ua and a more technical one DOU.ua, you can see at least a few different educational events for startups happening every week. Those are usually non-free but affordable, and can help to fill the gaps left after traditional education.
F — Funding
Same as with accelerators and incubators, venture funds in Ukriane saw a boom last year, with their number growing from two to at least five. Among the active local venture funds are TA Venture, AVentures Capital, Dekarta Capital, Chernovetskyi Investment Group, and Vostok Ventures.
In addition to Ukrainian funds, there are many international ones that have discovered Ukraine and invested in local startups. These are mainly Russian funds, such as Almaz Capital, eVenture Capital Partners, Russia Partners, Runa Capital, and Maxfield Capital.
Of course, various funds and accelerators are not the only places where startups can turn for money. Less visible but no less active in Ukraine are angel investors, both local and international.
Let’s have a few examples of this year’s venture deals on the Ukrainian market:
* online fashion shop Topmall.ua raised $5 million from Ukrainian fund TA Venture;
* Jelastic, a provider of cloud infrastructure for Java and PHP apps, attracted an investment estimated at $2 to $5 million from Russian fund Maxfield Capital;
* mobile apps development platform Attendify landed $300K from Russia-based TMT Investments;
* augmented reality startup A-Reality received $75K from Evgeniya Dubinskaya;
* gift certificate seller uGift got $30K in funding from Semyon Dukach, an American angel investor born in Ukraine.
L — Locations and events
In a developed startup ecosystem there’s always a wide variety of activities around, as well as places that work as official or unofficial startup hubs. Ukraine is no exception, and last years saw quite a bunch of those emerging.
One of the most important kinds of events is conferences. In addition to IDCEE, there are several other significant ones, including iForum, Startup AddVenture, and Entrepreholic. These events attract hundreds to thousands of people interested in technology business from all over the world, while among their speakers and participants you can always see the most prominent local and international professionals.
But just a few conferences per year are obviously not enough for entrepreneurs, whose culture has historically been all about sharing their experience and exchanging ideas. That’s why in addition to educational events looked upon earlier, there are dozens of relatively small gatherings happening every week all over Ukraine, where startups can network, pitch, get advice, or hire people interested in their ideas.
Among those events is, for instance, Startup Crash Test that has been around since 2009. This is the place where young startups can pitch the audience and get feedback from industry professionals about their ideas.
Another touch to the ecosystem is a bunch of coworking places and “time cafes,” which in many cases are startup-oriented. Those are places where the newly created team can gather more or less regularly to work together and discuss important questions in person. Such places used to exist only in the capital, but nowadays you can find a few in any major Ukrainian city.
M — Media
To ensure the healthy development of the ecosystem, you need specialized media to describe and promote the innovation. There are several media outlets in Ukraine writing about technology business, venture market and startups. However, all of them are doing it in Russian or Ukrainian, so if you don’t speak these languages you might find it difficult to follow the news.
If you’re particularly interested in Ukrainian market, I’d recommend to follow relevant international media that usually cover the most significant news, and try to scramble through Google Translate to read local publications. Among the latter I’d list AIN.ua (effectively a one-stop-shop for the industry news), DOU.ua(mostly for technology/software development/outsourcing news), and websites of domestic business press such as Forbes.ua, Capital.ua, and Kommersant.ua.
S — Startups
Ironically, in the alphabetical order startups stand the last in the list of components of the ecosystem, even though they’re actually in the very center of it. There are two kinds of startups necessary to form and develop the ecosystem; you need a steady flow of young aspiring entrepreneurs starting new projects, and you need success stories and developed startups to mentor and inspire them.
The good thing is that Ukraine doesn’t lack neither the former nor the latter. For the first part, I saw an irresistible proof by myself a couple of days ago looking at the list of startups that have applied for a place on the Startup Alley at IDCEE 2013. Of course, among the two hundreds of names were those well-known by the industry, but there were even more new ones, and believe me, they look very promising.
As for success stories, Ukrainian startup community has something to show here as well. Probably the biggest one that usually floats up in the conversation is Viewdle, a Ukrainian startup that was bought by Google through Motorola Mobility in 2012 for supposedly anywhere between $30 and $45 million. More recently, two prominent Ukrainian startups saw a huge success in crowdfunding: iblazr, which has developed a LED flash for the iPhone, raised $157K with $58K goal, while the team of Petcube, whose product is a remotely controlled laser-based pet toy, has attracted about $140K in just two weeks.
If you want to learn more about Ukrainian startups, I’d recommend reading a comprehensive review compiled earlier this year by AVentures’ Yevgen Sysoyev. Yevgen is also among the speakers at IDCEE’13 — make sure you don’t miss his talk about Ukrainian IT universe.
All things considered, it is safe to say that the startup ecosystem in Ukraine is growing quite fast and has already delivered a bunch of world-level teams and project. Hopefully, you are there at IDCEE’13 in Kyiv to learn more about it for yourself.
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vita at goaleurope dot com