• Details of the transaction have not been disclosed. However, as AIN.Capital previously reported, EEGF III usually invests about $5-20 million in one company.
• According to the release, after this investment, Horizon Capital has became the largest financial investor of Miratech.
• Miratech is a technology services provider with over 700 employees across 25 countries. The company provides IT and consulting services for Fortune 500 companies as well as for rapidly growing companies in financial services, healthcare, technology, debt management, government, and telecommunications sectors. Miratech was founded in Ukraine in 1989, but today its headquarters is located in New York, USA.
• Horizon Capital will help Miratech accelerate its ongoing global expansion in providing digital product engineering and customer experience design services to renowned global companies.

“I am excited to welcome Horizon Capital as our new financial investor,” said Valeriy Kutsyy, Miratech CEO. “Over the past year we’ve been evaluating a number of alternatives with great investors globally. We very much appreciate Horizon Capital’s vision and approach to our future partnership. Their reputation for team strength, high integrity, value creation and their successful investment track record also made Horizon Capital stand out. We’re highly enthusiastic about our future partnership.”

Lenna Koszarny, Horizon Capital Founding Partner and CEO, added, “We are pleased to back Miratech, a dynamic digital engineering player with delivery centers worldwide, a solid track record of rapidly scaling teams for clients and a niche focus on customer experience digitalization. We are investing our capital and expertise to support Miratech’s ambitious market expansion and growth plans, alongside its visionary founders whose commitment and deep market knowledge has enabled them to build exceptional digital competencies and employer brand. This latest deal joins a strong portfolio of investments, primarily in high-growth tech companies and export-oriented businesses.”

• Horizon Capital is a US-domiciled leading private equity firm in Emerging Europe, backed by over 40 institutional investors with a capital base of over $570 billion, over $1.1 billion in assets under management, and a tenure of 28 years in the region.
• Horizon Capital’s portfolio includes more than 20 biggest Ukrainian companies and brands like Rozetka-EVO, Ajax Systems, Jooble, etc. In the digital engineering and consulting services sector, in addition to Miratech, EEGF III also previously invested in Intellias and Ciklum.

The round was led by Volition Capital that invests in fast-growing technology companies developing businesses in North America and Latin America. Horizon Capital, a private equity firm with more than 25 years of experience supporting growth companies in Europe, also participated in the round. The company’s team, management, and strategy, as well as its product vision and willingness to provide an exceptional customer experience, remain unchanged.

The received funds will be used to strengthen Creatio’s position in the global market of low-code solutions for process management and CRM, including enhancement of R&D activities and the development of a partner ecosystem in 110 counties worldwide. Investments in developing the Creatio ecosystem will reinforce the company’s standing in the global market. Among its priorities are the comprehensive support by a community of experts united around the Creatio technologies, as well as the active development of a marketplace of add-ons, connectors, and templates that enhance the capacities of Creatio’s platform and products.

• The Creatio group has been developing without attracting external investment and by its own resources.
• Today, there are 600 employees in its global team.
• Its partner network comprises over 700 organizations worldwide, including leading global integrators and consultants, such as Tata Consultancy Services, Amdocs, Virtusa, and many more.

“We see a future where everyone can automate business ideas in minutes,” said Katherine Kostereva, co-founder and CEO at Creatio. “Now is a critical time for digital and IT leaders to leverage tech and transform their organizations into low-code companies. This investment will allow us to keep building toward the vision of creating the new world, where any company can automate and change their business processes at speed and scale.”

“The market category of low-code platforms for process management and CRM has outstanding growth potential,” said Sean Cantwell, Managing Partner at Volition Capital. “Creatio’s offering, extensive partner base, and commitment to customer success has enabled impressive organic growth and market traction. We see Creatio’s leadership position being further strengthened as companies embrace low-code solutions that close the IT delivery gap and empower any organization to become a low-code company,” added Roger Hurwitz, Managing Partner at Volition Capital.

Lenna Koszarny, Founding Partner and CEO at Horizon Capital, said, “We are delighted to partner with the Creatio team. Creatio truly has it all to deliver on its ambitious expansion plans – a first-class team committed to its customers, solid execution, and strong product innovation.”

The Creatio technologies help large and medium-sized businesses optimize and accelerate their sales, marketing, and service processes, as well as the operational processes of the organization. They are based on a low-code platform that provides custom tools to automate processes and customize software solutions, with no programming skills required.

Creatio’s products enable users to solve problems across various industries. It focuses on 24 sectors, including banks and financial institutions, production and distribution, oil and gas extraction and pharmaceutical industries, agriculture, retail, and many more. Companies receive a comprehensive solution to their business tasks: training, help in launching the system, advice on making the most of the Creatio technologies, and many other services that provide for a unique client experience and earn high marks from users.

• Terrasoft is a provider of low-code platform Creatio for business process management and CRM. It belongs to the Creatio corporate group with 600+ employees, clients, and partners in 110+ countries. According to Gartner and Forrester researches, Creatio software products hold leading positions in different IT markets.
• Volition Capital is an investment firm that manages more than $1.1 billion in assets and operates in the North American market. Volition Capital invests primarily in high-growth technology companies and focuses on those that have demonstrated rapid growth and are committed to market leadership.
• Horizon Capital is a leading investment firm in Central and Eastern Europe that manages four private equity funds (backed by over 40 institutional investors) with over $850 million assets under management and more than 25 years of investment experience. The firm is an active, value-added partner, investing in visionary entrepreneurs leading fast-growing businesses in the region.

The raised funds will be spent on business expansion and entering the European market. First of all, Liki24 intends to conquer Poland, where the service has already launched in July.

“This round will help us to expand our team, implement our successful model on the Polish market and finance further international expansion at a time when safe and fast delivery of medicines is critical to the well-being of society,” commented Anton Avrinsky, CEO and founder of Liki24.

“Our investment in Liki24 matches the focus on visionary founders with a clear business expansion strategy who are looking to partner with Horizon Capital to reach new heights,” comments Elena Kosharnaya, founder and CEO of Horizon Capital.

What is Liki24

Liki24.com is a platform that brings together offers from thousands of pharmacies and makes it easier for customers to get their medicine. Liki24.com has its software that integrates with pharmacy ERP systems, instantly analyzes prices and product availability, and develops optimal routes for couriers. These features allow delivering a set of medicines to consumers quickly at the most advantageous prices.

The service was launched in Ukraine in late 2017, and in less than 3 years since its inception, the company has connected over 5,000 pharmacies and fulfilled over 500,000 orders. European startup media Sifted named Liki24 as one of the few European startups that help to mitigate the negative impact of coronavirus, and BBC included the platform among the companies that help patients during the quarantine.

However, the AIN.UA team managed to find out what was the size of the stake acquired by Horizon Capital and how much it paid for it. The team also found out about Igor Mazepa and Concord Capital’s stake in MAKEUP.

According to AIN.UA, Horizon Capital acquired about 18% of the company. The deal amount totaled $8 million.

Horizon Capital’s stake

AIN.UA managed to find details about MAKEUP stakeholders in the Cyprus state registry. According to the extract from the register, there are 4 shareholders in the company MINRAN LIMITED (a Cypriot legal entity which, according to YouControl, owns a 99% stake in MakeUp).

DEALBETA INVESTMENTS LIMITED is among them. It is a Cyprus fund managed by EEGF III of the investment company Horizon Capital, through which it carries out its deals. As stated in the document, Dealbeta owns 257 shares of Minran (the company has issued 1,401 shares in total). Thus, Horizon Capital acquired an 18.3% stake in MAKEUP.

The editors also managed to study the financial part of the investment round, which is documented in the same Cypriot extracts from the registers. The total amount of the deal was €7,179,600 ($8 million).

Thus, currently, the total valuation of MAKEUP Group is about 39 million euros ($43.5 million).

Concorde Capital’s stake

AAnother shareholder of MAKEUP (or rather MINRAN) is DARTLEM HOLDINGS LIMITED. It is linked to Igor Mazepa, the founder of Concorde Capital (or his full namesake). Dartlem owns 28 shares, which is less than 2% of the company. Previously, in an interview with Liga.net, Mazepa said that the fund has a stake in MAKEUP, but did not specify the figures.

Founders’ Stakes

The remaining two shareholders of MINRAN are KLARIANTALE LIMITED and BELIORID LIMITED. BELIORID LIMITED is linked to the full namesake of one of the co-founders of MAKEUP, Yevgen Maliev.

According to Panama Papers data, the shareholder of KLARIANTALE LIMITED is Serhii Volobuiev, the second co-founder of MAKEUP (or his full namesake, registered at the same address in Ukraine).

Maliev controls almost 48% of the company, while Volobuiev controls just under 32%.

As all transactions were registered in offshore countries, there are no changes in the Ukrainian TOV MAKEUP registers yet, as well as in the registers of subsidiaries.

Details of the deal are not disclosed, but the website of EEGF III says that it invests $5 million to $20 million in mid-cap private companies. This is the first such investment in the company.

MAKEUP

MAKEUP, founded in 2009, today is one of the largest online cosmetics and perfume stores in Ukraine. MAKEUP Group’s websites contain more than 200,000 product items from more than 2,000 suppliers.

According to the company, hundreds of thousands of customers use its service daily. Last year, about 200 million unique users visited the company’s websites, and it became the top 20 global online beauty e-commerce platform. Annually, this figure is increasing by 75%.

MAKEUP has its own warehouse management system, which provides storage of goods, automated fulfillment, and delivery planning systems using artificial intelligence, which work around the clock.

MAKEUP operates in 14 markets, including Austria, Belarus, Bulgaria, Czech Republic, Germany, Hungary, Italy, Kazakhstan, Moldova, Poland, Romania, Russia, Slovakia, and Ukraine. The company also plans to launch in the European Union: France, Spain, Portugal, UK, Switzerland, Benelux, and the Balkans.

About Horizon Capital

Horizon Capital is a U.S. private equity firm with an office in Kyiv. Its Ukrainian portfolio includes, among others, Genesis, Intellias, Rozetka, Datagroup, Jooble, AirSlate (formerly PDFFiler). Despite the coronavirus crisis, Horizon Capital intends to invest about $100 million in companies in the region.

Investments

The foreign investor is the investment company General Catalyst. It became the lead investor in the transaction with an alleged investment of up to $20 million. Previously, General Catalyst had already invested in Ukrainian Grammarly and became the lead investor of the round with $110 million. Other investments of GC include Airbnb, HubSpot, Snap, Stripe, and hundreds of others.

The Ukrainian investor is Horizon Capital investment company. It invested in PDFfiller through its new Emerging Europe Growth Fund IIІ (EEGF IIІ). According to the public data, the investment company invests from $5M to $20M through EEGF IIІ. Reportedly, the investment was similar to the previous Horizon Capital investment in Ajax Systems – $10 million.

They started to prepare the deal about a year ago, in the summer of 2018. In December 2018, the company issued new shares.

General Catalyst, Horizon Capital, and PDFfiller refused to comment on the deal.

Rebranding

AIN.UA also learned that PDFfiller is undergoing rebranding. The company has changed its name to airSlate. Reportedly, the reason for the name change was confusion: PDFfiller’s activity is not limited to working only with the popular PDF-format. The name AirSlate will help avoid this confusion.

What PDFfiller/airSlate does

PDFfiller is a SaaS company, the main product of which is the eponymous document management service. According to company representatives, PDFfiller has more than 400,000 customers, the number of its employees exceeds 500 people with the majority located in Kyiv, and others in Boston.

Aleksandr Konotopskyi. Photo: Ajax Systems.

It is reported that the fund bought out a part of Ajax Systems share from the first investor, SMRK (the fund invested $1 million in 2015 and still remained the only investor of the company), as well as a part of the shares from the company management.

“We are honored to become partners with Aleksandr Konotopskyi, the talented founder of Ajax Systems and his impressive management team, and we look forward to working with them over the coming years for the success of the company. We were attracted by Aleksandr’s vision, exceptional results of the company, its innovative product line, and success in serving customers in Ukraine and in international markets,” comments Olena Kosharna, founder and CEO of Horizon Capital.

“Ajax Systems is growing at a very fast pace, with more than 70% of revenue coming from export sales in more than 75 countries, mainly the EU. We are happy that the core of our team is Ukrainian engineers and world-class developers, we are proud of the results of their work,” commented Aleksandr Konotopskyi, founder and director of Ajax Systems.

Andriy Dovzhenko, the managing partner of SMRK, noted in his commentary to AIN.UA that the fund made “a very successful exit from the partial sale of previously bought shares,” and the long-term goal is to bring Ajax Systems to the IPO:

“This agreement gives a strong and clear signal about investment opportunities in Ukraine, both for venture investors and for private equity funds. We hope that the example of Ajax Systems will encourage even more Ukrainian entrepreneurs to create new companies and achieve even greater success,” added Dovzhenko.

Recall, Ajax Systems was founded in 2011. Today, the company’s products are sold in more than 75 countries around the world. The company employs over 500 people, 20% of whom are in R&D. The company has 5 patents. Wireless security system Ajax Systems is one of the most high-tech in the world. According to the company, by January of this year, Ajax has already sold more than a million devices.

The Ajax Systems product line includes more than 20 devices for protecting the premises and surrounding areas, fire safety, flood protection, as well as devices for home automation equipment. Products are designed and manufactured in Ukraine.

Ciklum was founded in 2002 by the Danish businessman Torben Majgaard. Starting from the age of 15, Torben was involved in sales of computer components, selling 10,000 floppy disks a week, while working in the Obs! supermarket in Holstebro. At 23, he founded the Den Blå Butik network of computer equipment stores. And at the age of 26 he founded the Latvian company Vilcomp, which was engaged in the sale of used computer equipment to the countries of the Baltic region, Russia and Ukraine. In August 2001 Torben turned 31 and moved to Kyiv, and in January 2002 he founded Ciklum. By next August, the company already had 40 people.

After 8 years, in 2010, the company already had 1,000 people and revenues of $32.5 million. Ciklum is among the top 5 Ukrainian outsourcing companies, and the only one in the top with the prevailing outstaff employment model of developers, there are 70% of them in the company, as opposed to 30% at an outsourcing.

Deals

Until the end of 2010, an American entrepreneur, Michael Schneider, is buying 11% of the company. He also holds the position of COO Ciklum.

Already in May of 2011, Schneider leaves the company. And in April 2012, Torben sells a stake to the American fund Horizon Capital. The size of the share is not specified by the fund, however, according to the Cyprus registry, it was 23%.

A month before the deal, Schneider’s share was returned to Ciklum Holding Limited. At the same time, Lorimer Ventures (Cypriot legal entity Horizon Capital) transferred MAJGAARD LIMITED (beneficiary Ciklum Holding Limited) $1.5 million secured by 5% of Ciklum shares. The purpose of the transaction was not clarified by the AIN.UA editors, however, it probably could have been related to the purchase of Schneider’s share and the subsequent transaction.

Ciklum’s revenue for 2012 was $86.4 million. However, the deal, announced in April, with probably preparatory transactions in March, and, most likely, started in 2011. Revenue in 2011 was $62.5 million. With an average EBITDA of 15% for outsourcing and a multiplier of 5-7, as for a company that had grown one and a half to two times before that year, it could be about $10.7 million – $15 million for 23% of the company. The Ministry of Finance comes up with that amount as well (albeit with a larger corridor of $5 million). Their calculations are based on public data on the IPO competitor Ciklum, the EPAM company.

In November 2015, Horizon sells its stake to the Soros Fund. A new share of Torben has been added to the share of Horizon, which, according to the AIN.UA edition, may amount to another 22%. The commercial result of Ciklum for 2015 is unknown. However, the revenue of an outsourcing or outstaff company, unlike a product company, is simple to calculate. It grows in proportion to the growth in the number of employees and amounts to about $4,000 – $50,000 per person per year at outstaff and $50,000- $60,000 per person per year at an outsourcing. The ratio of the number of employees to Ciklum’s revenue over the past years confirms this. With 2,500 employees globally, Ciklum’s revenue for 2015 could have reached $120 million. According to Ciklum’s own report, revenue for 2014 with the same number of employees was $130 million. Let’s assume that it never fell and in 2015 at least repeated the result of 2014. With the same EBITDA and possibly no smaller multiplier (although the growth from 2012 to 2015 slowed down, reaching 39% for people, and probably disappeared in revenue), the transaction amount could be $43.8 million – $61.4 million for 45% of the company.

Horizon Capital at this calculation could make exit x2 compared to the entrance. The specific buyer in the transaction is the Ukrainian Redevelopment Fund LP., managed by Dragon Capital within the framework of the Dragon Capital New Ukraine Fund, invested by the Soros Fund. In addition, probably 45% of the buyer, according to AIN.UA edition, could get the right of veto and the right to dismiss CXO, including the CEO. M&A deal consultants were AVentures.

New Management

In August 2017, Ciklum announced a change of CEO. Michael Boustridge became the new CEO, and Robert Corace became the new director of sales and marketing. Previously, these two roles were performed by Torben Majgaard.

In February 2019, a month after the death of Torben, the company announced a new deal, the sale of shares of Dragon Capital and AVentures. The specific buyers were Dragon Capital-controlled funds of the Dragon Capital New Ukraine Fund L.P. on the money of the Soros Fund and Dragon Capital Investments Limited. With a staff of 3,500 people globally, Ciklum’s revenue in 2018 could reach $168 million. Dragon Capital and AVentures shares according to information from AIN.UA sources could be 10% and 1%, with the current calculation it was $13.8 million – $19.4 million for 11% of the company. The entire company may cost $150 million.

To find out the details of the sale of new shares, the AIN.UA editors contacted the alleged successors of Torben, but failed to get a public comment.

It is noteworthy that 9 months ago, in April 2018, Torben invested in the AVentures Capital fund a seven-digit amount, which, according to AIN.UA sources, could be about $1.5 million. The amount is comparable to the likely price for 1% in the last transaction. Such investments are usually made not in cash, but in commitments – a promise to participate in transactions for a declared amount. AIN.UA editors could not find out whether the fact of the conversion of Torben’s stake into an equivalent stake in Ciklum for AVentures in the framework of the transaction announced on February 4, 2019 took place. According to AVentures partner, Evgenia Sysoev, “This is absolutely wrong. This is a separate new investment.” According to one of the interlocutors of AIN.UA, in the current situation, this may be a plausible scenario for the implementation of the April Torben’s commitment.

What’s Next?

After the sale of Ciklum’s stake to the Soros Fund in 2015, the company started talking about an IPO. However, the growth of employees, which directly affects revenue, slowed down:

From the middle of 2014, the Ukrainian office of Ciklum did not actually grow. For comparison, SoftServe and EPAM have doubled in Ukraine over this period of time. Luxoft also almost did not grow in Ukraine during this period, however it added 5,000 employees in other locations. EPAM has grown from 11,000 to 22,000 employees in other locations. SoftServe has grown by 1,000 employees abroad. Ciklum has increased the same amount of employees abroad for this period.

Now the company seems to have taken a strategic direction to “gain weight” through M&A: “The company has the potential to grow even faster if it increases its M&A activity — buying smaller companies with expertise in a specific IT field,” says the managing partner of AVentures, Andriy Kolodyuk. – EPAM has completed 19 M&A in its history, Ciklum – not even one. In fact, Ciklum has already performed M&A: in 2009, it bought Mondo A/S with 150 employees in Denmark, Pakistan and Ukrainian Kharkiv. In 2013 it acquired 100% of the shares of the outsourcing company Kuadriga with an office in Kyiv. According to forecasts of AIN.UA sources, the next purchase of Ciklum could be the outsourcing company CoreValue, the company where AVentures invested earlier.

The article was prepared by: Ilya Boshnyakov, Ilya Kabachynskyi.

The size of the fund exceeded the initial target of $150 million. Both existing and new investors took part in it. The new fund was launched thanks to the anchor investment of the Western NIS Enterprise Fund and investments from the EBRD, FMO, IFC, PROPARCO, DEG, IFU. Existing investors contributed more than 55% of the capital, 35% of the capital was provided by investors from the USA and Europe.

In total, Horizon Capital currently manages over $850 million, and the total capital of the fund’s investors exceeds $350 billion. Horizon Capital funds invested more than $650 million in 140 companies with more than 46,000 employees in Ukraine and the region.

“A substantial excess of the initial goal is a powerful signal of the huge opportunities in Ukraine for those investors who look beyond the media headlines. Since the completion of the first stage of attracting funds last year through the new fund, we have made six attractive investments and will close many new deals in the coming years,” says the founder and executive director of the fund, Olena Kosharnaya.

EEGF III is focused on companies that are growing rapidly and are export-oriented, using a competitive Ukrainian platform to generate global revenues, primarily in IT, light industry, food industry and agriculture. The fund is also interested in e-commerce, health care and pharmaceuticals, financial services. The size of investments will be from $5 million to $20 million, which will be invested over the course of 2-3 years.

EEGF III has already made six investments. One of the last: an investment in the Ukrainian IT-company Intellias, the deal was announced last September.

”We are excited to share news about new investments raised from Horizon Capital, while we are expanding our presence in Ukraine and abroad”, – says Intellias co-founder and CEO Vitaliy Sedler.

The company was founded in Lviv in 2002 by Vitaliy Sedler and Mykhailo Puzrakov. As of 2018, Intellias provides a full-range of software development services, it is listed in various ratings of the best IT-employers within Ukraine and the fastest growing IT-services providers. According to Intellias, the business has grown more than 10 times within the last 6 years on the market.

Horizon Capital is one of the largest and most active investors in Ukraine. The company manages private equity funds with an aggregate capital of over $800 million. Horizon has invested in such companies as Rozetka, Jooble, Ciklum, Tinkoff Credit Systems and others.