AIN asked Ivan Petrenko, the Angel One Fund Managing Partner and CfE Accelerator Executive Director, about the launch of his new fund, its startup preferences, and the average “temperature of the market.”

Let’s begin with the changes the venture, angel investment, and startup world has undergone compared to 2023 or 2022.

We all know each other in the industry. Some love to sound super positive. I prefer to sound realistic so that I can understand where the bottom is and how to get out.

Many say that we, Ukraine, are almost the leading startup development market in Eastern Europe. Hearing this, I have a bitter smile because I don’t see such a trend. This year, however, the situation became smoother thanks to grant programs, such as Google for Startups, IT Consortium, Seeds of Bravery, etc.

In my opinion, it is one of the two essential conditions needed for new startups to arise. Their teams need money. And it is grant funds for the first time. Before the full-scale invasion, USF granted $25-50k per applicant, and it was a significant boost for the industry. In 2022, they stopped doing this, resulting in a quick shrinking of the industry. It was one of the reasons.

Nowadays, new grant programs work in Ukraine, and some old ones are back, too. It’s a perfect chance for startups to give it another try. I think there will be more of them in six months.

I presume everybody is now looking at Defense Tech.

Not everybody. It is our bubble where all eyes are on deftech.

However, it is a very restrained domain most ventures would rather avoid because they are not allowed to invest in it. For example, we at Angel One may not directly invest in Defense Tech.

Is it because of your internal policy?

It’s not entirely about our policy. Legally, we are a US-based fund with several regulatory restrictions, so we cannot invest in Defense Tech. Otherwise, we would lose our investors. So, at the early stage, by establishing a fund, you should discuss [with partners] whether it will invest in the defense domain.

And there is a very thin line — dual use, deftech, and lethal weapons next. Those are three very different things you must be careful with. The same discussions we have in Ukraine. It’s obvious why. So, we often have to work with targeted deftech investments. There is no such bubble abroad. However, many players look at Ukraine carefully and pay more and more attention.

The funds that can invest are very familiar with the required information. Their analysts gather all the data about the current situation in Ukraine. They select projects with great caution because the funds must report to institutional or private investors.

Many things depend on Ukraine. And a lot of things are done. But a long way is still ahead. Anyway, when we invest in Defense Tech, we expect that their team and legal entity are based and registered somewhere in Delaware, as well as their technology, to enjoy protection according to the local legislation.

We do care that a deftech startup keeps thinking about sales not exclusively in Ukraine. The team should plan their international activities in advance. That’s why production or development is often located outside of Ukraine, which means a different market and an adapted business model.

The most recent investment of Angel One Fund in six startups was a syndicate deal with private investors, wasn’t it?

Yes. The same investors we had at Angel One.

So it was the Angel One syndicate member, right?

Mostly yes. Now, we are working on the launch of a Defense Tech fund. Hopefully, it will happen between September and October. We need an official opening to invest in defense startups not only through syndicate deals but also as a fund because there are interested investors who want to join not our syndicate, but the fund directly.

So, are there a bunch of investors committed to a new fund?

Yes, there is a particular sum. We may speak about a $1.5-million commitment. We are working on its institutionalization to run deftech investments as a fund.

Until there is no fund, we keep searching for teams and invest via syndicate deals.

Do you have a plan with your targets for this new fund? Which startups would it be?

We don’t care if it’s a hardware or software project. Software is always more attractive due to its better scalability, safety, and lower need for investment. However, I am not sure about the last one.

It is highly unlikely that it will be pre-seed rounds since fewer and fewer investors desire to enter at this stage, where you cannot check the actual demand and sales of a product. So, mostly, it will be very early seed and maybe late pre-seed rounds with a well-tested working prototype and pre-orders.

OK. Let’s return to the Angel One Fund. It currently has $1.5 million, right?

We have already got $2.5 million.

How many projects do you plan to invest in until the end of the year?

Recently, we confirmed our fifth investment. Hopefully, it should be three more until the end of the year. We wouldn’t reach more for certain, because we have another deftech focus with five more investments this year.

Are you going to close to close the fund in 2025, or not?

No, we will keep raising. So, the fund will keep working. It will be a nonstop process. We decided in favor of a rolling fund that will be constantly filled.

Speaking of your syndicate deals, we had a conversation with Dmytro Vartanian (SID Ventures) recently. Can you tell us about the platform you use to close deals? Do you use any technological platforms?

At the moment, we don’t use any. All prefer SAFE or Convertible Loans. It’s a universal tool with more than enough functions.

With the investments in six startups, you also announced that you will support them. What will it look like?

We are only learning. The fund is new and small. We don’t have any military expertise yet, so we cannot provide it. But we do have good business expertise thanks to our network of private investors, primarily US-based. They have good contacts.

We also can help with sales. If a startup team is interested in entering the US market, we undertake the work with contacts, which we get from our private investors.

Which domains are the market’s top priority?

It is AI, for sure.

I also hear a lot about EdTech.

First, we declared at least 30% of deals in EdTech would be a target. But so far, we haven’t made a single deal. SAS remains one of the simplest and most popular models as always. MedTech and BioTech are growing fast. There are vast investments and technologies quickly grow.

I think EdTech is less popular. It was three to five years ago, especially during the COVID pandemic, but the MedTech, BioTech, and FinTech development is very impressive. And there is, for sure, AI constantly added to different products.  Finally, people have the idea that AI is not a product but a tool. You should learn how to use it to create added value for your product.

Did the startup average ticket and entry terms change for Angel One during the full-scale war? What are the startup rounds you are looking for?

The average ticket didn’t change and remains about $150,000. The terms, more or less, are the same. In any case, we realized we are not a pre-seed fund, as we declared once. After all, we became a seed fund. Our team seeks products with customer feedback and dynamic sales. So, we are cautious by investing in startups without sales.

This requirement is a must now, and our investment committee doesn’t want to speak with teams that don’t generate sales. The only exception here could be some real innovations, such as quantum computers. But not so many startups work with them. OK, there is Haiqu, but our fund arose too late when they already had raised everything they ever wanted. This startup was, for sure, the one we would be very interested in investing in.

So, they must show some traction and a clear sales strategy. It is one of the weaknesses, particularly of Ukrainian teams.

And which of the Angel One Fund investments is the fastest-growing one?

Our first investment, Zeely, is showing the best results so far. They grow very well. I understand that the estimated value is a theoretical indicator because there can be any number until somebody puts a money bag on the table. Nevertheless, they attracted new investments and tripled in size for the past year. It is a very substantial indicator.

Another example is GO TO-U. Their sales are growing each month, maybe not so fast as at Zeely, but they do. They also entered the USA market and made several potentially good deals, including one with Siemens. We expect their mighty growth about the end of this year.

You are also starting a new IdeasLab program. What are the terms? Are there any changes compared to previous times?

There are no specific changes except for the constant improvement of the CfE Accelerator program. The program aims to support student teams in a hybrid format for free. Our main goal was and remains to let students try to launch a product, make their first mistakes, etc.

We decided to create our own learning program for future startupers where the students can get essential skills and apply them in practice by doing everything on their own. IdeasLab’s other goal is to allow students to do everything within three months. It is the only university program in Ukraine providing student teams not only with knowledge but also workspace and grants up to UAH 200.000 at the idea validation stage. Now, we have over 100 mentors, the founders of Ukrainian and foreign startups, who spend their time teaching the students. Among them are the founders of SoftServe, Angel One, LvBS, Netflix, Microsoft, TedxLviv, AiSDR, The Gradient, QubStudio, Kormotex, Tickets.ua, Harmix, Medallion, etc.

We already have $1 million in so-called credits from different companies, such as Grammarly, Salesforce, and Notion. We teach students how to use it. More applications are expected this year than in the past year.

We talked to Yaroslav and discussed all his projects, the current demand for FPV drones, how autonomy modules increase their capacity, why automated robotic systems are the future, and why Telegram’s ban in Ukraine is needed.

Yaroslav, please describe all the projects you are working on now.

The Fourth Law is almost my 24/7 job at the moment. It is a manufacturer of autonomy modules for robotic systems. For FPV drones, in the first place. Our mission is to make such drones fully autonomous.

However, I am still an entrepreneur. I have a couple of businesses I founded that are still functioning under other people’s leadership, which give me updates from time to time so that I can report some news on social media. Then, I have a bunch of civil initiatives like Kremlingram, Spend with Ukraine, or an initiative to add Ukraine to the Civilization PC game.

It’s a lot of things to do. In any case, I spend about 70 hours a week on The Fourth Law. I am also the founder of Odd Systems, which is very useful for wartime. Hired managers run it most of the time, but I also dedicate at least four hours weekly to this project.

We know little about The Fourth Law. Please tell us about the starting capital for this company.

We attracted some investments in the last month, but I have been its sole investor from the very beginning. Our cooperation with investors is crucial not only in finances but also in the expertise, contacts, and experience they can share with us.

Can you name these investors and the size of their investments?

It would be best if you always remembered that in the case of Ukraine and drone-related technologies, we must keep a certain level of secrecy. Too much information can harm. That’s why we cannot go in public with all the details. I can only say that the operation is running.

OK. Please tell us more about the autonomy modules you produce at The Fourth Law. How do they work?

FPV drones can sometimes carry sensitive cargo, which can be interfered with by clutters. One day, you need to deliver a package over a forest or a mountain, which creates a radio shadow. Then, you need so-called last-mile delivery when a pilot knows where to deliver the cargo but cannot fly over there because of losing radio communication. Some systems allow for the capture of the point of delivery and transfer of control to the board computer at a specific stage of the flight. These are last-mile delivery systems. We produce them for our clients.

Another part of our work is to split pilot’s missions into fragments and automate as much of them as possible. For example, search for a point of delivery or navigate the return flight within 10 to 20 km and back to the base (or not). Some missions require the simultaneous operation of multiple drones. For this, we need the autonomy we are developing now.

We work with FPV drones, which are probably the most robotized platform in the world. Maybe vacuum cleaners can compete with them in terms of automation. As PCs or smartphones used to be, FPV drones have become a platform for many charming solutions.

Nowadays, FPV drones require much attention from talented engineers, as do all robotic systems. I am sure we will see autonomous robots completely replacing people in several areas of activity within the next ten years.

There are two technology megatrends. The first one is the evolution of semiconductors: they got smaller, more powerful, and more efficient. The second trend is the development of neural networks and technology, now called AI. Twenty years ago, AI meant entirely different technologies. Those old ones and the new ones meet each other in a bridge technology—autonomous robotics. I am sure it will soon cause a critical shift in such multi-trillion industries as transport or agriculture, as the Internet changed access to information once.

In Ukraine, this area is essential for upgrading our defense capability. So, attracting as much attention from engineers and entrepreneurs as possible is crucial not only in the near perspective but for the next decades. Robotic autonomous technologies will also affect the defense capabilities of Western nations, Ukraine, and the world economy. That is why I started to deal with them.

So, The Fourth Law works for the defense capability of Ukraine now. And in the future, you plan to expand to new markets, including civil applications, right?

Exactly.

Have you already started working in this direction?

We started a pilot integration with a US-based FPV drone producer. They seem happy with that, and we will deliver new products together.

Odd Systems manufactures FPV drones in addition to autonomy modules. What were the sources of financing for this project?

My savings.

Do The Fourth Law and Odd Systems work in tandem? Can your customers order drones with installed autonomy modules?

Yes, we cooperate closely there. It is possible, but we sell the modules as separate items and even franchises to some clients.

Have your drones and modules already been used for their purpose? Do you collaborate with the government?

Yes. We also cooperate with Brave1 and other state entities. Everything is fine. Both companies are very young; both started with significant, daily growth results. Our current focus is to expand the scale. The issue of employee reservation against mobilization is on the table, as in many other companies. However, it will be resolved soon.

What would be your recommendations for beginner entrepreneurs in defense tech? Where to start?

If a guy has a decent idea, it is a great beginning already. In general, I think entrepreneurs should be curious and persistent. If you are a Ukrainian with business or engineering talents, ask yourself: What will you tell your children in 15, 20, or 30 years about what you did in 2024? Make sure you will remember that time with pride.

The Ukrainian defense tech community is open-minded, large, and resourceful. Here, you can always find people who share your ideas and help you take your own place. This industry is well appreciated not only in Ukraine but also around the world. So, it is like a gravity field to which the world’s matter bends.

Indeed, if you produce something valuable, you will always find funding, compassionate people, and options to make your ideas come true. An important thing to consider is that entrepreneurs should speak with the end users. It is a must in every industry, especially in defense tech. Unfortunately, I must admit that many still lack this skill.

There can be another situation: two engineers meet to create something, but they lack a product manager who will speak with users and think about how the product should be used, look, and pass all the way from a technological idea to the hands of end users. It can also happen that there are enough engineers but no entrepreneurs. And they are not able to build a solid business. If you don’t have a guy with a business background, find a partner with relevant experience who is ready to help. Then, some businessmen don’t look far enough. Their sight is limited to one or two years within Ukraine, while they must count in decades and worldwide.

When you finally get everything, you will find the required resources, funds, and specialists. And this will result in great value for the Ukrainian defense capability now and vast opportunities in the future.

We, as a nation, won’t live without threats. So, we must look forward. Look, learn, read. Speak with the people. And all will be fine.

Let’s discuss your other project, Kremlingram. It started as a volunteer initiative. Did it also require some investments?

We invested nothing in Kremlingram. It is more a project of journalist investigations that started in a Signal chat of a group of people who studied and discussed ties of Telegram with the Kremlin. That is how we named the project.

In general, Kremlingram began with my author columns on Ukrainska Pravda and Kyiv Independent. Later, more IT specialists, journalists, bloggers, state officials, etc. joined us. And last autumn, we launched a website.

We spent the last few months formalizing the Kremlingram project. Several guys, led by Nazar Tokar, have systematically worked on this. Recently, we also created BuyMeACoffee and Patreon profiles. We also raise donor funding to hire a few full-time journalist investigators to systematize content creation. We will also cooperate with foreign partners to develop alternatives for Telegram in Ukraine as soon as possible. We should also bring the idea to foreign partners, our government, and our citizens that Telegram is a Trojan horse in the pockets of 70% of Ukrainians.

How different are the opinions about Telegram in our society? Can they change radically and quickly?

Of course, we have seen some opinion shifts in Ukraine for the past twelve to eighteen months. I would say people became more cautious regarding Telegram. But it’s going not so fast, especially in the context of ongoing war and the scale of risks connected to this messenger. Just imagine all Ukrainians have their phones bugged. That is the scale of risk we are discussing now.

Sure, we cannot know for certain which level of access Russian authorities have to the application. But if so, the enemy would do everything to protect it. Unfortunately, Telegram has become a core of communication for us as Privatbank used to be at the core of our banking system. It is not so easy to cease using it.

Today, a set of essential activities go via Telegram — from news to FPV drone fundraisers and official state communication. You cannot just cut it all and block Telegram entirely. It would be a very complicated and non-motivated move that caused undesired destructive effects.

However, we can see a shift to alternative platforms that is too slow, even though GUR and SBU made statements about Telegram risks. And these risks appear in two dimensions. The first is social media and information distribution channels without content moderation, leading to spreading fakes, propaganda, and manipulations.

The second is Telegram itself as a means of media and communication. All messages are stored on servers and are not protected with two-way encryption. So, we can’t have any proof that this information is not read by anyone or won’t be read in the future. We don’t see any judgments from the state towards this app.

These judgments can be followed then by public statements of influencers and government officials who use Telegram and are gonna swiftly shift to alternative platforms. For example, the media would not close Telegram channels immediately but publish news on other platforms 10 minutes earlier than on Telegram.

However, despite the too-slow reactions, more and more people cease to use Telegram publicly. The trust is decreasing. And this trend will be only increasing. The question is how to speed up the process. If Germans managed to refuse to purchase Russian oil, Ukrainians could surely refuse to use Russian Telegram.

Do you think it will end up with a ban or a restriction on the level of law?

Exactly. The ban on Odnoklassniki and VKontakte was an absolutely right move from the perspective of national security. The same will likely happen with Telegram. But it should be a well-thought and step-by-step state policy of lowering the dependency of Ukrainians on a social network created, controlled, and loved by Russians. It is like that joke about a duck: It looks like a duck, walks like a duck, and quacks like a duck. So, maybe it is a Russian tool, isn’t it?

In an interview for AIN.Capital, the founder of Glovo, Sacha Michaud, and the director of Glovo in Ukraine, Maryna Pavlyuk, talked about the results and successes of the service in Ukraine and the CEE countries, talked about the telemedicine service, volunteer initiatives, as well as cooperation with Ukrainian startups. In addition, they discussed the PowerUp conference, which took place on June 18 in Kyiv and was attended by Sacha and Maryna, and also shared their impressions of the winners of the Glovo Startup Lab startup competition.

In June 2023, in a previous interview for AIN, you said that the company reached pre-war numbers in March 2023, and in May 2023, the company already saw growth. What are the current business figures in Ukraine percentage-wise?

Maryna Pavlyuk:

The growth has reached 23%, and by now, taking the run rate of May, it’s closer to 30%. The development is clear, the industry is not stagnating.

We have around 12,000 partners and more than 250 employees in Ukraine. Also, millions of users. Over the past years, we paid more than €20 million of taxes. Although we are not sharing the daily number of deliveries, there have been over 70,000 couriers that have done at least one delivery with us. In regards to our active fleet, we can’t really tell the number because it is not stable. In a week, we’re talking about 10,000 to 12,000 active couriers, which heavily depends on the demand of the market. Let’s say for the last half of the year, it was around 10% to 12% of growth month by month.

Of course, it depends on demand, but we still see the huge interest and the potential that we have on the market, in terms of new customers acquisition.

In the same interview, it became known that as of July 2023, Ukraine ranked in the top 5 among 25 countries where the service was present. Has this position changed?

Sacha Michaud:

Yes, it’s now the third on the list.

Compared to?

Sacha:

Compared to Spain and Italy. In that order.

And how does the Ukrainian market differ from Spain and Italy?

Sacha:

It’s a great merit to the Ukraine team to rank this high. Spain, where we were born, and Italy were the first two markets where we launched. In fact, Ukraine was the 20th market we launched. And it’s already in third place and still growing so quickly.

I think that there’s a lot more similarities between the markets than differences. In Spain and Italy we operate in more cities and a lot of smaller towns, whereas in Ukraine we’re in 37 cities. So here we’re not in so many smaller areas compared to them. And that’s the biggest difference.

We know that shortly after the start of the Russian war, Glovo launched a telemedicine service in Ukraine, the only country in the world at the time. Was this launch successful and was it possible to expand this service to other countries?

Maryna:

It is a very niche service. There was not a big business idea behind that. We were believers. At the time, we saw the need to support the community, which the telemedicine services allowed to. So we opened it nationwide and you still can access the service. Our main goal was to allow people to get very quick access to the qualified consultation online. I cannot say that it is big now. It is still quite niche, however it allowed us to expand the service to home appliances repair.

In terms of the other countries, I know that the teams tried to launch it in a few other markets. The service can be added if you have good partners and customers, as such services are heavily dependent on the people. For us, it’s super important to deliver good user experience, that’s why we don’t exaggerate the numbers. We prefer quality over quantity. 

Sacha:

The good thing about our app is that we have hundreds of thousands of users connecting every day. So it’s very easy for us to add and test out different services. I think the services that we launch in the future will primarily be related to delivery or, at least, to our partners, stores and restaurants, and digitizing retail businesses. But it doesn’t mean we can’t run services like telemedicine where they’re very useful for our customers.

Still, our core business that will drive growth will be around everything related to our restaurants, stores, and supermarkets.

Given the resilience that Glovo demonstrated in Ukraine, how did your business continuity plan evolve between the period of COVID, the first days of the war, and afterwards?

Sacha:

COVID was a big moment for us and our industry. Many of our countries initially closed down, which allowed Glovo to be an essential service to the economy. We were oxygen to restaurants and stores who couldn’t have physical customers. Still, it was difficult because timetables changed and it was a very strange situation to manage those operations. COVID also educated the market a lot on everything that wasn’t only restaurant food. I think it was a great moment for consumers to get used to other things, especially supermarket-bought items. And people continued using the supermarket delivery even when the pandemics finished. Although the time was difficult, at the same time, for certain industries, it was quite beneficial.

Moving forward to the Russian war in Ukraine. We initially closed down the app in every city across the whole country. Firstly, the team carefully assessed the situation. Seeing that our couriers were trying to do deliveries themselves using Telegram and Messenger, Maryna and the team advised us to reopen, which we did within 24, 48 hours in the cities which were safe to operate.

Secondly, we built some tech solutions which allowed us to switch off a city and cancel orders, which let the customers and couriers know immediately. And now we monitor the cities we are operating in, make sure that they’re safe and we keep them open. And if a city is in trouble [Air raid alerts and curfews — ed.], we close down the services.

Maryna:

On the one hand, operations are quite difficult, but on the other we have learned to be very agile in many ways, like adopting the global technology to the local needs and issues that we have from day to day.

Since the beginning of the war, Glovo has taken a fairly active volunteer position, helping businesses at the frontline with free shipping and investments. What volunteer initiatives do you support or endorse now?

Maryna:

We started doing these projects to make a difference. At the start of the war, we started receiving many self-volunteering ideas and programs from our team, for example, delivering critical medicine to people who couldn’t leave their homes. We also had a lot of products in our grocery stores, which we started giving away to the people in need. The same goes for our cloud kitchens across the country, which started preparing food for our soldiers, doctors, and for people in need. There have been a lot of small and big ideas.

Afterwards, this evolved into a more shaped program. We partnered with all the key funds in Ukraine, United 24 being our biggest partner, with whom we have another big project coming up. The total amount that we managed to donate to various charities and people, over the past two and a half years, is over €1 million.

Sacha:

In terms of global initiatives, we have our Impact Fund. Basically, we assign a small amount of money per order to this impact fund globally, and, doing millions of orders every week, it slowly accumulates. We can later invest these money into relief funds, like the one in Ukraine, where we help our couriers and partners if they face any problems. Ninety percent of our partners are small stores and restaurants, and we try to help with their business growth, as it can help us grow, too.

As it was said, we’ve donated over €1 million in different initiatives since the start of the war. And we’ll continue doing the good thing on an even bigger scale, because this fund grows at the same speed as the business.

In an interview for AIN.UA, Choice co-founder Volodymyr Olyanitsky said that his startup closely cooperates with Glovo within the Glovo On-Demand service. Can you tell us about how Choice or similar companies work with Glovo?

Maryna:

Basically, Choice is one of the integrators of Glovo On-Demand. Glovo provides the technology for small businesses in order to help to work smoothly finance-wise and operational-wise through a simple interface. Apart from Choice, there are lots of different brands that we are also working with through Glovo On-Demand. 

Sacha:

It takes a lot of money to create a full cycle delivery business, starting from restaurant production, lead generation, and then delivery. Sometimes it requires even bigger investment than opening a restaurant. And, as Glovo is an expert at what we do and we have an operational fleet, we decided to support these initiatives, in order to build on our loyalty channels. It’s also beneficial to us, as we get more partners and order volumes coming through the direct integrations of the Glovo On-Demand by our delivery partners.

Two years ago, Glovo announced downsizing of global teams. How is the company doing in other markets now? How did the company manage to optimize its internal processes to overcome the crisis?

Sacha:

I think similar thing happened across all tech companies. There was a phase of very high growth where we wanted to invest in the growing businesses, which meant investing in our channels, marketing, but also in people. What we’ve been doing the last year and a half, is really focusing on profitability. Many of our markets are already profitable [Ukraine is among those countries — ed.], but we still have a lot of markets which are still growing and not profitable. 

We’re also planning to become profitable in H2 this year as a company, nine and a half years after starting. This means a lot of things, but above all, it means optimizing our technology and increasing the efficiency of our teams.

In addition to Ukraine, Glovo operates in other CEE countries such as Poland, Romania, and Moldova. Can you share how the business is doing in these markets?

Sacha:

We’re extremely excited about this whole region, Central and Eastern Europe. It’s one of our fastest growing areas. We’re the market leader in the region. Of course, not all the countries are as big as Ukraine. However, Romania is also one of our top five markets, with the rest growing rapidly. We’re super excited about the results there and in the rest of the region.

Looking ahead to the second half 2024 and beyond, what are Glovo’s short and long-term goals and projections for the CEE markets and Ukraine?

Sacha:

There are two areas that we really put our focus on. The first one is growth: expanding the number of cities that we operate in. And the second is getting more partners in, for example, quick commerce, to offer our customers an even bigger choice of goods.

We’re planning to also focus on our other services, like the one we talked about, Glovo On-Demand, or, what we call it, “logistics as a service”. Being a tech enabler, helping digitalize our partners and being a great ally to them — that’s probably where growth is going to come short term.

Regarding other services, an ideal plan for us would be to start working with payment plans. Or becoming our own wallet. I think there’s great opportunities, especially in countries where we’re the market leader and we offer a lot of value. We can probably align with other local companies and do things together. And Ukraine, obviously, would be an ideal candidate.

Maryna:

There are a lot of things that are in the development stages at the moment. And Ukraine, of course, despite the current macro factors, is still the country that is great for testing new services. I don’t want to spoil anything, but there are interesting things that will definitely require more time and partners.

Sacha:

And we’ve got some cool stuff coming up in the app. You’re going to like it.

Now, let’s talk about the PowerUp conference, which took place in Kyiv on June 18. What was the motivation behind the creation of this conference? What goals did you want to achieve?

Sacha:

Helping Ukrainian startups with visibility, especially at a European level, is our main goal. I think, to have a larger impact, we should be attracting more scale-up companies to come to Ukraine. And this conference is a good opportunity to tell large international tech companies as well as investors that they can still do business and grow; that they should be investing in local startups and creating jobs for people here because it’s a really good and profitable idea. I think the kickoff event really helps with raising awareness about the real state of the Ukrainian startup ecosystem.

Can you share with us the results of the conference?

Sacha:

The first part of the conference consisted of three panels that brought together heads of Ukrainian technology companies, institutions and venture funds, representatives of state institutions, as well as industry experts in discussions on the following topics:

• How to start a company and scale it outside of Ukraine;
• How to manage a company in Ukraine despite adversity and have a successful business;
• Why is it still profitable to invest in Ukrainian companies and develop talents?

At the end of the panel discussions we were joined by the Minister of Digital Affairs of Ukraine Mykhailo Fedorov, who closed the ceremony as the final speaker. In fact, last time I met him, we talked about how we need to raise awareness outside of Ukraine about the fact that the businesses are still working here, despite many things happening. Of course, it’s difficult, there are many missile attacks every day, but people are getting on with their lives. And the most important thing right now is that we really invest in the economy.

As we know, the highlight of the conference was the Glovo Startup Lab competition, which Glovo organizes every year together with USF. Please comment on which startups took the winning places, what awards they received?

Sacha:

There were a total of nine finalists at this year’s Glovo Startup Lab [UTU, Banani, Birb, GetOrder, Getpin, Howcow, Releaf Paper, ToGether, Uspacy — ed]. At the end of the conference they presented their solutions, and we the panel judges decided on three winners:

• First place received €20,000 in funding + internship in Barcelona — Getpin, an online marketing tool that helps businesses with physical locations attract customers looking for products or services nearby.
• Second place: €10,000 funding + internship in Barcelona — Uspacy, a CRM system for small and medium-sized businesses.
• Third place: €5,000 funding + online mentoring from Glovo — Howcow, anAI system that determines the best time for cows to conceive and detects health issues.

And can you share your impression on the winners of the conference?

Sacha:

There’s huge potential in them. They’re very early on, so I do think they need guidance and help, like all other startups. I think great companies are built by great people who work hard, who just are persistent. And above all, these companies are going to grow because they have great teams, great leadership, and great ideas.They’re not going to grow because someone holds their hand. It’s super exciting and I think it’s going to be a great experience for both them and us. 

To my mind, in general, companies that are built in Ukraine have a great opportunity to expand very quickly in the region and be leaders in the region. I think entrepreneurial talent is unique in this country, while technology levels are extremely high. When I came here  three months before the invasion, I really felt that Ukraine was moving in the right direction. I think Ukrainian society has great tech awareness, how you embrace new things, which is quite unique compared to most European countries.

Based on past experience, how does Glovo plan to support startup winners after the competition? Are there plans for ongoing mentoring or partnerships that will help to, possibly, integrate their solutions with Glovo services?

Sacha:

First of all, apart from the money they also receive our mentoring. We can help them through our ecosystem, our partner network, and our data. We have big access to the venture capital network and to a pool of talented individuals. Obviously, we’ll help the winners as much as we can.

Concerning the latter part of the question. Generally, one of the things we don’t talk a lot about is the amount of local companies we end up partnering with doing such different things, like giving solutions to our couriers. As an example, we just mentioned Choice, or other similar companies, or even fintech. It can be a whole wide range of services that we can plug into our network. There’s always opportunities for great companies to work with us and us with them. I think it’s the key to success.

Also, related to startups. We have a project called Glovo House, which incentivizes our employees to start their own companies based on their ideas. This can ensure that our legacy is not just Glovo. Already, close to 100 startups have been founded by ex-Glovo employees. Most of them received good funding, so they’re already on the road to potentially get bigger than Glovo.

The project focuses on these main areas: 

• Verification of the project. If anyone presents a project, we can look at it and, based on our experience and network, help them to redefine the project a little bit better. 
• We can give them access to our network of capital, either through local funds, angels or crowdfunding within the company.
• And then of course awareness. Glovo is a well-known brand in pretty much every country we operate. So we have easy access to channels to raise awareness about any new startups our employees come up with.

Any words in conclusion?

Sacha:

Personally, it’s amazing coming here. It’s my sixth time visiting Glovo in Ukraine since we launched here. I was super energized to arrive. And also the team here is an example for the Glovo globally.

Support a joint fundraising campaign of AIN.UA, KOLO, and SHIELDS for night vision and attacking equipment for the Da Vinci Wolves battalion.

Medical Aid and Rehabilitation

Dear Oleksandr, I would like to start our conversation with things that save the lives of Ukrainian warriors. You used to work in different health positions before the war, and now, your battalion has its own health service unit called Ulf. What is the situation with medical equipment and aid at the frontline and rehabilitation after injuries?

There are universal rules for all units, and saving lives and the health of injured soldiers depends on how well people follow these rules.

But first, let’s go back a bit and speak about planning. We plan any combat action and activity, including training, by considering the medical aid component. We plan the logistics, unit interaction, evacuation routes, etc. These elements are connected. You can even say that evacuation equals logistics and vice versa. In reality, however, it will always go differently despite even the most sophisticated planning. And if you have no plan at all, the worst scenario will happen.

Second, the individual training of each soldier is vital. The better you are equipped, the better your people are trained to use available means, and the more likely your rescuing and lifesaving measures will be effective.

Based on your observations, how well are the future combatants taught tactical medicine, using the MARCH algorithm, and first aid in a boot camp? Would you recommend taking extra measures and doing another private tacmed course before beginning military service?

There is never too much training. The more different courses you take, the easier the next training, the better cohesion in the boot camp and by performing combat tasks.

If you have polished your skills to almost automatic—both in defense and attack and if injured—you will do it without even thinking about it.

So, when you have polished your skills to automatic actions, you will follow the protocol and act automatically in a stressful and dangerous situation. If the protocol is not well tested yet, under stress pressure, you do anything but the things required in a specific case.

Everyone can be scared after getting wounded and sometimes literally fighting for their life. And fear is what accompanies all your actions. Strictly following the protocol helps you act right, even under pressure.

I know that you were doing rehabilitation after an injury. Can you briefly describe, as a former healthcare specialist, plus and contras of the injured soldier rehabilitation?

Yes, my rehab happened with the help of specialists at the Unbroken Center on the base of the Lviv First Medical Community. They set me on my feet.

Getting wounded, receiving first aid, and being evacuated is one story. The more efficient it is, the more chances to survive and heal.

Of course, the treatment is also important: the quality of surgery and then external fixation, the speed of wound healing, and the kind of treatment you get.

In my case, the rehabilitation began on the fifth day after the surgery when I still had an Ilizarov apparatus on me. In the hospital, a personal physical therapist first gave me advice on how to maintain muscles to avoid atrophy. For example, what would be a problem if one of your joints becomes dysfunctional? It gets atrophied. And restoring its functionality can be difficult or sometimes even impossible.

So, in my case, it was theoretically possible. After the surgery, surgeons told me that the basic functions could be restored at least within a year. But thanks to the rehabilitation, I participated in cross-country running after only eight months. And now, I am preparing to visit some front edges.

In the Unbroken Center, I did exercise the whole day. At nine o’clock, I came to the gym, did physical therapy until lunch, and then I had psychotherapy at the local mental health center until six o’clock.

As a result, I could run a short distance after four months after the start of my rehab. By doing this, of great importance is the patient’s attitude that rehabilitation is a job you must do so carefully as you did your job on the battlefield.

In my opinion, such medical centers and the Unbroken must be in all big cities. Because unfortunately, there are already many patients for them, and there will be many more.

EW/SIGINT and a Cossack Agreement in Infantry

Speaking about the materiel, equipment, and means to destroy enemies, what is the most desired at the front? EW and SIGINT? Munition?

At war, you need everything, and even that would be not enough. It sounds like a metaphor, but it also makes sense.

Let’s take as an example the Honor Company, which is a part of the Da Vinci Wolves separate battalion. First, we must provide soldiers with all the basics—from socks to individual protection. Most of it is provided by the state. Of course, when our friends offer something better, for example, tactical socks for our guys so that their legs don’t sweat too much, I would never say no.

By the way, the bulletproof vests and helmets provided by the state have a pretty decent quality. However, we always need earmuffs. They must be reliable, protect against concussions, and not interfere with communication on the battlefield at the same time. Thanks to our partners, all our guys have at least one set of earmuffs now. The comms is a different story because coordination of actions within combat and during evacuation relies on them.

In order to simplify the answer, let’s restrain the war to two key objectives: to see and destroy the enemy and not to be seen and destroyed by them. These two objectives demand us to be always a step forward.

Let’s begin with safety. We must do our best to prevent the enemies from seeing us and being able to hit us. For this, we must shut down their “eyes” represented by drones. What is efficient in preventing them from flying? It is the means of electronic warfare and signals intelligence (EW and SIGINT). It’s expensive equipment, and the government can cover only part of the costs. Thus, we have to look for extra resources to purchase more of it. Fortunately, we got lucky in this context, particularly with EW.

Another essential safety component is making targeting our positions impossible for the enemy, for example, by using FPV drones, which have become vital in modern combat actions.

Regarding EW, if I understood you right, you need both the equipment and qualified specialists to coordinate your actions with other units. One must bring impressive expertise to avoid jamming their own drones entering the EW range.

It is a separate science. According to the manning table, EW and SIGINT specialists must be on the level of a battalion. Of course, a battalion would act in the interests of its smaller units. However, ideally, these specialists must be on the level of a company.

Unfortunately, the manning tables used today have been written for the past wars. It is fabulous that the Ukrainian state considers successful UAV application cases and introduces a new military branch.

But one must understand that any change to the manning table is difficult because it is always followed by logistics changes. If the government writes something in the manning table, it must supply all the means for a respective position.

So, let’s pay more attention to the capabilities of our state, daily facing extraordinary challenges while constantly adapting to new circumstances. We fight and develop our army at the same time. Come on, it is hard work.

Why did I mention this? Because our people like to make stupid conclusions. If something wrong happened, someone must always be found guilty—an official or a high-ranked military officer. But you need to understand that any change in the manning table means logistics changes. If something is missing, it is not always because someone is stealing.

We just don’t have enough means to create a perfect manning table with EW and SIGINT specialists, a land robotic platform operator, and space intelligence on the level of a company.

In reality, first, teach a guy to be an infantryman. Then, they cohere with others as basic infantrymen with opportunities to use other means like electronic warfare and signals intelligence. The fact that such options are available on the company level makes such infantry more valuable for application beyond regular assault operations.

And if you fight with other men, and this very infantry guy works as an EW/SIGINT specialist, you have a so-called gentlemen agreement or a Cossack agreement.

People who understand this concept would not avoid their duties in the army and would wish to master new skills due to understanding that their lives depend on it. So now you have an idea of the mental basics of a volunteer battalion.

We should thank the units that are not afraid of undertaking more and more innovations.

Technological Handicap and Saving Lives

In one of your late public speeches, you emphasized the importance of having a technological handicap over the enemy. In your point of view, does it exist? Is it negative? Is it equal? Or are we a step ahead?

How far have we gone on a technological level compared to Russians? Are we winning or losing? I don’t know. I would like to believe that we are a half-step ahead.

My belief is based on over two years of the full-scale war. Let’s look at the 2022 situation: without a doubt, Ukraine was the first to widely apply DJI Mavic drones. And it gave unbelievable results on battlefields. How does it look in practice? Russians sometimes had ten times more artillery munition than we did. Under such circumstances, we never dreamed of victory but only hoped to suppress the enemy somehow.

Despite all this, we managed not only to hold the enemy but also to perform an incredibly successful counteroffensive in the Kharkiv region. Why? Because Ukrainians were motivated, skilled, persistent, and technologically advanced. We understood the importance of drones in highly efficient artillery use. When Russians shelled the squares, we hit precise targets.

Another example is last autumn when US help ceased to come at the most critical moment, and we had “munition hunger.” FPV drones were our Plan B.

In Ukraine, you can see innovations going from the bottom to the top, from volunteer communities with a proper mental setting, “Let’s try something that nobody tried before.” Innovations are made by privates and considered and widely implemented by higher officers in the Defense Forces of Ukraine.

In Russia, it works differently. They study our successful cases and command to scale up our solutions vertically from the top to the bottom. By doing so, the enemy catches us up very quickly. For instance, in early 2023, we had a significant advantage in Bakhmut: Mavic drones dropping explosives 24/7. But in late summer of 2023, the enemy already had more drones than we had. We couldn’t relax either during the day or at night. And they achieved this just in a few months.

The enemy researches our innovations, reproduces them, and scales their production up. Nevertheless, our success in this war means to be always a half-step ahead. I think we can succeed here. I wish we could do it faster.

When preparing a fundraiser for the Da Vinci Wolves, we heard a statement about “a battalion of the future” from your Back Office team. It should follow the philosophy of saving as many lives of Ukrainian warriors as possible by achieving a technological advantage over the enemy.

Futurists started to speak about it a long time ago, and the practitioners implement theories in very this time with the help of various military equipment. We all read books and watched movies about robot wars. Some unmanned vehicles have been used during World War II already. Unfortunately, the military doctrine we had at the beginning of this war had been written based on past wars. But we all understood that the next doctrine would be written based on the current war. Thus, the winner will be the one who will adapt a new doctrine faster than the competitor.

The Armed Forces of Ukraine are writing this new doctrine right now. To finalize it, we need only two things: forces, the manpower that can implement the doctrine, and the materiel needed to complete this task.

The logic of the doctrine demands to hold infantry as far from the frontline as possible. And even if the men are close to the contact line, they must be ultimately safe. Our primary goal is to save lives. An experienced warrior is the most valuable asset at war. We have plenty of guys with combat experience in our battalion. Today, they share it with others and try to implement their experiences into new solutions mentioned before.

Compared to the past wars, there were never such sophisticated intelligence opportunities in history. However, there is the opposite side of the medal: the ever-highest restraints on forces and equipment concentration in history. Because as soon as some forces concentrate on a spot, the enemy will see it. So, it is nearly impossible to perform a hidden maneuver. And now imagine how it looks on the army level—totally impossible.

I remember you on the manning tables from old wars that we still use today. So, what can we do and change on the practical level? In boot camps, we aim to cohere the maximum number of different forces and equipment. We combine the infantry with land robot platforms already during drills to clearly understand how electronic warfare and signals intelligence work. We test the gear together with our air surveillance units, FPV drone operators, etc. In other words, we already use methods not present in the current military doctrines during training. We exchange our experiences peer-to-peer with other passionate battalions, especially volunteer battalions, to craft the new doctrine together.

Dmytro Dubrovskyi talked with the Editor-in-Chief of AIN.UA about how the fund will operate and where and how much they are planning to invest.

Dmytro, not long before our conversation, you have released a statement about Uklon Co-Founders’ first big-check investment in a defense tech startup called Buntar Aerospace. Can you share some details of this deal with us?

We have invested $200,000 in a seed round. The startup produces vertical take-off and landing surveillance UAVs that can fly for 60 km and intelligence-mission planning and operating software that automates a UAV operator’s planning effort by 90%. They are currently being tested on a training ground and soon will be their first combat use.

If I am not mistaken, was it your first external investment as Uklon Co-Founders? Or did you mean Defense Tech?

We didn’t invest in external companies, but this year, we decided to open such a track and raise $2 million within our fund for defense tech development in Ukraine. The average check is $200,000 to $500,000. We are interested in startups during seed rounds. Now, we plan to get 8 to 10 companies in our portfolio.

Are you going to invest in non-military startups as well?

Not now. We have a clear goal at the moment.

Have you used private funds for this foundation, or did you also invite some external investors?

It was only private funds of co-founders from Uklon dividends. We invested in the foundation according to our company shares.

Buntar Aerospace was only the first company in our portfolio. Now, we consider another ten projects that passed due diligence.

What requirements do you have for defense tech startups? Do you prefer software or hardware projects? How important is having the BRAVE1 status?

Having the BRAVE1 status is very useful. We also expect that a startup will raise an intelligence component. So, it should not be limited to FPV assembly of Chinese parts supplied by the state or volunteers.

We look for unique tech advantages. That’s why we consider hardware plus software. We also appreciate when startup products have already passed a testing stage and are prepared for combat use so that we can receive feedback from military units. And the third point is secure sales.

In any case, we also study the project team. We check whether there is a legal structure, the financial statements are clear, etc. If not, we can consult them on optimizing these processes.

Do you participate in product development elsewhere than in consulting and financial support? Maybe you share your expertise in sales or development?

For sure, we can share our expertise. We might give a hand of help in marketing, sales, and back-end development. In addition, we have a long list of contacts, including deftech developers, military, and volunteers. We can aid with testing, getting feedback, and developing the product. However, we are investors in the first place, so finance is our primary contribution.

Do you seek advice from the Ministry of Defense or the General Staff regarding startups you would invest in?

We have no ties with higher military command, but we may always request feedback from some famous volunteer funds and formations involved in testing.

We have friends in the Ministry of Defense and Special Forces, too. So, a lot of feedback flows to us from different sources.

Let’s speak about Uklon. Recently, you have exited Azerbaijan. Did it change your expansion plans somehow? Which markets are you going to enter next?

In one way or another, the war influences our plans. Indeed, the joint co-founder’s investment in defense tech is of value from the perspective of emotions and national consciousness powered by a desire to invest in Ukraine’s victory. Expanding into new markets became a bit complicated for our product.

We don’t cancel any of our plans, but there is no need to rush. We are developing Uzbekistan and successfully pushing a Russian competitor from the stage there.

Indeed, we have left Azerbaijan due to a tense situation with unpredictable legislation changes. Our local partner also decided to cease investing in this country.

Recently, Uklon joined the Diia City special taxation mode, and it was relatively late compared to other product companies. How satisfied do you feel about it? What benefits and underwater stones do you see?

Actually, we like it very much. We also joined the Diia City United Association, which aims to preserve the rules of this unique space.

Can you comment on the consequences of the newest claims anonymous Telegram channels published against Uklon? Did you find out what and in whose interest has it been done?

Most likely, in the interest of exacting money. One day, we just decided not to dig deep into that kind of pretty typical media attacks, which became more and more usual, unfortunately. You can see both businesses and politicians attacked. Sometimes, such media activities are accompanied by law enforcement bodies’ actions. Now, we are focused on building a defense strategy for the event of new attacks.

Do you participate in side projects besides the Uklon ecosystem?

I am involved in the Defense Builder Accelerator as a mentor. We will share our experiences with startups so that they are ready to comply with our investor requirements.

Speaking of GR as one of the Diia City United Association’s functions, a member of which you are, what would be the most painful problems Ukrainian businesses face nowadays, in your opinion, as the ecosystem member? Is the government attentive to your concerns?

For instance, there are ongoing discussions about the necessity of employee reservation from the mobilization. In particular, Oleg Gorokhovsky, Co-Founder of monobank, posted on this topic on Facebook. What do you think about this?

For sure, employee reservation and a more transparent mobilization procedure are the things the businesses are lacking. There must be an option to reserve key employees at least to keep the company working. I like the concept of employee reservation by MP Dmytro Natalukha.

I understand that such a decision would be unpopular among our people, but our country really needs it. Hopefully, the government will act in favor of this instead of only raising taxes. It looks simple on the first look. However, many don’t see that the economy would shrink without employee reservation, and the businesses would not survive, especially by having to react to all those blackouts.

Should we meet again in a year; what news would you like to share with me? What strategic goals do you want to achieve?

I dream that Ukraine would be victorious then, and defense tech startups supported by us would grow into big companies and unicorns. The whole world saw the aggression of an autocracy and its imperial ambitions. So, NATO member states and other democracies have to invest more in the defense industry.

I also would like to speak with you about new markets Uklon entered as a truly international company.

AIN‘s English-language editor-in-chief, Rostyslav Sobachynskyi, spoke with the company’s co-founder, Dmytro Dubilet, about the recent investment, the company’s main plans, the entrepreneur’s other projects, and the future of the Ukrainian fintech industry.

Let’s start with the recent $32 million investment. How did you manage to raise such an amount?

The deal followed several hundred meetings with potential investors. It was quite a long process. This investment is a combination of Round B and Round B Extension, which took almost a year to complete. And when we received the last portion of the investment from the Bank of Georgia, we decided to share this information with the world.

How does the “Neobank in a Box” model that your company currently operates differ from other BaaS (banking-as-a-service) providers?

If we look at our competitors, perhaps the company that is most similar to us is a neobank in the UK called Starling Bank. They recently launched a sister company called Engine. This is almost the only company with a business model similar to ours. Because most technology companies in this market offer one or more of the solutions you need to run and maintain a bank. We offer a solution that consists of almost 30 to 40 software suites that you do not have to buy from the outside. These are back-end complexes, from CRM to anti-fraud, from a program for managing plastic card balances to a customer support service. And, of course, the key is our mobile application, which in itself is often a key driver of customer loyalty.

The uniqueness of our offering is that it is a truly comprehensive solution. In addition, there are specific banks that have already implemented it and become successful. Our first project was Leobank in Azerbaijan, where we actually became one of the market leaders in a year and a half.

You mentioned that Fintech Farm is different in that it provides operational support rather than regulatory or infrastructure services. Why did you choose this approach and what are the benefits?

In an ideal scenario, of course, we would like to create our own banks and launch them in different countries around the world. But that is impossible because you need a banking license in each country. That’s why we decided to take a key aspect of digital banking startups — technology, which is 80% of success — and sell our product that way.

Our model assumes having only one exclusive partner in each country. And we dream of being represented in at least 50 locations in the next 5-7 years.

Fintech Farm cooperates with banks based on a performance model. What does that mean in practice?

We have a formula that calculates what we get from this digital bank based on operational and business metrics. First of all, the number of customers.

This is not a revolutionary model; in fact, it is used by many vendors, including in the technology industry. If we came in and sold our solution to any bank for a fixed fee, it would be much more difficult.

We have a very simple message: “If your bank and Fintech Farm roll it out, your bank will become super successful.” And we are willing to take the risk that it will become successful.

This often finds a positive response among potential customers. After all, if you come and just sell them a solution and ask them to pay several million dollars for it, it would be difficult for them to take the chance. We say, “Let’s start everything together, and if this bank is successful, we’ll get the main revenue for it.”

Much has been written about the launch of Leobank in Azerbaijan and Liobank in Vietnam. What other markets have you entered and have you managed to gain a strong foothold so far?

To date, we have only fully launched in the two countries you just mentioned — Azerbaijan and Vietnam. A year and a half ago we had an unsuccessful attempt to launch in Nigeria, we quickly closed the business because we couldn’t come to an agreement with the local banks [couldn’t find a full-fledged partner – ed]. On the other hand, Vietnam started very well and we decided to focus on that market.

I would like to say in advance that this year we are launching in two Central Asian countries. It will be Kyrgyzstan and another country — I don’t want to name it now until we sign a formal contract. But we also really hope to launch in India this year.

Why did you choose India? And how exactly do you choose the countries you want to enter?

To be honest, we don’t choose just one country and don’t look at other countries. Absolutely all countries are suitable for us, except those that are part of the “Axis of Evil”.

But of course, markets have their own priorities, depending on the level of competition, the local fintech, the banking system, the size of the population, and many other factors. And according to these criteria, India and Vietnam have always been on our top list.

At one point, we went directly to India, met with many banks and found a very cool partner there. We have been working on this project for the last six months. Now all is left is to “dot all the i’s”, and we will finally sign the contract and announce it. We are very lucky to have a partner who has big ambitions for the Indian market based on our solution.

In terms of numbers, what are the prospects for Fintech Farm in India?

Our target customers are 200 million middle class people in India.

Do you have a strategy for entering a country and finding a strong bank? Or do you have a specific approach for each country?

Typically, when we enter a new country, we look for all kinds of contacts to communicate with those who make important decisions for banks. First of all, we communicate with medium-sized banks. Again, the message is very simple: “Let us do this for you, and you have every chance of becoming the big bank in your country.” And at the same time, we refer to the experience that we have.

On the one hand, there are some personal contacts, and on the other hand, Visa and MasterCard help us a lot with introductions in local markets. With me personally, they had the experience of cooperation in Ukraine, they cooperated with Fintech Farm in Azerbaijan and Vietnam. And they see that when we enter a new market, everything works for us — and this really affects the redistribution of market share among payment systems. We have a kind of deal with them: “If you help us get to know the banks, we will start with an exclusive contract [cooperation of newly established neobanks with Mastercard or Visa – ed.] It’s a win-win for everyone.

Speaking of experience, in your latest post, you noted that “a part of me regrets that I once left monobank to serve in the Cabinet of Ministers of Ukraine, only to be fired within six months”. What is your current relationship with the monobank team? Do you think about returning?

My relationship with the monobank team is excellent. They are my friends. But I have no will to return. If you have already left, what will you do here?

It was a very big decision for me. If you dare to join the civil service, it changes your life a lot. Both in the household and in the business aspect. This is a very serious decision about how your business life will change. For a long time, I could not dare, but when I was invited to join the cabinet, I accepted. In retrospect, it looks like a mistake. This happens.

And what went wrong with the civil service? Do you currently have a relationship with anyone in the current government?

No, I do no have any relationships left. Things did not go so well because the cabinet resigned. It’s not that I was fired personally, it’s that the whole government [Oleksii Honcharuk] resigned. This is a complex question that is difficult to answer in one sentence. Obviously, this government did not have good relations with the presidential administration and the parliament [according to the official version —because of the president’s loss of confidence in the prime minister due to the slow implementation of reforms, according to another version — because of the so-called Honcharuk tapes, in which a person with a voice similar to that of the then prime minister talked about the president’s “primitive understanding of economic processes” — ed.].

Your brother Oleksiy Dubilet has the largest share of 33.74% in Fintech Band, which is developing monobank. Do you often exchange experience with him?

Of course we communicate. That is, we communicate not only with Oleksiy, but also with [the co-founders of the project — ed.] Misha [Mykhailo Rogalskyi, — ed] and Oleh Horohovskyi. We exchange what we can so as not to harm other shareholders and partners. Although it’s so transparent now, to be honest [information about business operations — ed.]. If you watch Misha’s blog and read Oleg’s telegram, you can get enough insight into the business.

Let’s go back to Fintech Farm. How has the company changed since its launch in 2020? How did the start of the war in 2022 affect it? What has been accomplished in that time? And if you can share, what is the current valuation of the company?

Unfortunately, I cannot share the valuation. We have agreed with our Board of Directors that we will not disclose this information for the time being. Mykola Bezkrovnyi once shared a range. You can probably refer to these figures [according to AIN.UA, the company’s valuation exceeded $100 million as of April 19, 2023 — ed.]

In terms of how the company changed, in 2021 and 2022, we were just starting out, and we had nothing to refer to except the experience of one of the co-founders, which was me. And after that, in 2022, when it became obvious that the bank had become a resounding success in Azerbaijan, and then the solution had taken off in Vietnam, it became much easier to communicate with both investors and potential partner banks.

As for the war factor, of course it affected the business and all of us. Currently, due to our recruitment strategy, a certain part of our staff lives outside Ukraine, because it is important for both our partners and investors.

Despite all the good news, raised investments and successful projects, it is generally interesting to hear about the difficulties that Fintech Farm faced and how you overcame them?

I would say that the biggest difficulty is that when a potential partner or investor hears about Ukraine, they immediately think that it is an additional risk. After all, if a bank ventures into such a big project with us, it is a risk in itself, even without the war factor. That is why we describe the whole situation in detail and very openly, so that the partner is not worried.

I believe that we have managed to build such an organization that there is almost no operational risk for any, even the worst scenarios of war development. But of course this is a big factor. And it is even difficult for me to say how many rejections we have received from potential partners or potential investors because of this.

I’m not even talking about the fact that when the war started, I personally and many employees of the company were mostly engaged in volunteer work, not business. In the first 4-5 months of the war, I had almost no focus on business.

And what is the main challenge for Fintech Farm today?

I would say that the main challenge, as in any project, is the issue of implementation. In other words, how do we get up and running as quickly as possible with the resources that we have agreed upon with our partners beforehand?

We have a rule of thumb that we launch a new neobank in six months from the moment of signing the contract. And we have done a lot of work within the team to meet these deadlines, even when we are working on several projects in parallel. I would say this is the biggest operational challenge we face.

But we managed to build a very cool platform and an approach on how to customize it for different markets. I can say that we are able to meet these deadlines. We are even thinking about reducing the time to launch a new bank to only four months.

And how are your other projects — the business automation ecosystem Navkolo and the traveltech startup Flat Planet — doing? What is their current value?

There is no valuation for either of them because there was no investment involved.

Navkolo is part of the Checkbox project, which works with software cash registers. It is the market leader. It turned out to be a very successful project, at least in Ukraine. But now, unfortunately, I am not so much involved in it operationally.

As for Flat Planet, we’ve only just started. I don’t see it as a big project that will make us all rich. But we talked to my brother about starting it a long time ago. And actually, as soon as we started to make it, the war started and everything stopped. Recently we decided to try to finish it. Again, I’m not going to reveal the numbers at this time, but they’re not going to blow your mind yet.

Generally speaking, how do you see the future of the Ukrainian fintech industry and what is the place of neobanks in it?

The future of the Ukrainian fintech industry depends very much on the future of Ukraine. Now, of course, everything is tied to the war. When it ends, we will have a breakthrough. I hope. This will also be true for the fintech industry. But, now… it’s survival mode.

In conclusion, what future plans for Fintech Farm can you share?

We have two main aspects to work on:

1. Consolidate success in key markets and launch in India.
2. Open new markets.

We should be operationally profitable this year. And accordingly, the need to attract new investment will not be so urgent. We can focus solely on the business. And strategically, we have very big ambitions to create at least one cool neobank in every corner of the world.

In general, I think Ukrainian banking is very advanced. It was like that even before mobonank appeared. Ukraine really has a very cool experience that can be shared with all countries in the world. And we are using it: these are technologies and, above all, people who have worked in various banks and fintech companies with Ukrainian roots. And thanks to that, we really have something to say to the world.

AIN had a great opportunity to talk with Inka Mero, founder at Voima Ventures, about the fund’s recent activities, successes and challenges, as well as discuss the state of the Nordic and Baltic markets.

Tell us more about Voima Ventures.

We are a leading deep tech venture capital firm based in Helsinki, Finland & Stockholm, Sweden, specializing in science-based investments. We were founded in 2019 by (Mrs) Inka Mero, a seasoned and well-known angel and serial entrepreneur in the Nordics. Partners include Jussi Sainiemi, Pontus Stråhlman and Investment Director Jenny Engerfelt, as well as Niko Elers who is our investment manager.

Voima Ventures is driven by a mission to support visionary entrepreneurs working on breakthrough technologies that have the potential to solve global challenges and create significant societal impact. To this end, our latest Fund III is Article 8 compliant, and offers transparency into the environmental impacts of all our investments.

Our investment strategy revolves around backing early-stage startups with cutting-edge science and technologies, global markets, and scalable business models. We find the rare companies that leverage deep technology, usually developed out of years of university research, that address pressing societal and environmental challenges — solutions for the people, planet, and industry — while also demonstrating a strong market potential and a clear path to commercialization.

We currently have close to €200 million in assets under management, with a total of 37 companies in our Portfolio, across three funds.

Let’s talk about numbers. Voima Ventures is turning 5 this year. Can you walk us through the investment deals you consider the most successful throughout those years?

Fund II:

• Kuva Space, €17 million seed round for hyperspectral nanosatellite constellation. 
• Enifer Bio, over €15 million Series A for sidestream-based protein production
• Genomill Health, next gen liquid biopsy technology.

Fund I:

• Solar Foods, feeding HO2 to bacteria to generate novel food
• Infinited Fibre Company, 100% eternal fashion fibre from recycled clothes.Backed  by top global fashion companies.  
• Dispelix, the only independent waveguide player in the AR / VR space. 
• Exits: Focalspec, Minima, and Paptic.

It’s almost a year since the launch of Fund III capped at €120 million. In terms of investment deals and received financing, how many of your plans have been achieved so far?

On average we review and assess approximately 800-1000 cases from the funnel on a yearly basis. 

In March 2024, Sooma Medical announced its €5 million investment round where Voima was the lead investor. How did the deal come to happen and what can you tell us about the startup?

We met with the founding team back on summer 06/2023.

Sooma Medical is a spark of hope for the mental healthcare sector. They have pioneered an innovative solution that will change the lives of individuals battling depression and chronic pain. Founded on a mission of compassion and driven by a commitment to scientific rigour, Sooma’s groundbreaking therapies offer drug free, effective, and non-invasive alternatives to traditional treatments. 

Through the use of neuromodulation, Sooma is alleviating symptoms and restoring hope and vitality to those with mental health challenges. Backed by research, Sooma is set to push the industry benchmarks of this healthcare sector North.

As we know, in September last year, you launched Velocity offering €1 million to science-oriented startups. N-ink managed to win the challenge. How did the challenge go and do you have any plans for “Velocity 2”?

The Velocity Challenge exceeded all our expectations, both in terms of the quality and quantity of applicants we received (83 to be exact!). The event garnered widespread positive feedback from co-investors within our network and sparked numerous fruitful discussions with finalists. While organizing an event of this scale required significant internal resources, it also generated an extraordinary amount of unique deal flow opportunities, we had finalists who were not on the radars of any of the other VC’s at the event. 

This is validation that our deal flow strategy is on point and the relationships we have cultivated with Universities across our region are paying off. As a result, discussions about Velocity 2 have already commenced internally, with a tentative plan for a second round slated for an undecided date in 2025. This year, our focus remains razor-sharp: to seek out and support early-stage Nordic and Baltic companies poised to make meaningful contributions to society, the environment, or industry.

In our 2022 ranking, we included Voima Ventures as one of the most active funds in the Nordics and Baltics. You surely must know a thing or two about these markets. Can you comment a little about the current investment climate in the region.

Finland has laid a solid foundation for financing domestic startups through years of concerted effort, which has been crucial in light of the significant decrease in foreign capital. In response to the tightening market, startups have also taken proactive measures to enhance capital efficiency,

Jussi Sainiemi, Deputy Managing Partner of the venture capital firm Voima Ventures and Chair of FVCA’s Venture Capital Committee, comments.

Many investors are talking about tough times for the market in recent years. Did you experience any difficulties in 2022-2023 and how did you overcome them?

Looking back, we all know the numbers: there was a massive drop from the top years of venture capital investments from 21 to 23. The decrease in venture capital investment volume in the Nordics and Baltics — that’s our home turf — was close to 50%. So, the top year of 2021 was roughly €19 billion and the last year was only around €9 billion. 

What does it mean? Firstly, one of the successes which we recently had was the first closing of Fund III. We were able to raise a fund above our initial target within really tough times. I think we managed to overcome the difficulties by building a unique positioning for Voima Ventures. In this challenging landscape, we are one of the very few science-centric investors with a proven track record from our Fund I and II. The team had grown from Finland to Sweden, so we’re really covering the Nordics and Baltics. And then we also did a very specific thesis-based investment strategy on three core areas we invest in: green transformation, exponential health solution, and game-changing platform technology. 

In short, we managed to overcome such difficulties by doing very thorough work. Then let’s also remember that the work for Fund III had started already when we launched Fund II. So many of the new investors who came along were the LPs we started talking to five years ago. So it’s very long-term work.

Now, how did the fundraising difficulties affect our companies? So, the companies that have been in their later fundraising stages, Series A, B or C — anything from €5 to €10 million or above obviously struggled. So I don’t think any company had an easy time fundraising. And each of the more mature companies that have been in this phase, have been solving those problems very individually. 

Some of them have been focusing more on customer traction, really driving revenues because investors really value revenues. Others may have been also, let’s say, cutting the burn in order to have just more runway to survive through the tougher times, particularly the ones who are in the R&D mode. And that’s obviously a smart thing to do. Thirdly, of course, the most successful companies were raising big rounds, but it just took them longer. So we’ve had a lot of value growth optics in our portfolio. And I think the good lesson learned for any entrepreneur is that even in tough times, you can raise big rounds if you are even more focused. And then, of course, we’ve had some companies that have gone belly up, particularly the ones that come from the Fund I, older vintage companies. 

Sometimes it’s good to have these disruption points like COVID or this financial crisis, following the inflation and the war. As for us, we work with deep tech companies, with 90% of them having some actual concrete innovation, like a diagnostic kit or a factory to generate next generation protein, or a satellite for the next generation of surveillance. All these companies had to go through different challenges than, say, B2B and Travel tech companies. In that respect, our companies were better positioned for this financial crisis. They already knew how to cut burn and focus on customers, going straight ahead with this thesis that the companies need to have a 24 month runway. And that’s why we’ve done better. 

Of course, the 100 million rounds have been non-existent in the Nordics. Only this quarter we’ve started to see a bit more of a positive development in the market. Time will tell how the whole market will evolve from this altogether.

Can you share any predictions about the close future of Startup and VC ecosystem in the CEE region and the Nordics? What should we expect?

Let’s remember these big megatrends are not disappearing anywhere:

• Firstly, we have a massive planetarian crisis. We will see different weather disruptions due to climate change, declining biodiversity, and things like that. But we are also seeing a massive shift, in the B2B side, from the industry to climate neutrality. This will create great opportunities for a lot of science-based and deep tech companies. However, it’s critical to get into scalability, as well as similar cost and pricing to existing solutions. The scalability is becoming really essential, and also the cost of capital. 
• The other megatrend, of course, is exponential technology development: this competition between Asia, Europe, and the US, whether it’s AI or fundamental technologies like semiconductors, optics, photonics, etc. National interests are driving a lot of change in these matters. We see a lot of subsidies even within Europe for technology-intensive core technologies. Doubling down here on the single European market would be really critical. I think it will benefit everyone if we have more semiconductors, optics, photonics, and even dual-tech production in Europe.

Dual-tech, in particular, I think is the only silver lining of this war, if there’s any. Europe will start to invest more into dual-tech, which is a foundation of many consumer and B2B technologies we’re using today. And we shouldn’t shy away from that. We need to be independent in our defence technologies in Europe,

Inka Mero says.

• And then, on these other megatrends, which are now happening, like ageing population, urbanisation, and then, of course, the accelerating pace of the disruptions and the changes — offer a huge room for opportunities. The challenges that the European countries have are more systemic, relating to our innovation ecosystem or our demographics. But I think we have a really solid foundation on these opportunities.

Say, a startup is eager to raise fresh capital from Voima Ventures. What is the best advice you can give the founders?

When seeking funding from Voima Ventures, founders should focus on clearly articulating your startup’s value proposition and aligning it with our investment thesis. 

• We back Nordic-Baltic deep tech startups who are building companies with a societal and environmental impact.
• While the technical complexity of your solution may be difficult to convey, it’s crucial to emphasise the scalability, potential impact, and your team’s expertise on the issue you are trying to solve instead of focusing on the granular details. 
• Prepare a well-defined business plan, outlining your growth strategies, and demonstrate a solid grasp of your market and competitors. 
• Highlight your commitment to innovation, sustainability or societal impact, and remain open to feedback throughout the process. 

As specialists in deeptech investments, we bring extensive expertise in areas like cleantech, life sciences, advanced materials, quantum, and AI. This enables us to offer strategic guidance and valuable network connections tailored to startups in these sectors.

And, in conclusion, do you have any future plans you would like to share with our readers?

• We’re planning to expand our presence in Norway and Denmark, and continue to build our operations in Sweden through recruitment of a Life Sciences Investment Director.
• Double down on our efforts to connect with universities conducting cutting edge research into new technologies.
• Continue to advocate for greater boardroom diversity with our Annual Women to Board initiative, as well as fostering female representation in the STEM fields through proactive investments in female founded Science companies.

AIN had the opportunity to interview Denis and Viktor Gurskyi, brothers and co-founders of 1991 Ventures, discussing the fund’s activities in 2023 and plans for 2024, as well as talking about the CEE and Ukrainian markets.

Tell us about 1991 Ventures. What specific sectors or industries do you focus on and why?

We’re a sector-agnostic fund, incorporating priority and interesting areas into the fund’s strategy. 1991 Ventures has a significant historically accumulated experience.

Historically, 1991 began as an open data project. So, we deeply understand Government API and government services, as well as civiс tech. Among 1991 graduates, many companies have built their entire business on open data. Among them are Opendatabot, YouControl, Штрафи.ua. And as open data very quickly becomes big data, we also understand the specifics of working with big data projects with databases and arrays, and how various services are built on that. 

Then we worked a lot with fintechs: with MasterCard, Visa, the National Bank of Ukraine. 1991 supported various projects like platforms in areas of digital health, transportation mobility, clean energy. Accordingly, all these sectors can now be linked to AI+. However, we believe that AI is a superstructure over all industries, rather than a separate industry, as it permeates all industries.

We also understand the specifics of working with B2B, B2G sectors.

We believe that this question is not about which industry the startup comes from, but what added value the fund can offer. Today there are no problems with fundraising capital for any company with an interesting model.

You also emphasize supporting companies and startups that adhere to ESG standards and sustainable development goals. What is the mission and core values of 1991 Ventures?

We believe that the fund should provide, in addition to investments, a certain value. That’s why we don’t want to work with companies that the fund will only invest in and then watch how they are doing. We want to be a part of companies’ growth.

For example, we use our global network of contacts at the corporate, government, and international levels to match companies for further mentoring, partnership etc. If a startup deals with disinformation, we’ll gladly introduce them, for example, to NATO. If it’s a company offering corporate software, we’ll introduce them to Meta, Microsoft, or Google.

Tell us more about the fund’s creation process.

I think it’s better to call the fund not newly created but gained. Because its formation took a long time, which is quite rare for a fund mandated to work with founders from Ukraine. 1991 is an FCA regulated fund, structured in Ukraine. I remember when we were at the Web Summit in November 2022, and then, we already knew we had commitments to the fund. Then the structuring process took almost a whole year.

In the summer of 2023 during Ukrainian Recovery Conference and London Tech Week, we obtained the license. By that time, we had already set up all the documents, and the fund came into force in 2024.

And now, at the beginning of this year, we were able to announce it without any legal issues for us.

You did not announce any investments yet, but said about plans to invest in early stage companies. Tell us how you deal with the difficulties that arise at such stages?

Yes, there are no investments yet. Why not? Because the whole process is still being structured. It’s quite a large and complex historical process. It’s a full-time job for more than a year.

During the work on the fund, many people already knew about it, and we had many private meetings where we talked about future prospects and potential portfolio companies. This helped us build a network of co-investors, those who can invest after us, and those who invest at later stages. This also allows us to understand what form of fundraising to choose.

We believe that this is an important strategy to make such connections. For example, the UK-Ukraine Tech Bridge, an initiative of the British and Ukrainian governments, where an agreement was signed, and our team helped in its investment accelerator. As part of this initiative, 20 companies from Ukraine were selected to be mentored by British investors and will be showcased at London Tech Week.

In addition, it is worth noting that we collaborate not only with funds but also with various ecosystem organizations from Ukraine, such as the Ukrainian Startup Fund.

As for our stage-focus early stages, our fund focuses on investments in the amount of €200,000-€400,000. For the European market, these are small amounts, but if we talk about CEE, this is not an idea-stage startup, but already a startup with a valuation, probably of at least €3-5 million. And this means that this startup already has some validation from clients and organizations and has received grants.

What difficulties did you face during the establishment and operation of the foundation, in particular, in overcoming the cultural differences (and geographical chasms) between Ukraine and Britain? Have you experienced these differences?

It seems to me that the Ukrainian startup ecosystem is slightly corrupted by the American approach to venture capital and startups. In fact, Silicon Valley is corrupted because there is a certain misinterpretation of some principles. For example, the idea of thinking big doesn’t negate the need to be present, polite, modest, open, in terms of transparency. For local British investors we work with, the main thing is the issue of trust and the realism of various projections regarding the assessment of their company in the market. Perhaps this is a somewhat pragmatic approach, but it has more business grounds and requires honesty, or as they say, being a good citizen.

I also want to mention something potentially unpleasant for Ukrainian companies and founders: the fact that the whole world is currently supporting Ukraine does not negate the requirements for Ukrainian startups remain the same as for startups from any other country. Sometimes this line between what is possible and what is not blurs. When a foreign investor meets a Ukrainian startup, they simultaneously have a choice from many startups working in the same industry and not related to Ukraine or Eastern European countries. One must consider the competition that exists beyond the Ukrainian information field, especially when it comes to Britain.

You have been working as an accelerator since 2016. In your opinion, how has the market changed and is it now more difficult for startups to attract funds right now? Have the selection criteria changed for them?

Denis commented:

I don’t think the selection criteria have changed significantly. Of course, there are questions related to compliance, team, but it seems to me that, on the contrary, due to extremely unpleasant reasons related to Russian aggression, attention to the Ukrainian IT and startup industries has grown significantly. And when we talk about the early stages, it seems to me that at these stages, the focus is on the human potential and capabilities, and the talents of Ukrainian companies, which are outstanding compared to other startup teams.

The ingenuity of Ukrainian founders is impressive. Their emotional resilience and flexibility don’t come from the DNA of the company, they come from the person. And these characteristics give Ukrainian founders an advantage on the international stage. And I hope that because of this, Ukrainian companies will become successful because they currently have more representation abroad and exist in many different countries. For example, one founder abroad, and the team in Ukraine, or vice versa, founders in Ukraine, and the team in Poland. All these pirouettes and combinations will ultimately have a great, cumulative effect for the entire industry.

I hope that in a few years, there will be more such small funds for London, but very important for Ukrainian founders, like ours, appearing on an independent basis, as a result of successful exits of Ukrainian founders, or as an allocation of very large funds that want to pay special attention to founders from Ukraine.

Viktor added:

I want to note that in Ukraine, the full-scale invasion is perceived as an invasion directly into Ukraine, but in Europe, in Britain, it is seen as a war in Europe. And this, of course, affects the investment climate.

In 2022-2023, we saw a decline in the number of deals. Therefore, on the one hand, it’s difficult for us to launch a new fund in a crisis, but on the other hand, we understand – this is a very good moment because it has become harder to obtain investments for Ukrainian and Eastern European startups. We believe that 1991 will be a small stepping stone that will help alleviate this and impact the unfavorable conditions in the market.

Tell us about your team.

Before the full-scale war, we had offices in London, Kyiv, and Mariupol. Unfortunately, it has been lost.

In London, the team is small. Viktor and I are GPs of the fund, and we also had one person who left GP and became our advisor. We also have a group of advisors who represent a whole group of five organizations that help the fund in various aspects. We work with them on a regular basis. Global company Morgan Lewis helps us with legal issues,

Denis said.

In Ukraine, we are used to turning to lawyers when urgent issues need to be addressed. The support of a legal company in Britain is somewhat different because they are a permanent advisor on many issues, and they are liable for their work. 

We also have a separate group of advisors who work with us on fund management. The team in Ukraine is working to ensure the stability of the accelerator’s development and to contribute to the development of the ecosystem through events, programs, and so on.

1991 has carried out many programs, accelerators, and other projects in Ukraine, but legally not related to the fund because it is an unregulated activity, even abroad. Therefore, legally these are different things, but still, it’s one group of companies linked together by various elements, such as the brand.

Do you plan to expand, increase the team in Ukraine?

Yes, we plan to, but we cannot share this information at the moment. The only thing I can say is that the Ukrainian community is not limited to Ukraine; there are many powerful centers with Ukrainian founders around the world that have emerged. And we were interested in collaborating with these hubs, which would bring great value to the entire ecosystem.

Tell us more about your partnership with the British funds Venrex and Samos Investments. How quickly did you manage to raise capital from them?

We started working together about a year and a half before the first document was signed. However, informally, we quickly solidified our intent. They formally act as LP’s in the fund. It is worth noting that their role is not limited to financial investments since they are very powerful financial institutions with extensive expertise in the market.

Vendrex is a financial fund, a veteran of British venture capital, and an early investor in Seedcamp. Therefore, they understand well how startup platforms and accelerators transform into funds. And so, they often have something to say and advise.

Samos also once invested in Seedcamp and is an investor in Entrepreneur First. This is a quite powerful program that focuses more on founders rather than business ideas. Therefore, they have a slightly different worldview, but nevertheless, it is very useful.

There is a lot to say about Samos because it is an investment fund that has many different directions, including a separate structure represented by a private equity fund. They provide a lot of advice, expertise, and various connections.

Can you share some of your plans for the future?

One thing I’d like to mention is that the fund typically constructs its plans very simply. They mainly concern portfolio growth and work with the current portfolio. Therefore, these plans are usually not very interesting because the world learns about them when something happens with portfolio companies: they raise funds, or exit, or undergo M&A.

But we would like Ukraine to be sufficiently represented at London Tech Week this year so that the companies that fall under the UK-Ukraine Tech Bridge initiative represent the country. We want to attract the investment potential of the British venture capital community specifically for this initiative because the British government has a lot of contacts in the venture market.

Additionally, 1991 Ventures is an accredited member of the British Private Equity and Venture Capital Association. Through the BVCA, we also plan to develop certain initiatives related to Ukraine and Eastern Europe. Because our goal is to make it easier for Ukrainian companies to navigate in Britain and to establish this connection.

How is your visit in Ukraine, in Kyiv?

First of all, I really like Kyiv. This is not my first visit here. I really like the fast roads, very good conditions. And, in fact, everything is very well attended from the security and safety point of view.

Very glad to hear that. Can you share some developments or agreements between our governments that you are working on during this visit?

We talked about several directions of cooperation, in particular, assistance in providing Ukraine with the Internet, in particular, the Starlink systems, which is very important for the security of Ukraine and which is a priority aspect of Polish assistance.

We also talked a lot about the Tallinn Mechanism [ed. A new format of assistance to Ukraine in the field of cyber security] and about the principles of cooperation in order to develop the back-office within the framework of this mechanism. We talked a lot about how to ensure long-term cyber security mechanisms.

We also talked about the role of the Republic of Poland during its presidency in the European Union in 2025 and about the support Ukraine during this period.

In addition, we talked about the fact that Poland is currently in 3-4th place globally in terms of support for Ukraine from all countries of the world. For Poland, this means 2.5% of annual GDP. Also, some databases and servers of Ukrainian enterprises are now localized in Poland and we declared our readiness to guarantee the security of this data in the future.

I also invited Deputy Prime Minister Fedorov for a return visit to Poland, where I hope he will present the successes we talked about today.

We have a lot to discuss, so let’s start with digital government services Diia and mObywatel. We know that mObywatel 2.0 was released in July 2023, which equated the Polish Digital ID to plastic cards. Almost a year has passed since then. How is the implementation process going and can you share the results?

This process gives a sense of increased possibilities and opportunities to use digital reality to Polish citizens. We can say that mObywatel is the most popular application in Europe today. In the European Union.

We have a rather similar situation with the Ukrainian Diia.

Actually, Diia is the most popular in Europe, but not in the European Union.

Immediately after the Russian attack on Ukraine, some Ukrainian documents appeared in the mObywatel system. Are there any plans at all to further integrate these two applications so that more documents and services have this kind of cross-interaction?

Actually, we also talked about this with the Deputy Prime Minister. Now, with the help of mObywatel, Ukrainian citizens have the opportunity to legally confirm their identity and the legitimacy of their stay in Poland. We want to expand these possibilities in the future.

Every year more and more services are added to these platforms. Could it be that the Ukrainian Diia somehow influenced the development of mObywatel itself? Maybe some functionalities inspired something during the development process?

I would say that it was mObywatel that influenced the development of Diia a few years ago. And now Diia has a greater influence on mObywatel regarding the development of the application. Therefore, it can be said that this is such a brotherhood and sisterhood, like a brother and sister who go to Europe together.

Now back to the topic we discussed earlier. We know that Poland is one of the largest donors of the Starlink systems to Ukraine. In December 2023, this figure reached about 20,000 Starlinks. Can you update us on the current numbers?

Poland provided more than 20,000 of the Starlinks systems to Ukraine. Starlinks ensure the operation of broadband Internet, which is very important for the security of Ukraine, for the interaction between citizens and the authorities. The Internet apparatus is very important because it also provides communication for the military, for hospitals and important infrastructure facilities.

Therefore, to the question of the Deputy Prime Minister, I assured that Poland is ready to continue financing Starlinks.

Very glad to hear that. There are talks that Poland may also start financing of the Starlink subscription service. Are there any official plans or news on this at all?

Does Poland plan to finance the Starlinks it has already acquired? Of course. Poland has been doing this for a long time.

Sure, then another question. How does this mechanism work now?

We just pay for these Starlinks monthly and quarterly. That is, I personally periodically sign this money transfers.

Now to the topic of war. Ukrainian energy, infrastructure and communications, as well as virtual services, very often become victims of russian cyber attacks. Is Poland also experiencing such cyber attacks?

Actually, the threats from russia, if we talk about cyberspace, are the same for both Ukraine and Poland. Every day we see cyber attacks and other cyber threats from russia. The russians are particularly keen on using Malware and Ransomware.

Therefore, it is a priority for us to close these holes in the protection. To do this, we increase our spending on cyber security every year. And now we are working on changes in legislation that will protect more and more sectors of our everyday life with such a cyber shield.

How do Poland and Ukraine generally cooperate in the field of cyber security? Can you share this with us?

We work very closely together and we work very secretly.

But there are things I can talk about openly. For example, from September to December 2023, russian special services started using such programs, called SVR, which could make changes in programming. And the Polish services, together with the American and British services, blocked the access of the russian special services to our servers, which could also be dangerous for Ukraine.

It has already been mentioned that Ukraine has registers in Poland. Is it even possible to transfer or backup these registers on the territory of Poland in general, in order to avoid their physical or virtual destruction?

I think that this is a question for the Ukrainian side, not mine.

Of course. We will try talks to the Ukrainian government regarding this issue. But is Poland open to this at all?

Poland is open to very broad cooperation in the digital field. This is what the memorandum signed today should serve to cooperate in the framework of it on digital protection, data protection, data storage, access and operation of the Internet. We are open to everything, but the decision will be made by the Ukrainian side

And can I ask a little about the details of this newly signed memorandum? What does it cover?

We agreed with Mr. Prime Minister Fedorov that he will talk about the details of the memorandum signed today. Therefore, I will allow myself not to answer this question, because I will talk about these details in Poland. This way, everyone will do their job.

And now to the last question for today. We know that many Ukrainian startups and IT specialists moved to Poland after the war. How has this affected the Polish IT ecosystem, and in short, how is it doing now?

Actually, the IT ecosystem in Poland is developing very well. And this is also due to the fact that there are a lot of specialists who work in Poland, but who are citizens of Ukraine working remotely. Neither Polish nor Ukrainian specialists are competitors for each other because they complement each other well and develop this field together.

I am very happy that 47% of Ukrainian startups that moved to Poland after the start of the full-scale invasion plan to return to Ukraine because it will help the Ukrainian economy.

In addition, Poland, for its part, aims to provide conditions for Ukrainian startups to use European Union funds. That is why, often when such startups decide to relocate from Ukraine, they choose Poland. Ukrainian startups also receive support from Polish and foreign IT companies. And we plan to continue this in the future.

AIN talked to Vitalii and discussed the company’s changes, as well as nine successful deals closed since the full-scale Russian invasion has started.

When you agreed on this interview, you said that InSoft.Partners would change the concept to a group-of-company format. Please tell me the conceptual differences from its current IT holding format.

I would love to say that it’s an old strategic vision with 15 years of planning, and we are implementing it step by step. I love telling such visionary things. But let’s be honest. We just saw another opportunity and started moving to it.

Eight years ago, we started as InSoft Capital. It was a different brand, a foundation. Later, however, we understood that this format was not that convenient. We are more than bold operationalists or classic investors. We are not the ones who like to bite small pieces from many companies as ventures do, for example.

Our concept is rather about private equity with a significant operational profile. So, we consequently transformed into an investment company and then into a holding.

Basically, we started with investing money of our investors. Later, we switched to joint investments with external partners. Then, we decided to spend only our own funds. Now, we use the money of internal partners to invest. And, of course, we continue testing new business models.

What benefits did we enjoy from a holding concept? We consolidated assets within one decision-making point. Why must we become a group of companies? Because it is an ecosystem with all its members’ expertise and a cost-effective structure. InSoft.Partners will be an umbrella brand of a higher level.

Thanks to this, we may now participate in tenders that are unavailable for separate companies. Now, we spend less on establishing foreign offices and purchasing stands at large exhibitions. We apply cross-sales within our group and exchange knowledge between companies and their divisions. Our Lead Generation and Finance teams pretty long organize joint meetings and work united on many projects.

How many companies belong to InSoft.Partners’ portfolio at the moment, and how many employees does the group have?

Currently, it’s eight companies. Seven are in the main portfolio, and one is in the accelerator we started in an MVP format. The number of employees is about 700.

What is InSoft.Partners worth now, in your opinion? The last figure I heard was $40 million.

Naming a figure is complicated nowadays. Look at the current situation. Unfortunately, many international funds or strategists we know say Ukraine is not a place for investments today. Under such conditions, an M&A with some foreign partners would be a coincidence. And, unfortunately, it is usually about discounts or something like that.

So, any company evaluation would be far from reality and sound like a myth.

Still, if you want me to name you a figure calculated based on some math or finance, I would say that, according to our current margins, structure, market share, and operations, speaking about the group as a whole, including previously considered multipliers, we could have grown 1.5 times from the previous estimate of $40 million [to $60 million—edit.].

Nevertheless, it is only a figure. Only closed deals matter.

So, we are only playing with numbers now?

Yes.

You mention an important thing about investor fears. What are the three most significant risks of investing in Ukraine?

Even one reason would be enough. People who are not aware of the everyday events of this war create too many fairy tales. In fact, our image of the war also changed several times, and it continues to change.

Our Western partners were full of emotions at the beginning. Now, it’s rational thinking. For the first six months of the big war, we experienced a compassionate wave of their support and help: donations, contracts, new customers, etc. Some old clients also came back to resume our cooperation. Then, everything started to shrink. Life goes on. The corporations have their quarter and annual plans and middle-term strategies. They think about investments and bonuses, not emotional one-time support but balanced decisions. It is hard to explain to your board members that you didn’t fulfill your plan because your contractor lived an entire week in a blackout and couldn’t visit you for the last two years because he might not leave his unit.

Another fun observation is that nowadays, you can hear that Westerns got “tired” of news about the war. In my opinion, it is in the past now. As I spoke with my foreign partners in 2023, they really could wonder, “You did not sign peace yet, really?” Yes, they indeed asked me this. So now, most of our counterparts never mention the war and simply calculate potential losses from cooperation with Ukrainian companies and local restrictions.

That does not sound optimistic, but thank you for the real picture. Let’s return to the company. You privately told me earlier that the CEO of Inoxoft, Liubomyr Pohreliuk, joined your pool of investors in January 2024. Can we suggest that you are now in the middle of a story of your company and other businesses that joined your ecosystem through syndicated operations can invest in deals of the group?

That’s an interesting topic. Based on my observations, a businessman who builds a working and profitable business that doesn’t grow anymore will eventually feel bored. All these entrepreneurial extremes turn into routines, such as endless Groundhog Day, and the entrepreneur gets eaten by the routine.

Actually, we created a way for our partners to look beyond their routine operations and switch to investor relationships with us. We applied the current business model with Inoxoft longer than others, made plenty of changes, and established deep business relationships. That’s why we tried to expand the partnership format with them specifically.

With Liubomyr, we sought a potential target, conducted negotiations, estimates, and trades, and closed a deal. It all resulted in a new company in our portfolio, Rolique. And Liubomyr was not a passive investor here since he had been deeply involved in strategic and operational process development. Now, the whole group watches Liubomyr’s professional transformation and helps him because other partners are interested in switching their roles similarly.

You also mentioned syndicate. We discussed creating something like this because not all partners are ready to enter other businesses on the operational level. However, they are interested in co-investing. It’s all about finding an investment model that would be useful for all of us. Maybe we will create an internal corporate fund with interested partners.

Tell me about your evaluation procedures regarding companies you invest in.

We look at the essence of a business and check whether it has severe problems in its structure. If it doesn’t, we seek low-hanging fruits, the processes to solve pretty quickly to increase its revenues.

During the screening, we look at founders. We very appreciate an effective partnership. Every day, we work together. And such a personal connection and mutual understanding and vision are keys to a long and complicated way.

We look at companies with 100-250 employees. We can lower our expectations for a niche business or one that can quickly take over a niche.

It should be a developing company that is profitable and oriented toward Western customers. As always, we are interested in leaving the founder in charge, but we are also very close to the control share. So, we used to buy 30% of a business, but now, our appetite has grown to 49%.

In February, you also used the option to increase your share in Noltic.

To be honest, I think we did this before, too, but without a systematic approach. And after Noltic, we add such options to the contract. It’s a win-win because this option is effective for buyback deals. A buyback is when the founder can buy our share if we find our partnership non-convenient for both parties. In such a case, we wouldn’t hold our part of the business and exit pretty easily, saving good relationships with the founder.

According to this concept, we purchase smaller shares at the beginning. Because, in the case of a buyback, the founders could struggle to buy their part back. However, if a partnership works well during some time, we use our options then. It’s what we did in Noltic.

At the beginning of our conversation, you talked about an internal accelerator. Remarkably, some market players started developing their own accelerators. Tell me the conditions of how to join it.

You should know that our project is not a classic accelerator. One day, we got an idea that we could help grow both companies we used to—with 100-250 employees—and smaller ones, with 40-50. That is what we call acceleration. We share our experience and support through training, routine building, and, sometimes, branding. However, our work within the accelerator differs from our core business model. To start cooperating with our core companies, you should first go through the accelerator and grow.

Our readiness to test such an approach and the Perfsol founders’ wishes matched. I believe it is a win-win. If we win this story, it will be a win for both sides and a new opportunity for the small service company market.

Only IT companies can be candidates for acceleration, right? Or are you ready to try other domains, too?

It is the second option. I believe in niches, and we will go beyond the service IT domain. Our knowledge about lead generation, business development and operations, and the ecosystem we are building would be relevant for other niches. It is only a matter of time.

How do united teams work now as a group of companies? I remember you merged lead generation and helped each other with legal expertise. What else is there?

Yes, our lead generation and finance teams work together every week. Other teams have done it ad hoc so far. We have a small internal university our trainees attend to learn quickly on real cases. The same goes for finances—we solve non-trivial issues, for example, how to open a bank account for an Estonian entity. Everybody who has done this knows how painful it is. But together, we managed to solve this.

We also use the umbrella brand to participate in tenders. Competing at tenders is a known problem for small Ukrainian companies, up to 200 people. But if they apply as part of a large group of companies, with all its strengths, they will at least meet formal criteria.

So, if you have a small business with up to 150 employees and want to open a foreign office, it means many complications and costs for you. You must find a physical office, negotiate, understand how to hire and work with people in this country, pay taxes, consider cultural differences, etc.

But if you have eight companies in one office, it all is much easier. It is cheaper since the costs are split between all, making them irrelevant on the scale of a single company. And then, you have an expertise multiplication effect with every player aboard.

Speaking of foreign offices, where are you currently present outside of Ukraine? 

Our companies already have their own small offices in different countries. What’s different about the current project is that we will immediately open such offices under a common brand, where dozens of people will work together. This will be more interesting for clients and the team. Because for partners, the logic here is based on the principle: “It does not matter if you want. You have to.” More and more clients are requesting cooperation with at least a part of the team outside Ukraine. Accordingly, we realize that this is a crucial step for us to develop further. 

We are now opening our first office in Poland, in Wroclaw. We will continue to move forward according to the Agile principle: depending on how the first office performs, we will decide on locations, size, and timing.

Today, you said that a serial entrepreneur is always about a different routine. Speaking of InSoft.Partners, what is the next milestone you see for this project? 

There will always be a routine. Maybe I didn’t make my point clear enough. Jumping from one dopamine game to another also raises questions. First, you need to make an MVP out of an idea, then a system, and scale it. But then the system will have to be improved. Of course, somewhere later, you can hire managers. However, everything comes in due time.

As for milestones, first, we need to establish a process where the founders of the companies from the group will systematically contribute to the group’s expansion, as Liubomyr from Inoxoft did. Secondly, we need to resolve the issue of the corporate fund because our partners have such a desire, and it would be logical to keep the money in the system. Thirdly, we need to test the idea of our accelerator. Fourthly, we need to go beyond the classic service IT. 

Next, we shouldn’t forget about our foreign offices because if the concept works, we will have an exciting way to become more and more international. Then, we will move into another league when we start investing in expansion through a leveraged buyout mechanism. 

AIN had the opportunity to talk with Venla Väänänen, Marketing & Platform Manager at Maki.vc, discussing the fund’s activities in 2023 and plans for 2024, as well as talking about the CEE and Finnish market.

Tell us about Maki.vc.

Our founding partners include Ilkka Kivimäki and Pirkka Palomäki. We also have Pauliina Martikainen and Paavo Räisänen as partners. Maki.vc invests in brand-driven and deep tech startups at pre-seed and seed stage. Our portfolio includes for example European quantum leader IQM and sustainable fiber company Spinnova. Additionally, we have €180 million AUM.

Maki.vc partners with deep tech and brand-driven companies obsessed with challenging category norms. The Nordics are our home, but we take on a global front in spotting the unexpected — venture capital investments from B2B to B2C, with a sweet spot for scientific advances, strong IP, and customer understanding that looks beyond convention.

What have been some of the biggest challenges you’ve faced in building Maki.vc, and how have you overcome them?

Macroeconomics affects the venture capital industry in many ways, as it affects how many top notch founders are out there, how much top talent is available and how much financing is available in different stages of a startup.

That being said, having a talented team surrounding me and trusting in the investment & platform process that we have has always carried us through the hurdles!

How is Maki.vc’s performance in Q1 2024: how many investments were closed?

During first 4 months of 2024, we closed a number of investments, adding bright founders and brilliant companies to our esteemed portfolio. While we’re unable to provide specific details at this time, our team excited about the potential these companies hold and look forward to sharing more information as appropriate.

Were there any successful exits yet?

Our portfolio company Ultimate.ai was acquired by Zendesk and Alvar Pet was successfully merged with Kivuton, also bringing aboard a new majority shareholder.

How can you describe the Nordic VC market now, in particular in Finland? 

The Nordic VC market, particularly in Finland, is vibrant and dynamic, with significant potential across various industries. We’re witnessing a diverse range of innovative startups and entrepreneurs emerging, fueled by a robust ecosystem of support and investment.

In Finland specifically, we see a wealth of opportunities across sectors such as technology, healthcare, sustainability, and beyond. The country’s strong tradition of innovation and world-class talent pool continue to attract attention from investors globally,

At Maki.vc, we’re particularly excited about the prospects within the Nordic VC market. We believe in the power of disruptive ideas and are committed to supporting the growth of promising startups that demonstrate potential for scalability, innovation, and impact.

Tell us more about Maki House. Does this community still exist and what is the focus of its activity? 

Yes, and it’s thriving! We strive to be an accessible and yielding powerhouse with a global foothold. Whether building from scratch, fine tuning a product or brand, or navigating new markets, our entire network of investors, LPs and brand partners works side by side with our companies to supercharge their growth. Monthly, we bring global industry pioneers to talk with our founders and executives about a range of topics:

• People Management;
• Product;
• Financial modeling;
• Branding.

Previous speakers have included founders of Wolt, Product lead of Uber/LinkedIn, VP People of Payhawk, and much more.

For a while now, our special emphasis has been ESG related topics. We believe that by keeping ESG at the core of our work, we are able to build truly resilient and remarkable companies that can thrive through the hurdles of reaching sustained business growth,

We integrate ESG practices throughout the investment lifecycle, all the way from due diligence to exit. Our emphasis lies in identifying risks related to our portfolio companies’ operations, as well as approaching ESG as an opportunity to create value in pre-seed and seed stages

Has anything changed in Maki.vc’s approach to investments recently? Did the average ticket size, focus, or geography change in any way?

We continuously evaluate and refine our investment strategy to adapt to evolving market conditions and seize emerging opportunities. While our core principles remain steadfast, we may make adjustments to our average ticket size, focus areas, or geographic scope to best align with our long-term objectives and maximize value for our portfolio companies and investors.

Does Maki.vc experience any effects due to the harsh geopolitical climate, war in Ukraine in particular?

Maki.vc remains vigilant and closely monitor the situation surrounding the war in Ukraine and its potential impact on our investments and the broader market. While geopolitical events can introduce uncertainties and challenges, our diversified portfolio and rigorous risk management practices help mitigate potential risks and ensure resilience in the face of adversity.

Among most recent rounds joined by Maki.vc were Norwegians Databutton and Strise. On a personal note, can you tell us about the specificity of the fintech and deep tech investments made by Maki?

Fintech and deep tech are two areas where we see tremendous potential for innovation and disruption. In fintech, we’re particularly drawn to startups that are leveraging technology to enhance financial services, drive efficiencies, and improve user experiences.

With deep tech, our focus is on companies that are pushing the boundaries of technology and innovation across various industries, from artificial intelligence and machine learning to robotics and quantum computing.

In terms of industry trends, we’ve observed a steady increase in both the volume and number of deals within fintech and deep tech sectors. This growth reflects the expanding opportunities and heightened interest from investors in these areas.

What are your plans for the future growth and development of Maki.vc? 

Our plans for the future growth and development of Maki.vc revolve around positioning ourselves as the foremost Nordic seed VC investor and supercharging our platform offering to provide our founders with the best resources available.

Not long ago, the company closed several deals with $50,000 checks with Mantis Analytics, CloudAvocado, and Fintellect and invested $180,000 in S-Lab during the seed stage.

AIN spoke to Andrew Zinchuk, the co-founder, about the most successful startups “to become unicorns,” minimum checks to join a syndicated network, and exclusive details of a new crowdfunding project for investing in defense tech startups.

“If you want our funds, come to us at least six months in advance.”

Nowadays, you actively participate in syndicated deals through your own ZAS.Syndicate community. Are you satisfied with the results, and how does it technically look in reality?

We are one of the first syndicates in Ukraine, right after ICLUB. Our first deal was with Zeely in early 2023.

Following our example, other ventures created their syndicates: Toloka.vc, SID Venture Partners, or United Angels Network. The last one is developed by Ivan Dmytrasevych and Sasha Reminnyi.

You must understand all syndicates have their missions. We, as a venture and a syndicate, are focusing on startups with Ukrainian founders. Our mission is to support them with investments. The conditions are that most team members are in Ukraine and a foreign legal entity, for example, in Delaware (USA) or Estonia. Unfortunately, it is what the current market dictates, and we can’t change it. And the last condition is a startup’s active traction.

As a syndicate, we invest from pre-seed to Series A. We and our investment company usually sign two $100k checks in parallel against specific KPIs during the pre-seed stages.

Our goal is to make one deal every month. How it goes: We give a pitch deck and a brief project description to our investors. After that, we send interested parties a deal memo, detailed information about a startup, and our “homework” about why we believe it would be worth investing in. One or two weeks later, we will do an introductory call with the startup team. Then, we will involve the interested investors who showed in this deal.

Which startup requirements do we have? If you want our funds, come to us at least six months before fundraising. We are the only one in the market with office hours: you can come during those hours, pitch your startup, and get our feedback. We will follow your activity after you get us interested.

The closer the fundraising, the more we will give you mentorship. During these six months, we want to see three things. The first one is the startup’s delivery or how they achieve KPIs, follow the roadmap, and perceive feedback. The second thing is the startup’s fuck-ups and how their team solves critical issues. And the third one is status updates. We have specific monthly report forms.

We see the importance of running this track together and discovering more about the project team. Because you usually invest in the team during a pre-seed round. 

Another critical startup pre-development assessment indicator is our 3-3-3 method: three months of traction in a foreign market (most of the time, it’s America and Europe), at least a $3,000 MRR, and a 30% growth until the end of the month. Although some startups struggle with fulfilling those requirements, for example, a B2B project with complicated sales, low-touch selling projects can do it.

If a startup does 3-3-3, we invest $100,000 in installments through our investment company against set KPIs and make another $100,000 deal within our syndicate. For instance, we invested $50,000 through our foundation within the deal with S-Lab and had to invest the same amount from the syndicate. Nevertheless, we raised $130,000 as a syndicated investment, resulting in $180,000 in total.

We always make pre-seed investments from the investment company first, so it takes the most risks. We split a check in installments according to the KPIs achieved. And in three to four months, we present the project to our syndicate. So, the syndicated deals face much fewer risks thanks to the startup’s live traction. However, the syndicate must consider investing based on an evaluation of the foundation. Then, we invest in seed, later seed to Series A with a check of up to $1,000,000.

So, we closed three syndicated deals last year. The first one was Zeely—$125,000—which raised $1m within the round. The second investment was $500,000 in ComeBack Mobility and a $500,000 allocation against achieving the set KPIs. The third deal was S-Lab, which got $130,000 from the foundation and syndicate. That means we invested almost $800,000 in 2023 only through the syndicate.

Zeely is worth my special attention. They finished the third year of their product existence with a $300,000 MRR and a $4,000,000 ARR. And now, they are closing a pre-series A round with an evaluation of $26 million. We prepared a $500,000 allocation and almost raised the amount.

For our syndicate members, the round was closed in March 2023, and a new round started in December 2023, six months later. The startup evaluation increased from $10m to $26m during this period.

“We will make 12 to 15 deals this year.”

How does your syndicate look from the inside?

We have no paid membership, but all members must invest at least in one deal a year. If they don’t know how to invest, they learn together with us.

In order to join us, you should fill out an online form on our website and wait for my call. I do all the calls with potential new members to understand if our values match.

We also created a Discord channel where syndicate members can chat, discuss ongoing deals, and back our portfolio startups. A highlight of this communication will be our first offline community event to devirtualize and present the next startups in our pipeline.

How many members do you have now, and what is a minimum investment check?

Our community has about 70 people at the moment. $10,000 is the minimum check within the syndicate, but it also could be $5,000 in case of a joint investment with our venture firm. We understand our responsibility to select syndicated deal investors. They must bring relevant expertise and help a startup grow, even if they signed small checks.

When your venture created a venture firm in the past year, you declared a goal to do 30 pre-seed investments in Ukrainian startups. Do you catch this goal?

We follow our plan. Last year, we closed four deals. This year, we will do 12 to 15 more. And the remaining deals will be closed in 2025. Our great goal is 30 new unicorns in Ukraine until 2034.

Which startups would be the fastest to achieve a $1,000,000,000 evaluation?

I think it would be Zeely. They plan a Series A round until the end of 2024 with a sound multiplier after this round. And I know some serious players are watching them.

They meet the T2D3 (triple-triple-double-double-double) requirement: after getting its first $1m ARR, a startup should grow triple in the next two years and double again within three years. Zeely grew up four times after its first $1m ARR.

I may also not name another project yet because it is our next potential deal. If it fulfills signed contracts, it will most likely become a unicorn within the next 3-4 years.

“The investors are very compassionate with the events at the forefront.”

ZAS Consulting is a part of your ecosystem. What does it do?

It’s new. I found its importance when I saw how many foundations look for Ukrainian deal flow but don’t know where to find it. The initial war shock is long behind, and they want to invest. We provide two simple services: paid access to deal flow for subscribers and analytics. We are an experienced venture and know how to do due diligence, reference checks, and background checks of founders.

Including Defense Tech, correct?

Correct. By the way, we launched the first equity crowdfunding platform in Ukraine, BeFunders, exclusively focusing on defense tech projects. Any startup confirmed by Brave1 can be placed on our platform and funded by Ukrainian residents. The checks start from $100. The motto of this project is “Become a Co-Owner of Our Victory.” Last week, we closed the first deal which we will publicly announce in July.

So, we work in stealth mode now. Since it is a B2C story, it requires a decent technical implementation because when Russians see the platform, they will DDoS it.

We solve two issues with the project. The first one is the so-called “donation tiredness.” People become co-owners of the project and can get an upside when the business transforms or gets sold, or an exit will happen.

The second problem is gambling—some soldiers, unfortunately, lose all their combat bonuses or take loans. And we give them a chance to invest in a new military development instead of gambling. They will use the product among the first and make more “Russians good.”

In previous interviews with AIN, you mentioned a curious detail: ZAS Ventures doesn’t invest in startups in the Web3 and hardware domains. Did it change or not? Because many defense tech projects work with hardware.

We don’t work with Web3 if it concerns cryptocurrencies or related services. However, if it concerns a direct blockchain application in a real-economy sector, we are ready to examine such projects more closely.

Our investment company doesn’t like hardware, it’s true. However, our next deal is with a hardware company with a founder you can’t refuse his offer. He has 20 years of experience in the industry and a lot of successful cases. If it were someone else with shorter traction, I would say no.

My last question is about the Ukrainian investment market. In the past year, you said that, unfortunately, only a few investors pay attention to 100% domestic Ukrainian products. Is it better now?

Let’s focus on syndicates and our foundation. In Ukraine, we invest only in local founders as the only pre-seed investor. The others always have a condition of having a diversified foreign presence.

I see the investors are very compassionate about the events at the forefront. For instance, everyone awaited the counter-offensive in the past year. But it didn’t succeed, and enthusiasm decreased.

In any case, there is always a space for optimists. Three weeks ago, I was in the Czech Republic at the Invest in Bravery event that united an insane group of investors—different foundations, angel investors, private equity, etc. They showed great interest in Ukraine, and in September 2024, they will organize a new event in Kyiv at which the best startup will win a prize.

After this event, I returned to my hotel room at ten o’clock at night and wrote to all the founders and managing partners of ventures I know in Czechia. They all responded within three hours, and I met all of them during the next three days of my business trip. So, you can imagine a level of interest in the events happening in Ukraine. They also told me about their support of general and defense tech funds working for Ukraine and trying to exchange deal memos, which inspires people who consider a crisis a time of great opportunities.

She separated from RAZOM because she wanted to be effective in miltech besides the existing humanitarian projects. Lyuba has a vision of which problems need to be solved and how. She also worked on document flow digitalization at the Odesa Regional State Administration. In an interview for AIN.Capital, Lyuba Shipovich shared her ideas.

“Ukraine seemed not to have a future.” Moving to the USA in the 2000s

In 2008, you moved to the US. Why did you decide to emigrate? Why to America? You already worked for a Canadian company in the third year of your study at the National University of Kyiv-Mohyla Academy.

I worked for the Ukrainian branch of Tangram, and it helped me get a job in the US because a recommendation letter from Canada was almost the same as an American one.

In 2008, all patriotic movements that boomed after the Orange Revolution in Ukraine, which I passionately attended during my student time, stagnated. A dark era seemed to return when Yanukovych became prime minister, looking towards Russia again. It was my period of youth maximalism when we believed all our successes and ideals after the Orange Revolution’s victory had been betrayed and canceled, and I just wanted to run away from it as far as possible. Ukraine seemed not to have a future.

And I started to look for opportunities abroad. At the time, many Mohyla Academy IT faculty graduates moved to New Zealand, Canada, and the United States, which were my three best options. I filled in applications for IT specialists in these countries and got an email that I won a Green Card on the day I protected my diploma work. It was how I chose the country to emigrate.

What were your career steps in the USA?

I moved to New York City, where my relatives lived. I didn’t communicate with them much before leaving Ukraine. Then, they were unknown to me since I had met them only as a small child. However, it was my starting point.

During the discussion on my perspectives, my relatives said, “Forget all you learned in Ukraine. Everything goes differently here. A friend of mine, a brother of my mother-in-law, worked in a good company. We will ask him to help you. It is so difficult here to find a job!”

I listened to them carefully and decided to research the US labor market myself. I read articles on famous job portals like Dice or Job Monsters. There, I learned that the average response rate is about 7%. I decided to send 100 CVs a day to get seven calls for a job interview. Every morning, I woke up and applied for 100 different IT vacancies.

But it appeared I was wrong about statistics. Seven percent was the average response rate for the whole labor market. In the IT industry, this indicator was much higher. About 50% of my emails got responses. After a week, I had to change my phone number due to an impossible amount of calls and interview invitations.

I left two job offers, negotiated a bit, and got my first IT job after only two weeks in the US.

This small startup, EZ Texting, grew into a large company with offices in three countries and many employees. I grew with the company up to the CTO level. I spent there over seven years.

I persuaded my boss to expand beyond the United States and open an office in Kyiv. We did it in 2012. And the office still works here, although my boss sold the company, and I left it many years ago.

What was your job at EZ Texting?

It is a mass texting platform. It was a popular service in the US during Obama’s campaign, which widely used texting before his first presidency to access the voters. Thanks to that, emergency push messages evolved. There was also communication between school teachers and student parents and business newsletters.

The platform provided mass sending and receiving text messages. It was a two-way communication, for example, for TV shows that ask you to text a keyword.

After you moved to the US, your relatives said you should forget everything you learned in Ukraine. What was the difference between Ukraine and the USA?

There is a stereotype among immigrants that you should start from scratch, from the bottom. You must forget the education and experience you had in Ukraine. In reality, it is a myth. Maybe it was so when Ukrainians migrated to the USA in the 19th century and worked in mines in Pennsylvania.

But it is long not so, I believe. Ukraine gives people a good education, especially in trans-border professions, such as computer sciences, finances, pedagogics, and medicine—all multinational subjects. And Ukrainians have always been well integrated into English-speaking society. They read scientific papers. They participate in international congresses. So it’s a cliche that you must work hard at the worst job after moving to a new country. It’s long not true.

“I didn’t know how to translate хабар.” Opening an office in Kyiv

Were you not afraid to open the office in 2012? Yanukovych was the president of Ukraine, and there were obvious economic and political risks: a non-transparent government, corruption, monopolies, etc.

I have lived pretty long in the United States at that time. If you live far away, you can forget what things are in reality and start wearing pink glasses. You only return during a vacation for a few days, and it all looks pretty. The restaurants are working. Your friends are smiling. All this influenced my point of view.

So, we needed an office to represent us in Ukraine. I contacted several real estate companies to find a proper one and suddenly got lost in translation because I didn’t know how to translate хабар [bribe in English—edit.].” I didn’t know how to explain to my boss that if we like an office, we must give a bribe to its owners to get this office. Later, I managed to find a proper translation. But back in 2012, I was shocked and forgot such things could exist.

One day, I even thought the idea to open the office here wouldn’t work. Those days, real estate agents looked like big guys with barsetkas [specific handbags—edit.] who showed us real estate in Kyiv.

But fortunately, it went well thanks to our great partner, Alex Lutskiy, Founder & CEO at Innovecs, whom we met through our friends. In a hotel lobby, Alex presented his drawing portfolio. He told us about Innovecs, a company that has yet to be established. Now, it’s large and famous in Ukraine. But then, it was only drawings. The founder of our company, Shane Neman, asked me, “Do you believe they can do it? That these drawings wouldn’t be it?” I answered, “Let’s try first, and we’ll see.”

Four weeks later, we visited their new construction object near the Taras Shevchenko underground station. It had bold walls and unfinished renovation. Shane asked me again then, “Are you sure there will be something here? An office?” We believed in them and became their first customer. They built an isolated office for us from scratch and helped hire people. That’s when the outstaffing concept arose. It’s when a hired person carries out all the job duties for a company (client) being officially employed by another company (outsourcing agency).

I remember other customers coming to our office and telling us about the results of that kind of partnership, where we played a role model.

What was your boss’s reaction to the bribe situation?

None. I didn’t inform him. I just told him the owners didn’t want to lend the facility to us. I was ashamed and decided not to share this and avoid Shane’s disappointment in Ukraine.

Returning home and the beginning of the war

How did your career continue in Ukraine?

In Ukraine, it didn’t. We created an office; I returned to the United States and built my career there. Later, we sold EZ Texting to Callfire, a larger business that kept the Ukrainian office.

At the beginning of the Revolution of Dignity, I was in the United States. My friends and I registered a non-profit organization, RAZOM, and started helping Ukraine with funding, providing agency, and protecting Ukrainian interests in the US.

And suddenly, a war began in Ukraine. At the same time, I continued working as CTO at EZ Texting. I had two full-time jobs—I helped my native country and led the technological development of my company. With this adrenaline, I could work so until the summer of 2015.

Then, the company was sold, and I received my part, which was enough to live a year without a job. So, I quit the company and went to Odesa to work in Mikheil Saakashvili’s team on things I knew well—digitalization.

It became the first region of Ukraine to provide digital document management and digital services at a state administration. There was no Diia at the time. Dmytro Dubilet and I worked on iGov, a government services portal, and launched the first digital services in the Odesa region. We also implemented more projects like Affordable Meds, where patients could check budget reports online.

I have been to Odesa until 2017. Then, I came back to America since I had no more savings. I changed two jobs because I believed I could work for somebody as an employee. But it appeared I didn’t. That’s why I founded my own US-based fintech company, Data Ocean, in 2020 with an office in Ukraine that became profitable within a year, which was very fast and successful. I couldn’t believe it was so easy to achieve.

We had great development plans. However, on February 24, 2022, all our key specialists in Ukraine went to the military commissariats. Almost all of them continue to serve and destroy the invaders. So, we paused the business in 2022. It was absolutely natural.

Two months before the full-scale Russian invasion, we planned our actions in the case of a big war. And on February 24, there was no panic. Everybody followed instructions: where to deliver papers, equipment, etc.

I am sure, as a business, we were well prepared for this scenario. I remember my friends from other businesses laughing at me on Facebook when I asked them how they would prepare for the invasion.

Did you not plan to replace your employees who went to serve?

Our business is pretty special—it’s the registers for bank compliance monitoring [checking if actions of a company and its employees are legit—edit.]. It is about sensitive data. On February 24, we shut down all servers at once because personal data was one of the enemy’s primary targets. And now, while having a physical war on battlefields, we also have a cyber war that caused data protection costs to increase. So, our business became unprofitable in front of multiple cyberattacks.

Thus, the registers operate in the private mode. We grant access to the Ukrainian special services and the Anti-Corruption Action Center. There are no public packages anymore.

They could return in the future, but after Russia has been destroyed. Today, the business can’t be my No.1 priority. It is the support of the Defense and Security Forces of Ukraine for me and many Ukrainians.

What benefits do the special services get by accessing your databases?

We provide access to our compliance registers, mainly regarding politically exposed persons, their connections, associated legal entities, etc. It is pretty helpful for different investigations. DataOcean is not just a name; it possesses vast datasets.

Dignitas Fund

Let’s discuss your charity activities and Dignitas Fund. When, how, and why did you create this foundation?

At the end of 2013, several Ukrainians in New York and I created Razom, a fund that helped Ukrainian citizens during Euromaidan and supported veterans later. In 2022, Razom could raise over $65 million, $48 million of which became military aid, mainly tactical medicine equipment and UAVs. In 2022, I came to Ukraine from the US because I believed I had to be here to provide qualitative aid.

At the end of the year, we discussed our priorities for 2023. The board members in the US and I had some differences in the vision of the future. They stayed in the position to cut military support and focus on humanitarian aid. I didn’t understand it. How can we support humanitarian actions when people die every day, and the war goes on?

We must support the military to avoid the endless needs of suffering civilians. The enemy must be stopped so that we don’t have to buy more prostheses and care for more orphans.

I didn’t want to protest and persuade them of the importance of my point of view. Therefore, our military and veteran project teams decided not to argue. We separated into a new fund where there would be no doubt about which projects to support. Because it is a foundation that provides special technology aid to the Security and Defense Forces, that’s how Dignitas arose.

It wasn’t a new beginning since we had running projects with active teams. For example, we got the Victory Drones project that was created in 2022 and the Flight to Recovery project aiming at rehabilitation of heavy-wounded soldiers. We continued delivering drones to the army. By doing so, we didn’t interrupt working and focused on tech support and training of the Armed Forces of Ukraine, National Guard, Border Service, and other military units.

Are you still participating in RAZOM activities?

No, I quit. I am its co-founder because this title can’t just disappear. But I left the board and totally focused on Dignitas.

Which Dignitas’s projects can you name based on the most effort made?

• Victory Drones is probably the largest and the most famous project in Ukraine. Mariia Berlinska leads it within our fund. First and foremost, Victory Drones provides training to our soldiers on how to apply technologies in the war. Over 50,000 combatants have finished practical training on training grounds within this project.
• The Development of the Ukrainian Miltech Community is an association between military tech robotic systems and producers of AI technologies.
• Furious Birds provides military units with combat drones manufactured in Ukraine.

All our projects are connected. At Victory Drones, we develop a manufacturer community, and at Furious Birds, we purchase UAVs from Ukrainian manufacturers to support their growth.

• 1000 Drones for Ukraine supplies surveillance drones to military scouts.

We split combat and surveillance drone initiatives since we may not raise funds for the last ones in the USA. So, Furious Birds doesn’t work in America, but 1000 Drones does. We have one legal entity in the US and one in Ukraine to balance and decide what and where we can do.

• The Flight to Recovery project trains boys and girls to assemble, repair, and pilot UAVs during rehabilitation. We establish training rooms at rehabilitation centers where trainers can do their lessons. Watching a veteran who lost three of his four extremities operate a drone is exciting. It is a masterpiece and extra motivation for veterans in rehabilitation. It also motivates our trainers and military students when one can say, “Look, your comrades can fly even without hands. What is your reason to say no?” It is one of my favorite projects.

• Protecting the Beauty of Ukraine is a joint project with EVA. Its goal is to teach 100 female soldiers aerial reconnaissance and provide them with equipment. Now, the half of the project is behind.
• The Mobile Shower Laundry Unit is a project that looks different from the others. However, its name corresponds with the name of our fund. Dignitas means dignity in Latin. And the hygiene of soldiers is about human dignity and accessibility under any condition.

Currently, we put our Veteranius project on hold. It aims to teach soldiers civil IT. It is about helping Ukrainian veterans reintegrate into civil life. At the moment, there is no demand. But we are ready to resume it any time. Some of the mentors from this project educate soldiers on training grounds within the Victory Drones project. Otherwise, if the war slows down or there is a demobilization wave, we will start to adapt veterans to the civil IT industry because all our projects are dedicated to technology. We believe we can save lives, help equalize the battlefront situation if the aid volume is sufficient, and even win at some parts of the front. That’s why we invest in the development of miltech the most.

You have another initiative—UAV Engineer—teaching to craft and operate UAVs.

The UAV Engineer is a course on the Prometheus platform powered by Victory Drones. We have three online courses:

• Technology Application during the war is a restricted course for combatants access to which is granted upon requests from their commanders.
• UAV Engineer is a basic course for all.
• People’s FPV is about handmade drones.

The two last courses have free access.

Why are there public and restricted courses?

The Technology Application during the War course has been developed for the military only. It has military officers as lecturers and special topics correspondingly. We verify its participants to restrict combatant access only to avoid leaks to the enemy. Part of the training materials have already been leaked and translated into Russian. However, we constantly update the materials and keep them closed so the enemy doesn’t feel we help them. It contains a lot of sensitive data regarding nuances of technology applications in Ukraine.

“A million drones is a real and too small number.”

Now, we have more and more drone operator schools. What mistakes do they make that can be avoided?

People must understand that civil and combat drone operations are two different skills. Civilian pilots don’t turn into good front operators automatically. So, civilian schools must have military teachers who serve and know how to work at the zero line. Or you can constantly be in touch with them because technologies change quickly. It means the things that worked two months ago don’t work today.

Our trainers do field training directly on-site, close to the front. The trainers also must not lose their practical skills.

The war is such a huge impulse for technological development that civilians must spend much more time catching up.

What is your opinion on the development of miltech in Ukraine?

It evolves amazingly fast. It is only a pity that the war caused this. Another pity is it happened with delay. If we had such technology evolution at the time of the full-scale invasion, we probably could strike Russia back beyond our borders relatively fast. But unfortunately, we didn’t have this technology two years ago.

It would be unfair to say that the state doesn’t pay attention to miltech development. There is a state-backed Brave1 agency, a Ministry of Defense accelerator, the Army of Drones project, mass drone purchases by state bodies, etc. But it all is still not enough for such an intense war.

We must buy more. The government should invest in technology development before purchasing ready solutions. Because in order to develop a business that can sell its products to the state, you must invest before. The business should be sure its products will be purchased.

The government officials say the government will buy over a million small drones this year. But first, someone must manufacture them. The manufacturers without signed contracts are not ready to scale up their production without guaranteed sales in the future.

One more time, only short-term contracts are signed today. The state should make at least middle-term or three-year contracts so that the businesses can plan their production expansion.

Unfortunately, R&D and initial production expansion stages are possible only thanks to private investments and charitable organizations. They are ready to buy even those drones that haven’t received a state certificate yet. Thanks to this, the manufacturers can survive and slowly develop. However, it would be much faster if the state concluded contracts with guarantees and invested in production development.

And, of course, there is a lack of standard ammunition for drones. Civilian companies manufacture drones and no ammunition. They provide vehicles and products that can transport something.

Nowadays, over 90% of soldiers craft explosive devices, which is connected with some difficulties by drone projecting. Because the manufacturer doesn’t know the weight, form, and size of a self-made explosive device and therefore cannot make an optimal vehicle for it, another problem is those explosives are not safe. They can either not explode or explode during a drone start. We have many operators wounded due to a lack of standard ammo. And this part can be resolved only at the scale of the government.

We visit the frontline quite often, bring aid to our soldiers, and speak to our military instructors. I even did a few tours for officials from the Ministry of Defense. I asked them to look at how the ammunition is produced on a bold clay floor in a simple house.

And what did they answer?

It was not “old bulls.” They are young people who came into their offices to make changes, and they were shocked and tried to figure out how and why such things happen. And I know there are some improvements in the field of standard ammunition. The three ministers announced their development during the recent events we visited together. Still, there is no standard munition on sites.

Do you believe in the promised one million drones?

It is a real and too small number. According to our calculations, we need about 3.5 million FPV drones for this year.

What will be the costs?

Speaking of FPV drones, they cost about $500 apiece. It is not big money for the state. The government could invest in this to let manufacturers expand their production and sign long-term purchase contracts.

What do Ukrainian manufacturers do to be more independent from Western help?

In fact, we don’t depend on our Western partners in FPV drone production. The parts come mainly from China.

At the same time, Ukraine tends to localize production and evolves pretty quickly. Sure, we won’t be able to use only local components shortly. For example, there is no option to set up microchip production in Ukraine within a few months. It is years of mass investments. However, some components can be replaced soon: plastic and carbon parts or flight controllers are already made in Ukraine. The same works for engines, fans, and electronics.

Some big Western companies have even expressed their interest in our production facilities. They want either to create production here or sell such products to us. About a month ago, American media published hot news about the White Stork drones. The project seems to be associated with the ex-CEO of Google, Eric Schmidt. These FPVs are supposed to be used in Ukraine. So, the West understood how important unmanned aviation technology is for current wars and that tanks would soon be put on sale as non-liquid assets because a tank costs millions of dollars, and a drone costs only $500.

NATO members follow the experience of Ukraine, and I think they will refill their armories mainly with UAV technology in the coming years. Many European and American business representatives visit Ukraine to learn about our experience.

How did the attitude of average Americans to the war in Ukraine change?

I visited the United States in December 2023, and Ukraine seemed to almost disappear from their media. They discussed Venezuela, border problems, future elections, etc. And now, Ukraine has become a means in the political struggle between Republicans and Democrats. They debated whether to help Ukraine or protect the border with Mexico.

In general, Americans support us. But they forgot about us since there is no Ukraine in their news. Americans can even ask you, “Does the war still go on?” If people don’t see the war going 10,000 km away on their TV screens, it doesn’t exist anymore for them. So, we must do everything to keep their media interested.

Three CNN teams worked in Ukraine for the whole year 2022 and part of 2023. Recently, I chatted with the editor of the Ukrainian CNN office and asked for support. She answered that all their teams left Ukraine. So, CNN will not say anything about Ukraine.

Yes, not only tragedies can attract attention to the newspapers. However, we must remember them about the war. Maybe we should also learn from the enemy. Look at their propaganda-spreading channel Sputnik. Russia continues to invest in it and puts some entertainment content there to keep its audience interested.

What do you think about Russia’s technological potential?

It is huge. If we were better in unmanned aviation a year ago, now they have caught up with us and sometimes are even better than us.

It is vital not to underestimate the enemy. Russians have very powerful engineering high schools, such as the Novosibirsk universities. In addition, the Russian Federation is an autocracy with vast financial resources and can scale up any technology relatively quickly. We all know of their Lancet and Orlan drones. Can we do the same? We did it a long time ago. But we cannot scale up production.

Another crucial thing is who will be faster to develop a cheap optical target acquisition technology. Today, drones are still man-operated and must also avoid enemy electronic warfare.

An optical target acquisition system can help solve this problem. This means that if an operator loses connection with a drone but has already captured a target, the drone will fly and hit it automatically. And it will be a game changer at the frontline. Both Ukrainian and Russian experts work on it. The ones who do it faster will get a great advantage on the battlefield.

The second point is swarm technology. Today, we have one operator for each drone. If an operator can operate 50 to 100 drones at once, it will be another game changer. Several Ukrainian manufacturers already have some prototypes that are to be proven in the field.

“The Ukrainian Paper Army”

Let’s remember your experience at the Odesa Regional State Administration. You worked on introducing digital document management. I know the issues of bureaucracy in the army are pretty sharp. Many officers are tired of complaining and making jokes about the situation. They seem to be desperate. What do you think about changing this bureaucratic system now?

When I offered to switch to digital document management, I heard an answer with thousands of reasons why it is impossible. After working in the private sector in America, I never worked with the government.

I listened to all these “reasons” and grew tired of this. So I went to the Chief of the Administration, Mikheil Saakashvili, and released a resolution that there will be digital document management starting next month. Period. The officials with 20 years of experience ran and whined, but they had no choice. They had to follow orders. After you switch to paperless, it is an irreversible process. You cannot roll it back.

The current CDTO of the Ministry of Defense, Kateryna Chernohorenko, moves in the right direction. They already implemented digital documents for the Armed Forces and forbid duplicating them on paper. I think the next step should be a total ban on paper documents except for classified data.

The Ukrainian army changed a lot in the last two years. Maybe not as fast as we wish, but it is really two different armies—the one from 2022 and the one we have now. For this, we can thank many businessmen and IT specialists who joined the military.

The modern army has a strong human potential. The Armed Forces would never afford to hire such well-paid professionals. But now, they have them thanks to mobilization and their free will. And if you have many professional people somewhere, changes are inevitable. And the changes are happening already.

The Armed Forces of Ukraine use a lot of digital services. For instance, Kropyva existed from 2014 to 2015. It was a base for the Delta, Vezha, and Ochi systems.

All these services became possible only thanks to a bright flow of qualified specialists in the AFU, routine digitalization, business process management, SAP introduction, etc. All the innovations are a big progress for the MoD. But it would be much better if we did it during a time of peace and prepared for the war.

AIN had the opportunity to interview Zlatolina Mukova, Managing Partner at New Vision 3, discussing the fund’s activities in 2023 and plans for 2024, as well as talking about the CEE and Bulgarian markets.

Tell us about New Vision 3.

New Vision 3, as you might guess from the name, is founded by veterans in the VC industry in Bulgaria. Myself, a team manager at the Bulgarian Post-privatization fund back in 1999, joined by Konstantin Petrov, a start-up founder at investee company at that time, and both of us partners at Neveq1 ( 2007 ) and Neveq2 (2012) funds, Jordan Zarev  and Alexander Terziyski, investment professionals at Neveq2, and Jordan Stoyanov and Filip Genov, bringing solid banking VC experience from the largest Bulgarian bank. NV3 operates from Sofia, Bulgaria, and invests in fast-growing tech companies, which aspire for the leading position in their domains on the local and/or global markets. 

NV3 invests in early-stage technology companies in fintech, AI, blockchain, shared economy, e-commerce tech, green energy, frontier tech. To 100 years of joint experience in venture capital, €50 million investments in local start-ups, three VC funds, over €50 million co-investments, the team adds a success record of 7 exits to multinational players, mostly listed on the West European and US stock exchanges. The fund manager is a proven partner of visionary entrepreneurs creating new global technology solutions and business models from East Europe. 

NV3 fund commitments amount to €22.3 million, where the leading co-investor is the Fund of Funds in Bulgaria with a commitment of €19.1 million provided by the operational program Innovation and Competitiveness 2014 – 2020, co-financed by the European Structural and Investment Funds.

2023 seemed like quite a busy year for NV3, with nearly a dozen new investments announced only in Autumn. What is the exact number of closed deals in 2023, and how did you manage to do it?

We invested in 18 companies in 2023, which was the last year of our investment period. But the preparation of the deal pipeline started in previous years. And most of the deals come from our network of contacts. As we are so long on the market we are very well connected, moreover some of the founders from our previous funds are already investors themselves bringing a lot of contacts, but also knowledge in the tech space which helps to validate the hypothesis of candidates for investment. Our rich experience also helps to close deals faster.

Can you tell us more about the recently announced Autumn batch of 7 startups?

• QuarkXR is a company we have been following for a few years. It develops a Next Gen compression and streaming Technology, an ultra-fast software solution that provides low-latency wireless transmission.
• CoLumbo reads spine MRI scans better and faster than humans. The software has a CE mark, FDA 510(K), and TGA clearance. The key novelty of CoLumbo lies in the unique machine learning algorithm, based on fully convolutional neural networks combined with medical domain knowledge. Health tech is one of our target sectors and we are very happy to have been able to invest in such a promising company.
• 365 Data Science provides a holistic data science and AI training, including the technical expertise and soft skills needed to ensure long-term success in a dynamic job market. Its courses and projects are based on real-life use cases people can expect when they get hired. Job candidates can verify their data and AI skills with industry-recognized certificates and get a desired job.
• AdScout is an ecommerce tech company that builds a network of trusted recommendations, connecting satisfied users with popular brands. This is our second investment in this sector, and we believe it will be a game changer in the way people make buying decisions.
• Vibejobs is a job platform in Viber that enables companies to find and attract Blue-Collar Workers utilising a chatbot-based solution for communication and recruitment automation. The platform is making digital hiring accessible to all people looking for jobs which are currently underserved.
• Bronia is a deep tech company specialized in next-gen intelligent & autonomous security solutions. Its AI-based acoustics signal processing platform leverages state-of-the-art proprietary technology to identify sounds of interest, locate their sources and act smartly across a variety of industry and security scenarios.
• eLando is a professional services company that provides innovative technology solutions using top notch delivery methodologies. The high level of technical expertise, complemented by break-through thinking and creativity are the key to their success.

What usually makes you think “We need to invest in this startup”?

It’s a difficult question, but I would say we are not making emotional investments. We are analyzing every aspect of the business – market, product, team – before making any decision.

From your experience, can you tell us what differentiates Bulgarian startups from others in Europe?

I wouldn’t say there is much difference especially with the ones in Eastern Europe. Compared to Western European ones the difference is, surely, the lower amount of available capital, as well as weaker connections with the large markets in the EU and the US. Thus, startup founders in the region more frequently resort to bootstrapping strategies compared to their western counterparts.

Can you walk us through the specifics of the Bulgarian Startup and VC ecosystem? How is the ecosystem faring recently?

I believe the Bulgarian startup and VC ecosystem is one of the most developed ones in the region. Important driver for this development was the specialization of Bulgaria in the IT sector in the socialist past. Then, the successful programmes of the European Investment Fund aiming at building of professional fund managers and attracting private capital alongside EIF. Despite the overall VC funding downtrend, the ecosystem is faring quite well in Bulgaria.

Are there any notable changes between the ecosystem in 2019, when you started, and now?

NV3 started in 2019 together with a bunch of other VC funds targeting companies from the seed to growth stage. As of today, all 2019 vintage funds are beyond their investment period and one can feel the lack of capital on the market. Nevertheless, the Fund of Funds and the EIF are in the process of selection of fund managers for new funds and we hope they will be operational early next year at the latest. It is still very difficult to raise funds in Bulgaria without those two important players.

As regards investment proposals, we are evidencing a larger number of quality deep tech projects.

What are your general predictions on the market in 2024?

The market is recovering from the 2022 capital crisis. Still, the recovery is not as fast as we would like it to be. No doubt, AI will continue to be a bright spot for investors.

Can you share some of your plans for the future?

As you know, VC fund managers are in the startup mode themselves. Thus, our team is also looking into raising its next fund.

So, the team has been developing a long-range surveillance UAV (up to 80 km from the operation station) called Buntar 1, special mission-planning automation software, and an AI-driven navigation system working without GPS, for example, under the influence of enemy rear electronic warfare means.

They plan to raise funds for three other drones and get them tested and certified by the state certification body to prove their effectiveness on the battlefield in the coming summer.

AIN.Capital talked with the Buntar team about its project perspectives, private and state investments, and how to keep Ukrainian innovations hidden from the enemy.

Tell us about the project’s origin—from the very idea to the team expansion and project implementation.

Ivan: I joined the Armed Forces of Ukraine in April 2022 as an infantry private and got a concussion in the Popasna area. After the rehabilitation period, I have been dispatched to a unit I am not allowed to name.

Through our familiar friends, I met Kateryna, who worked at Brave1 then and helped them test several drones. We analyzed defense tech in Ukraine and decided to do a workshop dedicated to a well-known problem to be solved in the form of a high-quality product of an international startup.

We wanted to speed up the creation of new high-tech products and not just combine some Chinese plastics with some Chinese engines. I spoke to my military superiors and explained what we could do, and they supported my idea. During a team call, I officially announced: “Now we are going to make an aircraft.” So, it is how it started in August 2023.

Bohdan: I have known Ivan since we were in a startup accelerator in 2017—Roman Kravchenko’s IoT Hub. Last year, we met again. I also met Katya there. So, we three started working on this project. At Buntar, I am responsible for the quality of the product according to military officers’ expectations and needs.

Kateryna: Before the full-scale invasion, I volunteered and worked a lot in strategy and sales departments. I wanted to be useful for my country and not to feel ashamed in the future. At Brave1, I shared many prototypes to be tested at the frontline with Ivan. One day, during a call, we decided that we could implement a really cool project. Buntar was born on that day.

Today, I am responsible for operations, international cooperation, and GR, and I do my best to attract as many soldiers as possible using Buntar and our software.

The Buntar project is already six months old. Can you tell us about its development through time? What results have you achieved so far?

Ivan: We closed an investment round and raised over a million dollars from investors who wish to stay anonymous. Now, we are ready to slightly extend this round to close it with an overcommitment and expand.

We have 25 super professionals and our own production. We have three R&D teams: The first one develops the aircraft, the second one creates software for mission planning and execution, and the third one deals with navigation without GPS, using multiple channels simultaneously. A fun thing to mention is that all three product team leads are called Taras.

Our invention—the Buntar1 UAV—uses a multi-rotary system to take off. After that, the drone switches to the aircraft flight mode. This helps significantly decrease UAV losses due to operator mistakes. The personnel learning process is quite quick and takes only five days.

Instead of a drone mission planner, we use the Buntar Copilot AI-driven software. It automates many flight mission preparation routines and advises on a mission.

The software can be integrated with other types of aircraft. It is already in use in many units of the Armed Forces of Ukraine for mission planning.

We already ordered the parts required for two new UAVs. Tests will run in April-May. After the test phase is completed, our goal is to get approval from the army and sign our first supply contract to expand the production according to incoming orders. We are already in negotiations with potential customers: In Ukraine, not exclusively the Ministry of Defense can purchase military vehicles but also the Ministry of Digital Transformation via State Special Communication Enterprise [Derzhspetszviazok], and some units with separate budgets allocated for this kind of purchase.

We were invited to international exhibitions. We won’t go yet because first, we must show the ultimate result in combat conditions this summer and build the production.

Kateryna: After our field tests, we want to obtain certificates from the MoD of Ukraine. Officially, it should take about 20 working days, but, in fact, it can last up to two months. These certificates will help us get state orders from military foundations like Come Back Alive or Serhiy Prytula Charity Foundation or directly from military units.

This summer, after testing our aircraft abroad, we plan to go for NATO certification. It’s all taking long and full of bureaucracy. Certification rules existed for many years, and nobody was ready for a full-scale war. Ukraine, like a training ground for different military inventions, helps NATO change. We could solve safety issues at the NATO level since intelligence is one of the key defense aspects that so many nations lack.

Bohdan: We deeply study alternative products to stay up-to-date not only for now and here but also to join the collective safety efforts in the future. There are a lot of aircraft manufacturers. However, most of them just assemble their products from more or less standard parts. This number will only increase because of the growing demand for drones. But there is a question: How should one perform missions most effectively and qualitatively?

How many specialists does your team need to run serial production?

Bohdan: Now, we are hiring to cover five open positions. There is a saying: You are either fighting at the front or helping those at the front. So, it is the best time for civilians who are not fighting yet to support the defense forces with their intelligence and skills.

We need software developers, engineers, QAs, designers, constructors, avionics specialists, etc. There seem to be a lot of opportunities for such people, but not many projects combine military, engineering, and business expertise.

To create a game changer in this war, we need qualified specialists who will professionally build, plan, and develop. People are mostly wanted in production because it is still in the form of manufacturing. The software part is much easier, thanks to its similarity to ordinary IT products: Concept, Testing, and Development. But our customers are not civilians but military guys.

Ivan, in your previous interview, you said that our military specialists knew on the second day of the full-scale Russian invasion how the Iranian drones were working and how to locate them. How is it possible to keep Ukrainian innovations in secret?

Bohdan: We have both physical and data security officers on our team. We work in secret locations with different access levels. At the same time, we use some tricks to erase traces in case our creation falls somewhere in the enemy territory.

Ivan: It’s normal for technology to be discovered sooner or later. After the Russians shut down our first board, they will investigate all its parts for sure. We just postpone this moment for now. However, it won’t be an issue. Feedback speed is vital. How fast can we implement new features into software or hardware; how will we react to the fact this info is already known to our enemy? The reaction speed and our adaptivity are crucial safety means.

The Ukrainian state motivates citizens to assemble drones from Chinese parts at home. Such “actions” sometimes get criticized. How do you like this initiative?

Ivan: I would be careful here. We don’t criticize because doing something is much better than doing nothing. I think there are more efficient drone production ways. Producing components, controlling quality, testing, and adjusting—all these procedures are complicated. And I think the real high-quality can get to the battlefield only from an organized manufacturing facility.

Kateryna: We should think about international partnerships, appropriate management teams, and, first of all, the actual needs of the front fighters. We should consider what we can change in FPV drones to leave the RF beyond. But I can agree with Ivan—we don’t criticize or comment; we just do our job.

There were a few scandals with donations for military needs in the past year, especially the one with mortars. After that, Ukrainians started to check donation campaigns more carefully. Do you think the fundraising campaigns for military developments were also affected? How exactly will you provide reports, and how detailed will they be?

Kateryna: We do public reports. We are absolutely transparent. There is always a request from a military unit. Then we check all the papers. We don’t feel any problems with donations.

Ivan: We can report on our purchases. Part of it is paid with public funds; another part is covered with private funds. For safety reasons, we cannot provide detailed information about private money.

The main thing here is to hand over the package to the soldiers. For example, if we can’t collect enough donations to build a complete UAV, we inform the donors that we will cover the rest with money from fundraising. Then, we assemble the complete drone system and hand it over to a specific surveillance unit, which will later give feedback on our product, which is really doing its combat missions.

There are also special state bodies that audit the MoD suppliers. We can always confirm what we have purchased and inform that a certain military unit got the product and conducted specific war-related tasks.

Bohdan: We promote investments in Ukrainian arms developers. So, people donate to a developer who creates jobs and the basics of the future weapon industry.

Kateryna: Investing in Ukrainian defense tech decreases the risk of having situations similar to those with stolen mortar donations or DJI Mavic drones. The result of this investment can be seen on the battlefield.

Ivan: We change the donation philosophy. For example, people donate to purchase EOS UAV systems. They are also needed. However, from a long-term perspective, we must build our defense industry to find better and more affordable solutions that will also last. Doing so will strengthen our defense so that no bastard can come to us from the east alive.

What should be the structure of the military-industrial complex, which, in your opinion, Ukraine lacks now? Which roles take businesses, startups, and the government? Which specialists are demanded?

Kateryna: We and the government should build partnerships. For a startup, you must have a team—managers, hardware & software departments, and engineers who will assemble. Then, you ask the military about their needs, deliver it to the frontline, and receive quick feedback from the battlefield.

Your professionals must be allowed to go abroad to show their developments at exhibitions. So, you must clearly distribute roles in your team and write a roadmap, which is often, unfortunately, missing even at the state level.

We also need to have defense builder accelerators—startup support & development programs that provide funds, mentorship, training, and access to resources. Currently, our team is going through the acceleration at Scale Wolf [a venture and a tech acceleration program focused on dual-use technologies that can be applied in both the defense industry and business. The foundation cooperates with Lithuania’s Ministry of Economics and Innovation—edit.]

Many teams need more current assets for spare parts, operational activities, and R&D. With Ivan, we got a great talent who managed to raise an incredible amount of funds for our startup within just six months. In any case, so many people still must be taught fundraising skills.

How can Buntar Aerospace become profitable thanks to national and foreign customers?

Ivan: We can be profitable with our very first contract. We explain to our international partners and investors that supporting defense tech in Ukraine is not only about helping Ukrainians but also an opportunity for NATO members to prepare themselves for potential conflicts to come. If they cooperate with Ukrainian defense tech companies, it will be much faster and more effective.

Profitability is not our main goal. Our primary task is to develop high-quality products, increase the evaluation, and attract more investments in R&D. We have prepared another five projects to present before the next round of investment.

Multiple times, European or Ukrainian investors said they didn’t understand why we had such a high evaluation and asked for a discount since “we are a Ukrainian startup, not international.” However, the US bidders are totally OK with that number. To obtain a technology advantage on the battlefield, we require funds for R&D because you cannot build a tech company for $100K.

What problems with state investments in military projects do you find the most urgent?

Ivan: That there is no investment.

Kateryna: Another problem is not understanding what a startup is, how good it is, and how much funds it requires. There are only a few programs supporting the defense tech. Climate change or dual-use goods are far more popular, for instance.

Bohdan: You can get $25,000 from Brave1. It’s a great initiative, for sure. But if we speak about defense, it’s always costly. The idea that an engineering military solution can be cheap is a utopia because any military application means a harsh environment requiring specific components, approaches, and tests connected with increasing the final price five to ten times compared to an ordinary device for civil use.

How do you attract investments? Who is your favored donor category?

Kateryna: Currently, we collect donations in a “banka” (a special donation-collecting product by monobank—edit.) within our personal networks. We organized a fundraising campaign and asked the Dopovidai team to help start our first fundraising and establish communication with Ukraine-based donors.

Multiple military officers, foreign defense tech networkers, and Ukrainian IT specialists are among the first to send us their generous donations. Soon, we will get $25,000 from Brave1. Unfortunately, that will be all from the state at the moment.

Bohdan: The banka is not a way to fund the project. It is a donation campaign for a UAV set for our army [7.5 million UAH for three drones and a land operation station—edit.] We want to increase the number of active-fighting UAVs this summer. However, the major part of investments is private ones.

How can Buntar Aerospace be changed after the full-scale war? 

Ivan: Many things in the project can be turned into dual-use products. But now we are making a quality product for intelligence. Not only the defense forces but also the special forces are engaged in intelligence. And there will definitely be more of these forces after the war.

Some people think that the need for military technology will decrease after our victory. But it is exactly the opposite. Even after the win and returning to the 1991 border, we must defend these borders as we do now.

Investors, politicians, and defense ministry officials from different countries are working with us. They once thought they would simply share their technologies with us and everything would go well, but these technologies did not work. For example, they were sure that GPS would work, but there was no GPS in the combat zone, while our AI-based navigation module can work without satellite navigation, which means it is resistant to electronic warfare.

Ukraine is now creating military developments that will be in service for the next 30-50 years. We will make the best products. Will we take on the following tasks? We’ll see, but I’m sure we will. 

In Ukraine, there are private capital owners who dream of bringing our victory closer but do not know how. On the other hand, there are people who know how to make products: engineers, team leads, and managers. We need to unite them, teach them how to invest correctly, and explain the peculiarities of management, finance, and R&D production. 

We want to share our experience with others and build an ecosystem of companies engaged in development in their niches around Buntar Aerospace. We are working on a project to bring these two parties together. We need Ukrainian capitalists to consider investing in Ukrainian defense-tech startups, even with checks of $5,000-$10,000. Because, first of all, it can speed up the victory and bring us back to a better life. And secondly, in business terms, you can make money on it because such products will be sold in the huge market of NATO member states.

AIN.Capital’s chief editor had the opportunity to talk with Mariusz Adamski, a Partner at ff Venture Capital, about the fund’s activities in 2023 and plans for 2024, as well as discuss what makes the CEE market so appealing to investors.

Tell us the story behind ff Venture Capital.

ff Venture Capital is an early-stage venture capital firm with a unique footprint spanning the United States and Poland. Eschewing the traditional model of a centralized headquarters, ffVC embraces a modern, decentralized approach to venture capital. This is evident in its operation through dedicated teams that cater to the European and US markets, operating out of strategic offices in New York and Warsaw. Such a structure highlights ffVC’s dedication to combining local insights with a global perspective, ensuring a broad impact across the startup ecosystem.

ffVC’s journey began in 2008 with the establishment of its first office in New York City, marking the start of its mission to support early-stage ventures. Expanding its geographical footprint, the firm extended its operations to Warsaw in 2020, assembling a dedicated team of investment professionals to oversee its European ventures. This expansion reflects ffVC’s strategic intent to tap into the rich vein of innovation and entrepreneurial talent in Central Europe and to act as a bridge between these startups and global markets, especially leveraging its unique position to connect with Japanese corporate interests. 

In Europe, ffVC actively manages two funds. The firm’s inaugural fund, established in 2020 with anchor investors including Totalizator Sportowy and PFR Ventures from Poland, is already fully deployed. Building on this momentum, ff Venture Capital launched a new investment initiative in June 2023, aiming for a final close of €60 million. This new fund is particularly focused on empowering Central European startups, with a significant portion of funding sourced from Japanese investors. Specialising in sectors such as enterprise software, industrial technology, and sustainability transformation, ffVC distinguishes itself by facilitating unique connections between Central and Eastern European startups and Japanese corporations, a capability few European VCs possess.

In 2023, ffVC made a number of resounding deals. Can you share the general numbers and results of the year?

I’m thrilled to report that ffVC capped off 2023 with a series of remarkable milestones, including the successful closure of 9 new investments. This achievement not only shatters our expectations but also highlights our prominence among regional investment funds.

A significant development this year was the complete deployment of our first fund ff Tech and Gaming, demonstrating our commitment and strategic acumen in identifying and nurturing startup potential. Building on this success, we launched our second fund ff Red & White in Europe, reinforcing our dedication to driving innovation and supporting entrepreneurial ventures across the continent.

Among our notable investments is Molecule.one, a tech-bio innovator revolutionizing early-stage drug discovery with AI-enabled chemical synthesis planning, led by Piotr Byrski and Paweł Włodarczyk-Pruszyński. Additionally, ForActive, co-founded by experienced entrepreneurs Maciej Bieganski and Konrad Howard, is redefining connectivity within the health and fitness community.

2023 also marked a strategic expansion of our team with the addition of two new partners to our European operations, who relocated from Japan to Poland. This move not only strengthens our global perspective but also enhances our operational capabilities in Europe, further solidifying our position as a key player in the venture capital landscape.

ffVC was one of the leading international investors in the CEE region in 2023. In particular, the firm invested in Polish startup ReadyCode and Ukrainian AI startup Respeecher. Tell us more about those deals.

I am glad you asked about some of the most noteworthy investments circling around the entertainment sector. We think that both ReadyCode and Respeecher are both extremely interesting stories from the region which are both still somewhat overlooked.

ReadyCode was founded by a serial entrepreneur, Julek Kopczewski and it addresses the most important problem in game development — how to effectively market games and prolong their sales. The solution can be applied to different genres and the company is seeing strong interest from established game developers.

Respeecher is yet another fascinating story of a team that has thrived despite the war in Ukraine. They have a highly unique speech-to-speech technology and have the potential to become the dominant model in this space. The company has won multiple Emmy awards for voice cloning in TV series The Mandalorian or Richard Nixon in a short documentary. Now, it will be working together with CD Projekt for the Polish language release of the Cyberpunk 2077 expansion Phantom Liberty. [ed. Respeecher has already worked on character voices for Cyberpunk 2077]

From your experience, can you tell us what differentiates the CEE startups from others around the world? What drives you to invest in these startups?

The CEE startup scene distinguishes itself in several ways, making it an intriguing space for investment. One notable factor is the presence of a robust talent pool in the CEE region. Skilled founders, equipped with a diverse range of expertise, contribute to the development of innovative and competitive startups. This depth of talent often translates into a dynamic entrepreneurial environment, fostering the creation of ventures with unique value propositions.

Technological know-how is another key differentiator for CEE startups. The region has demonstrated a remarkable capacity for technological innovation, with startups often leveraging cutting-edge technologies to address market needs. This technological proficiency not only enhances the competitiveness of CEE startups in the global market but also positions them as leaders in specific niches.

Moreover, the presence of good technical schools in the CEE region plays a crucial role in shaping the startup landscape. Institutions such as the Warsaw University of Technology, which is now actively connecting with the venture world through the creation of a new fund, exemplify the growing synergy between academia and entrepreneurship. The integration of educational institutions into the venture ecosystem serves as a catalyst for innovation, providing startups with access to knowledge, resources, and mentorship.

The emergence of funds within technical schools, like the one at Warsaw University of Technology, is a testament to the evolving support structure for startups in CEE. This trend signals a proactive approach to fostering entrepreneurship, facilitating the transition of innovative ideas from academia to the marketplace. The collaboration between these educational institutions and the venture world enriches the startup landscape, creating a more interconnected and supportive ecosystem.

As an investor, these characteristics in CEE startups become compelling reasons for investment. The combination of a strong talent pool, technological prowess, and the increasing integration of technical schools with the venture world presents a promising landscape for identifying and nurturing innovative ventures. The potential for groundbreaking solutions, driven by skilled founders and supported by a conducive ecosystem, makes CEE an exciting and opportunistic region for venture capital investments.

With almost 16 years behind ffVC’s back, what are your thoughts on the current startup and VC climate in the world?

In my view, the current startup and venture capital climate appears dynamic and resilient. Despite the ongoing global challenges, there’s a palpable sense of innovation and adaptability within the startup landscape. Ventures seem to be navigating uncertainties with a blend of creativity and strategic thinking, showcasing the entrepreneurial spirit at its best.

On the venture capital front, it’s interesting to observe a continued appetite for diverse investment opportunities. The landscape appears to be evolving, with an increased emphasis on sectors that address the changing needs of our world, such as health tech, sustainable solutions, and digital transformation.

However, the scene isn’t without its challenges. Economic uncertainties and geopolitical factors could introduce elements of caution. Yet, this very environment often sparks ingenuity, with startups finding innovative solutions to not just survive but thrive in unpredictable circumstances.

Are there any notable changes between the global and Central and Eastern European ecosystems?

When we talk about the global scene versus what’s happening in Central and Eastern Europe, some commentators like to say the CEE market isn’t as active. Sure, the venture market had its ups and downs in 2023, deal-making in Europe took a bit of a hit compared to the years before. But if you check out the latest info from PitchBook, it shows that we managed to keep things above the average for the past 10 years.

Despite what people might think, we’re not seeing the CEE market as some kind of no man’s land. We’ve been facing the challenges head-on and actually found some great opportunities. Actually, we’ve been experiencing a totally different reality, only lately adding amazing companies to our European portfolio.

What are your general predictions on the market in 2024. And can you share anything on your future plans in 2024?

The ongoing development of AI technologies will likely make them more common in existing startups. I believe venture capitalists will be interested in finding startups that use AI to make things work better, make smarter decisions, and come up with creative solutions. This wider use of AI won’t just stay in tech – it will likely spread to regular fields like healthcare, manufacturing, and finance. The question that everyone is asking themselves today is how to capture value in this space and make investments that will realize returns over longer period of time. There is no obvious answer but we will for sure be actively reviewing any AI-related opportunities that have an asymmetric option value.

As the venture capital world matures, I think we’ll see more focus on teaming up and combining efforts. Bigger firms might try to expand by bringing in experts from different areas or teaming up with smaller local players. This could create a more connected network of venture capital on a global scale. Coming together could lead to a stronger and more cooperative investment world, where teamwork drives new ideas and smart decision-making.

Talking about IPOs, they’ve had a tough time recently. But I’m hopeful that as the economy gets steadier, companies with solid foundations will find it easier to go public. I think if businesses have successful exits and the market looks positive, it might get more people interested in IPOs again. Businesses that got support from venture capitalists might see going public as a good next step for their growth. So, there’s hope that a friendlier market will encourage more IPOs, giving investors their money back and encouraging more investments in new businesses. Liquidity is what the broader venture capital market desperately needs these days.

The last time AIN.UA spoke with you was in August 2023. How good were these six months for SID Venture Partners?

We looked for new startups, communicated with them, visited conferences, and discovered many beautiful projects. Some already received funding from us, and some are still in negotiations. A few of our startups already moved to Series A, their next development stage.

If we consider the full-scale Russian invasion a turning point, which investment goals did your venture fund achieve for the last two years?

We did almost every investment after February 24, 2022. It’s 22 deals in total at the moment, two of which require additional investments. For the last 24 months, we invested about $4.5 m.

Did the startups change their priority domains in the venture capital market in the last two years?

Yes, they did. At that time, Web3 and blockchain were very popular.

Everybody tried to find a solution to use these technologies, and some banks and logistics companies successfully implemented them. However, the current startup ecosystem finds the topic slightly obsolete because anyone can see difficulties in fundraising for this kind of project.

The bestseller is AI, widely used by all. We also invest in startups working with AI in a long-term perspective.

Speaking about AI, we can see a situation similar to the IT market during the war, where the supply is far higher than the demand. It’s too many pitches by a limited capital flow. How do you select promising AI startups among non-promising ones that try to take advantage of the current hype?

We have a few general partners who have professionally worked with artificial intelligence for many years and know this domain well. For example, it is Anton Vaisburd and Kirill Kirikov, the co-founders of Datrics. So, our venture fund has more than a clear understanding of this technology.

We examine startups: Web 3.0, blockchain, or AI are simply tools that one can use for different things and business applications. So, by selecting a startup, we decide based on whether we believe in the idea or not.

Some ideas can get confirmation of our belief in the form of small checks to prove their viability. Several startups already got paid traction—the customers—so even if we are unsure if an idea can develop more, we can invest more since it already has cash flow.

Did your average check change during the war? Or does it remain the same $300,000?

Now it is between $230,000 and $250,000. We also have a group of small-check startups in the early stages. They got like $50K. If a thing is “a revolver,” we can give them more investment in the following rounds, with a higher estimation value of course.

Our fellow investment market actors noted that a startup must be present internationally and diversified to attract funding since any investment in a fully Ukraine-based product is quite risky. Does it work for you as well?

It works for 100%. Tech startups that are worth real attention can develop internationally. Thus, they will more likely get supported by other investors. Even if it would be a big success in Ukraine, there will be a moment when more investments are required. And nobody knows whether foreign investors will look at that startup because they keep their eyes on those with US and European perspectives.

So, it’s one of our key parameters. Yes, the team can stay in Ukraine. It’s not an issue at all. But the business must be international.

We represent a venture that invests in startups with Ukrainian founders and global ambitions. Every company we invested in has foreign customers and a foreign presence.

Based on your observations, how do Ukrainian ventures feel at the moment?

Ventures struggle all the time, whether they are Ukrainian or international. They need more funds, clients, specialists, etc. So, the Ukrainian startups don’t seem any different from the American ones.

You mentioned 22 deals during the fund’s investment period. Please tell us about the latest ones.

Our latest announced deals are investments in Respeecher and AiSDR. Both companies have been doing the most innovative things with AI. Respeecher has already earned a worldwide name for its ability to synthesize and reproduce voices using AI, and its services are used by the world’s leading film studios. AiSDR is a new company by brothers Yuriy and Oleg Zaremba, recent Y Combinator graduates. The startup has been creating an AI assistant that significantly speeds up the sales process.

Several deals have yet to be announced. One of them is an exciting MedTech startup of Ukrainian origin, which is also related to artificial intelligence. It analyzes data from medical equipment and already has customers worldwide. We liked them as a team for their professionalism.

I know you have launched syndication deals. Tell us about them.

As we thought about creating a venture fund, we realized we wouldn’t go solo but a series. Now, we support startups in the early stages. Later, we want to make a more significant venture to support startups in the late stages with checks starting from $1 million.

Currently, we try to syndicate—precise investments within a separate entity with allocated $200,000-$300,000 to support a specific startup during a fundraising round. Syndicate is based on AngelList, a famous platform for early investments with over $8 billion of total investments attracted at the moment.

We have two such projects and invested in both in the early and following rounds and now, we want to run syndication deals for them. It’s a kind of private deal within our community where we do quality assurance as a responsible investor. Our task is to protect the Ukrainian investor community’s right to participate in quite exclusive deals that would be impossible for them despite their bright “angel” status.

We want our investor, IT, and startup ecosystem to expand so that more actors with smaller checks can also invest. The venture has a $50,000+ entry limit. But within a syndicate, you can start investing with $1,500, including crypto payments.

How do your co-investors like the news from Ukraine about searches in enterprise offices?

They didn’t tell us any concerns regarding this, but the situation isn’t great for the Ukrainian government or people. However, those startups cannot face the problem in their current development stage.

Moreover, most are registered abroad and only have a dev team or other specialists in Ukraine. It’s not about fiscal checks. Historically, startups use a limited number of popular jurisdictions. For example, the State of Delaware (US) has unique legal entity registration terms.

I also want to ask you about GR. What requests do venture funds have to the government?

We, as a venture, have no requests. However, from the other side, as a member of a tech ecosystem and founder of Sigma Software, I support positive government initiatives. We cooperate with the Ministry of Digital Transformation of Ukraine. I participated in discussing and writing the Diia.City bill as a lawyer.

We work with the government in this regard, but I would not associate it with the venture because it is an international story with only indirect connections with Ukraine.

Let’s return to SID Venture Partners. In your last interview, you said you had no exits. Is it still so?

Yes, it is. And it is OK. From the very beginning, at the end of 2021, we knew the fund would invest in the next four or five years. Let’s wait until next year or a bit longer. And then, we will have five years for exits.

An average venture lasts ten years, sometimes even 12, in the case of an IPO.

What are your investment plans for 2024?

We are constantly looking for new startups. And the market knows this. Last year, we got two awards: Best Investor from the Ukrainian Startup Fund and Startup Awards from Lift99. It’s vital because people must know where to go if they need money. Come to us.

Do you have some minimum deal plan?

We plan to invest at least $2-3 million this year. Or even more. Currently, we have $5 million to invest within the next two years.

You said, “Looking for money? Come to us.” How to do the right pitch for a startup so that Dmytro Vartanian himself would get interested?

*Laughing* Normally, we listen for 30 to 60 minutes, including Q&A after a presentation, for a deeper understanding of problems, if any.

For success, you must know your business well before an interview—its core metrics, product roadmap, sales, and market expansion plans. The founder must not get stuck with all the data.

Then, a recommendation from others also would be fine. Sure, we are ready to listen to pitches without references. However, a good reference always increases your chances.

Last but not least, the startup should get our attention. Ideally, it must be already growing and earning money. I know it’s uncommon. Most startups come in the very early stages for funds during the MVP. In that case, we examine the founders precisely because they must show their expertise and come with some experience.

You have to be able to sell your startup to investors the same way you did it to your clients.

Investors increasingly help startups grow by consulting on operational and marketing activities. Do you do that?

There are so many ventures in the world. What makes them look different except for numbers? Because all have the money. The value they provide makes the difference. For example, they can give some of their clients to the startup, provide them with tech support, conduct an audit, etc. The more a venture helps, the more attractive it becomes for startups. All our GPs have an IT background. So, we can assist in this area as well. And the startupers obviously like it. Added value is the main feature and quality of our venture fund.

The company’s idea is to become a single point of communication between restaurants and their guests through QR payments, web pages, table reservations, ordering, and food delivery functionality. For example, restaurants can sign up for the system and create an online menu for free, and then Choice offers them a paid subscription for additional services, with the price for Ukraine ranging from $19 to $95 per month.

The startup’s lead investor is the Czech company Presto Ventures. At the beginning of its development, the project raised €100,000 in investment from the British Seedcamp and Czech J&T Ventures. Choice received another €200,000 from the Czech investment company Reflex Capital. Subsequently, Reflex Capital invested another €400,000. In October 2021, the startup raised a pre-seed investment of €700,000.

As of 2023, Choice has grown to a thousand regular subscription customers, 16,000 signups, 5,000 paying customers, and has entered the markets of 25 countries. The service has offices in the Czech Republic and Ukraine, operates in Poland, the United States, and Hungary, and is used by about 16,000 businesses worldwide.

In this interview with AIN.Capital, Choice co-founder Volodymyr Olyanitsky shared the company’s achievements over the past year, announced new technological solutions for the platform, and shared details of the service’s integration with Glovo.

At the start, your service raised investments to enter new markets. Did you succeed in achieving this goal?

From the beginning, we were represented not only in Ukraine but also in the Czech Republic, so we succeeded in entering other markets. The fact is that many Ukrainian startups have been able to build their businesses in Ukraine, but they have not been able to jump into new markets. We were lucky because my business partner, Alex Ilyash, has lived in the Czech Republic for 17 years and understands how European business works. Given his market expertise, it was easier for us to launch in the Czech Republic.

As for other countries, we entered the Polish market a year and a half ago and now have a good position — we are about second in the market in our niche. In addition, we opened the Baltic market with an office in Tallinn, Estonia. We also tried to gain a foothold in Germany, but we do not plan to make new attempts, as this market is too expensive and highly competitive for us. We are focusing on Eastern Europe, where there is less competition and less initial investment for expansion.

In general, the European market is less receptive to our service due to the limitations of the QR menu concept, which doesn’t resonate there. Even if an online menu exists, it typically appears in PDF format. Unlike Ukraine, Europe is not as digitally advanced, so we focus solely on developing our QR delivery business in that region.

What were your platform development plans, and which did you implement?

We tripled our core indicators. I mean client revenues—the number of customers and turnover have increased. We entered Poland and the Baltic states and expanded our team to over 130 people. Ukraine remains our #1 priority market, so about 65 specialists work in the Ukrainian office.

Our product portfolio has also changed. We developed some pilot platform features the whole time, which are, however, supplementing each other. Therefore, we began developing an online menu with an order-to-table option where guests can reorder without a waiter using just the QR menu. But as a result, 90% of our efforts during the last 18 months were dedicated to developing a delivery service. It is our core product.

A restaurant makes money on both in-house and online orders by Glovo, Bolt Food, and, finally, its own delivery service. Choice provides businesses with a complete distribution and takeaway package. We tested the options in small, local, and medium-sized businesses, and now, we are slowly getting to the enterprise sector.

We also integrated two delivery providers—Uklon and Glovo—into Choice so that the entities not present there can still conduct their own delivery on a crowdsourcing basis. Our platform allows launching your private delivery and “lending” a courier.

Did you attract new investors in 2023?

Yes, we are at the final stage of negotiations with a European fund. We cannot disclose who it is, the details, and the deal amount, but we will close the round soon.

The 2022 total investment in the platform was €2.2m. What is its current estimation?

It’s €3.5m, including the last closed round.

What is the current company’s estimated value?

Our capitalization hits $15 to 20 million.

How will you use raised funds?

Our Ukrainian product feels fine. So we will reinvest its revenues in itself. We will focus on the product team expansion due to the growing numbers of customers and features and product roadmap. Our appetite for new features to implement is growing as well. And there are new markets to enter.

Do you plan new tech solutions for the platform?

We aim at new solutions for networks. We have got some niche-specific solution requests. For instance, we want the restaurants to choose who will deliver their orders: their own, Glovo’s, or Uklon’s couriers.

It should work like this: A restaurant sees delivery costs and provider options, e.g., 4 km distance for one price or another. We want businesses to calculate the most cost-efficient delivery option via our platform.

Our plans also include loyalty and CRM system development. Our customers’ biggest problem is that they never really knew their guests and had no data about them. This is where any business should start to study their clients. How many of them are there, how often they come, how often they return, an average bill, their names, what they like, etc.

Currently, we gather guest data and make businesses familiar with their customers. It may sound like a piece of cake. Because everyone believes data was collected all the time, but it wasn’t. People used to pay via terminals, and it was impossible to get any data about them. Then, we implemented a client database tool enabling a new level of awareness for the restaurants. While placing an order or paying, a client can enter their email or phone number for better analysis of their favorite dishes, being in touch with them and making a loyalty system possible by, for example, providing a 10% discount for the next order.

Did the restaurants & cafes feel the difference in profits after starting cooperating with you? How does it work?

In Ukraine, for sure. The average bill grew according to our numbers. Why? First, users used to order on marketplaces, and catering entities paid certain fees per client. In the case of a loyalty system (if a guest visited a facility at least once, it promotes repeating orders with bonuses, discounts, or promo codes—edit.), guests use its bonuses to make another order directly at the restaurant without extra fees, so the foodservice must not pay marketplace fees. However, the marketplaces deliver new clients. The caterers also increase their sales if they have plenty of clients or a delicious menu highly wanted due to tons of recommendations.

Second, Choice developed a special CRM system for restaurant businesses, enabling guest data storage and order analysis at once. Using the CRM system from Choice, they get data about clients placing orders. And if a facility motivated a client to make another order with the help of different CRM system tools—given a promo code or a discount for the next order, like 10%—they will show up again. By doing this, we certainly increase the LTV (Lifetime Value is an estimate of the average revenue a customer will generate throughout their lifespan as a customer).

Thanks to such tools and their own delivery, the caterers can increase their income by 10% to 20% by working with us. But you should not expect great improvements in terms of a month. The delivery itself is a channel the clients need to get used to and be motivated to use it with promos and other bonuses.

There are marketplaces in the market still. Plus, you can always place an order directly at a restaurant. It would be perfect when an entity uses two marketplaces and does delivery. A delivery option is helpful since not all venues are present on the marketplaces. In addition, restaurants can offer more direct promotions and offers. With your direct order, you support a specific business.

What is about competition, for example, expirenza by monobank?

Our products are different. We focused less on online menus and more on the front store of facilities; however, we are still on the table via QR menu. It is also a kind of front store but more for in-house guests and not direct online customers.

We and mono almost go separate ways. Often, you may see a QR menu by Choice and a payment system by expirenza in the same house. Most clients prefer the Choice menu for its single-menu option, where an administrator can edit a menu for all at once—in-house, delivery and marketplaces.

Based on our experience, people got used to the online menu interface by Choice. All other QR menu providers followed us. For example, it was us who implemented likes for dishes. And the others copy-pasted it from us. The idea of likes came to us in a new restaurant where we didn’t know what to order, and the waiters offered things that were not really popular.

What are the terms of your cooperation with Glovo?

Glovo On-Demand is a courier lending service. Thanks to it, the Glovo couriers can perform deliveries for all restaurants that are present and not present in the marketplace. We long asked Glovo to implement this function because it was already available in other markets: Poland, Estonia, and the Czech Republic. We rolled this feature out with Wolt Drive in Czechia.

Glovo On-Demand can be implemented with our help or by Glovo directly. In fact, it is delivery for business. It costs 100 hryvnia and more depending on the weather and traffic ratio. For a client, it looks so: a person places an order and a courier is assigned; and even if a restaurant isn’t registered in the Glovo system, the client can see a Glovo courier delivering the order.

Our collaboration is also advantageous for business owners. Within a single profile, they can manage all orders from Glovo in the Choice Business app. The administrator can enter and edit data in the Choice profile, and it is synced with Glovo automatically.

How do you test and validate updates?

It depends on a problem to solve or tasks to perform. We collect feedback from clients and our team. Depending on the request frequency, we plan its implementation in our monthly or yearly roadmap. Then, we research similar solutions by our competitors, develop a beta, test it in a testing environment, and fix bugs; after that comes a release and production.

First of all, we are a SaaS platform, so we try to do things that are applicable to the widest range of clients possible. Now, we are thinking about making our task backlog public so everyone can see our workflow. And the clients will be able to vote with likes for specific tasks.

What are your plans for the development of the service in 2024?

We currently have integrations with Glovo and Uklon as delivery services. We also want more restaurants to save their time because time is money. So, we want them to accept orders from Glovo and Bolt in one tablet. We already have the first 100 pilot projects. The main product we will be working on is features for chain restaurants. And, of course, we will set up a loyalty system to increase the average check for customers.

Update as of February 14: we have clarified the current situation with attracting new investments.

AIN.Capital talked to Yuriy Zaremba, CEO and co-founder of AiSDR, about the process of creating the startup during the full-scale invasion, his previous experience in developing AXDRAFT, the recent investment, and future plans.

How did you come up with the idea for this startup? What was the reason and motivation behind it?

AiSDR is my second company while AXDRAFT was my first. The idea for AiSDR came from my own experience in sales. I would create hundreds of email campaigns that didn’t receive responses, hire people to write those email campaigns, search and book appointments, fire people, and look for ways to automate sales outreach. When GPT-3 and GPT-3.5 came out, I started testing them for creating email campaigns, but the results turned out not good enough. The emails were oftentimes too long. When GPT-4 was released, I tried using it to write an email. That’s when I realized that it could work.

I always feel responsible for an idea, and that’s why Oleg and I decided to apply to Y Combinator. For us, Y Combinator was a transformative experience. We went there with only an idea. We had nothing – no product, no customers, nothing. But maybe if they were interested in the idea, then we’d trust the idea and start a new company.

I immediately understood that the market for this product is huge and this is something worth fighting for. We applied to Y Combinator, but didn’t receive any answer. Then on the last day of application review, we received an invitation to an interview.

The interview went well. Moreover, some of the partners already knew us from our previous company AXDRAFT. To take part in the program, we had to fly to the USA. We didn’t know this because the previous program was remote. I was able to fly over because I had a reason for postponing my military service, allowing me to go abroad, however Oleg didn’t have one. 

2 days after the interview, we received the invitation to join Y Combinator’s batch. That’s when AiSDR was born. We started planning the journey, building the product, and traveled to California. Within a month, the product was ready, and we even had several pre-order contracts already signed. During the first two months, we signed over 20 contracts for over $200,000 in annual revenue. And then I realized that this could become a really big company.

What difficulties did you, as a startup founder, encounter in the process of creating a startup? Has the war against Ukraine affected your product plans, and how, if so?

The full-scale invasion had been underway for well over a year before we started building AiSDR, so we were able to adapt quickly. We already had experience with our first company, AXDRAFT: we’ve had to set up satellite Internet, relocate and evacuate the team, and rebuild the entire business. This experience helped us understand the rules of the game and all possible limitations.

We didn’t consider building this company in another country. We’re very pro-Ukrainian. Now, I’m in Lviv. This is my choice. And building a company in Ukraine is also my choice. We immediately rented an office in Lviv. At the same time, the entire technical infrastructure of the company is located abroad.

The fact that I have the ability to defer military service and can travel abroad allowed us to join Y Combinator and receive funding from foreign investors. When you sit in front of them, it gives them confidence that you can manage the risks, even though the company is operating in Ukraine.

Oleg and I complement each other well. Oleg deals with the technical aspect of the company, and I deal with the business aspect. I don’t know how to write code at all, but I deal with fundraising and I know how to sell.

AXDRAFT, your first company, was launched in 2017. How would you describe the difference between the process of starting a company then and now? 

It took AXDRAFT three years to reach the business metrics that AiSDR has achieved in 6 months. The first reason for this is that AXDRAFT’s trajectory changed when we got to Y Combinator, whereas AiSDR started with Y Combinator. There was no product or no customers. Just an idea.

The second reason is that AXDRAFT started with the Ukrainian market while AiSDR started from the USA. All our clients are foreigners. This is good for the company due to the macroeconomic situation in Ukraine, but as a founder, I’m still happy that AXDRAFT is a technology that meets international quality standards while being used by top Ukrainian companies. I hope that AiSDR will leave its mark on the international market so that everyone knows that it’s a Ukrainian company.

AiSDR was founded in August 2023, so what are the results: metrics, income, or any clear indicators that can be evaluated?

Currently, we have over 60 clients and we’re constantly growing. Most of them are medium-sized companies. We add an average of 10-15 customers every month.

You are a lawyer, and your first startup was developing legal products. How does this experience help you now in managing AiSDR?

I believe that a legal education is the most useful for several reasons. First, it teaches you to think in a balanced way and to look for arguments in favor of the appropriate position. Second, and probably the most important reason, it teaches you how to convince other people. And this skill is incredibly useful in business. When I left the law firm and started working for AXDRAFT, I stopped being a lawyer by profession and became an entrepreneur, which is first and foremost a salesperson.

My legal experience helps me negotiate with clients and investors while drawing up and using privacy policies, terms of use, and contracts with clients myself. I don’t need to hire in-house counsel, and this gives me more freedom. I look at the contract and clearly understand possible risks to me from a business perspective, and as a business owner, I have the ability and knowledge to consciously accept that risk.

Recently, AiSDR received its first investment of $3 million. How quickly did it happen? And do you think it is more difficult for Ukrainian startups to attract investments during this period of the full-scale war?

How difficult it is to attract investment depends on how exciting your startup is. There are startups that can spend months on fundraising but to no avail, and that’s not because they’re from Ukraine, and it’s not because of the current VC landscape. It’s because the startup doesn’t have fundamental metrics.

The lack of English is the key factor that limits Ukrainian founders. If you can’t sell your company’s shares well in English, what else can you do?

Another factor is they often focus only on the Ukrainian market. Even before the full-scale war, the Ukrainian market for foreign investors was too small in terms of capital intensity, and now it is almost non-existent.

And the third factor that appeared as a result of the full-scale invasion is that the risk profile of Ukrainian businesses increased. Previously, it was possible to say “It‘s my startup, it grows well, and it sells in Europe and the USA.” This was enough for fundraising. 

Now, more questions are asked: Where is your team located? Where are the founders? Who can meet with clients in the USA? How many people from your team could be mobilized? It is this extra layer of complexity that raises the risk profile of a startup.

In the past, you have also mentored startups and founders. Is this activity interesting to you now?

I started mentoring after selling AXDRAFT. At that time, I had much less pressure to grow it, both internally and externally. Now, I only have the time to focus on one company.

What about your team? How many people are working in the startup? If you’re looking for new employees, name the positions.

Our team consists of 12 people, and we’re headquartered in Lviv. Undoubtedly, we plan to expand the team. Currently, we’re looking for two QA engineers, as well as a middle software engineer. We‘re actively growing, but in a controlled manner. We’re not one of those companies that waste money.

Recently, AiSDR received an investment. What’s next? Tell us about your future plans.

We will use the funding to reach Series A figures on the revenue side. That’s over $2 million in ARR. Hopefully, we’ll do it by the end of this year.

As a product, we want to become a true AiSDR – a tool that can communicate with prospects and book appointments at the moment of intent across multiple channels. Now, we can do this only by email, and in the future, we plan to expand to other channels (messages, calls). Additionally, we will begin to more actively monitor intent signals.

AIN.Capital talked with ZAKA VC’s Co-Founder and Managing Partner, Jan Kasper about the fund’s activities and success stories in 2023, as well as further plans and predictions for 2024.

You can read the interview below:

Tell us about ZAKA VC. Who do you invest in, how much, and at what stages?

ZAKA is one of the most active VC family offices in Europe. We have an agnostic approach, with strong focus on software solutions across multiple business sectors as well as on scalable health and biotech solutions.

Our primary focus is on pre-seed and seed, but we are always happy to assess startups even in the earlier stages. Geographically speaking, our portfolio startups are active on all continents, but our activity is oriented primarily on Czechia and Slovakia, the Baltic countries, and the UK.

In 2023, which was also ZAKA’s fourth year, you had closed 20 new investments. Can you tell us more about these deals?

With a strengthening network in the health & biotech sector, startups in this segment dominated our new investments in 2023. I will mention, for example, ExcepGen (where we became a co-investor together with Y Combinator, RA Capital Management, and Sam Altman’s Apollo Projects), Olio Labs, Medisearch (both also backed by Y Combinator), or Eigen Therapeutics (backed by First Round and Alumni Ventures).

Outside of biotech, there were, for example, Spanish-based Webel (service marketplace), Austrian-based Tripmakery (group booking platform), or the Czech startups Cruxo (retail media platform), and Sharpgrid (DataTech in On-Trade and Hospitality).

What startups in the 2023 batch impressed you the most so far, in regards to their team, product, or growth?

All of the startups in biotech sector have made some major progress since our investment – however, these are not measurable in MRR or CAC/LTV. All of the teams are working hard on proving their concept, IP registration, crucial partnerships, etc. Among the non-biotech startups, Webel and Tripmakery are proving on monthly basis that they “hit the nail on the head” and perceive a growing demand for their products. 

Can you share with us the proudest moments of 2023 that you’ve experienced at ZAKA VC?

We are very proud of the yearly progress that we have made – our know-how, energy, and investment opportunities get stronger every day.Not even once in the last year did we think about the fundraising crisis; we have rather perceived it as a stronger opportunity to invest.

Given you have a diverse geography portfolio, what did you find most challenging about the startup and VC market in 2023?

As mentioned earlier, where others see challenges, we see opportunities. Our independence and EU-wide activity allows us to perceive the situation on different markets which has led to a stronger focus on the Baltics and the UK. These are the countries where we see many success stories and a strong ecosystem development.

Did you face any challenges yourself?

One of the challenges is the precising of our assessment process – continuously shaped by tech innovation, market development, our network, and increasing knowledge.

With the arrival of 2024, what plans or expectations does ZAKA have for this year?

We want to continue growing and investing even more. We are eager to learn and to be better every day, which we are working hard for. We are also taking steps to prepare a new fund in 2024. With fund size between €12-15 million it will be based in Prague and focused on pre-seed and seed phase, active in the Baltic region, UK, and extended to the US.

This is the first time we are opening our investment instrument to other investors – our future Limited Partners.

By judging the market last year, can you share any predictions for the near future?

We are in the era of increasing implementation of artificial intelligence which has a massive influence on how people live and do business. Generation Z people think, act and work differently. All the startups which leverage these changes in business (sustainability, edtech, healthcare, biotech, mobility, etc.) gain a strategic advantage. We believe that VC activity will largely copy these trends.

What tips would you give promising startups in the region who want to raise capital from investors or, in particular, ZAKA VC?

• Keep yourself concentrated and motivated and also, keep your mind clear.
• Be ready to easily explain the problem you are solving as well as why your solution and your team are the best to solve it.
• When fundraising, do your math. Prepare your argumentation for the round size, valuation, market size, pricing strategy, and your unit economics.

AIN.UA talked with Oleksandr Sobolenko, co-founder and CEO of Releaf Paper, about the expansion of Ukrainian production and further investment plans. AIN.Capital translated the interview.

Over the past year, we have been actively engaged in business development in the European market: we opened an office in Paris and began to form a local team to work on the factory project, which is scheduled to open in the second half of 2024. The day before, we attracted €2.5 million from the investment fund of the European Commission, which was directed to the creation of our own production facilities. At the same time, we continued to use the production capacities of Ukrainian contractors for the production of final packaging, which was exported to EU countries.

For Ukrainian consumers — small and medium-sized businesses, large corporations, and especially retail — we have prepared many novelties in 2024. Cardboard boxes, paper bags, wrapping paper in sheets and small rolls, even notebooks for those who appreciate forests are now available in limited quantities. All these products are made from Ukrainian leaves collected by municipal services. Unfortunately, leaves are usually burned in our country, so we are glad that we can reduce CO2 emissions, as well as create a product that will help businesses show that they have an environmental component among their values.

Earlier you said that you used to focus on foreign markets, but now you plan to focus on Ukrainian. Why do you think now is the time for this?

Releaf Paper as a technology for the production of paper from fallen leaves and as a company was born in Ukraine, we found our first customers right here. Both the founders and the majority of the team are Ukrainians. Ukraine has always been and will be significant for us, although the focus of the last two years shifted to other markets due to the war, we still promoted the Ukrainian product. We understand the market of Ukraine and we believe in its potential. We see the demand for ecological products, that is why we decided to resume full commercial activity. We continued to receive requests from Ukrainian consumers even during the full-scale invasion, and now we have the opportunity to satisfy them.

What investments does the expansion of Ukrainian capacities require?

All products will be made from our material (Releaf Paper) at local Ukrainian contractors. At this stage, our investments will be directed towards marketing and personnel. For the Ukrainian market, we have a separate structure and team in order to respond very quickly to all consumer requests. Vitaliy Godzula, who previously held managerial positions at Lenovo, will head this team as the commercial director.

We have chosen an eCommerce business model — our products will be available to customers through orders from our online store. In addition, we are negotiating with a number of online shopping sites, through which our products will also be sold, increasing the reach. We also count on Ukrainian large and medium-sized retailers, for which we have formed a B2B department focused on direct sales. A good signal is that some representatives of large companies have already contacted us several months before the official announcement.

From the second half of 2024, we plan to start working on a raw material production project in Ukraine, which will process green waste into filler for paper production. This, in fact, is the innovation of Releaf Paper, but as of now, we do not have this type of production in Ukraine. The initial investment will be €500,000. If we later decide to replicate our format as a full-fledged pulp mill, the investment will increase to €5 million.

Last year you talked about plans to raise €8 million and the search for a new lead investor, how is the progress?

Our cooperation with a strategic partner (investment fund of the European Commission) consists of two parts: grant and investment. We have already received €2.5 million in co-financing for a pilot factory in France. Negotiations regarding the investment component and due diligence continued for most of the last year, and in the end we agreed on more favorable terms for ourselves.

This round will take place in 2025, and its amount will double to €16 million. By that time, the implementation of the pulp factory project in France will have been completed. This will significantly increase the value of our company in negotiations. All funds will be used to expand existing production facilities and create new ones.

The venture fund of the European Commission always provides only 50% of the investment in the round, the other 50% we have to attract from a third party investor. Since, as of 2023, we were not yet aware of the final terms of EC participation, we did not actively search for a co-investor. However, we still received a lot of inquiries and investment proposals, mainly from Western Europe. Most of them do not meet our expectations, because they are ready to invest very little in exchange for a significant share.

Currently, Releaf Paper is worth more than €20 million, and we, unlike many Ukrainian startups, are not interested in investments of less than six zeros. We will continue the search for a co-investor in the second half of this year — we will give preference to specialized European funds. We will make every effort possible to become a unicorn.

Its main feature is the ability to choose the position and unit where a person wants to serve, and responses to job postings are sent directly to commanders.

Lobby X has recently signed a cooperation agreement with the Ministry of Defense, which has effectively brought such recruitment to the official level. The team will also be involved in improving personnel policies in the Armed Forces.

We talked to Vladyslav Greziev about the current results of military recruitment, problems in the army, motivation of volunteers and the main obstacles to joining the Armed Forces, Ukraine’s mobilization potential, and his new educational project, Changemakers (Змінотворці), which is aimed at teenagers from small villages and towns.

First, I want to congratulate you on signing an agreement with the Ministry of Defense. Based on our previous conversations, you seem to have more work, candidates, and vacancies for the Armed Forces of Ukraine. Recently, the Lobby X team grew up, right? How many people work on your project now?

We hired in advance a few people for our military department before signing the agreement. Yes, more work, but we manage it. Currently, our team consists of 20 people, five of whom belong to the military department, including myself.

Recruiting for the AFU is obviously different from classic business recruitment. I have two questions: What are key differences between a “military” interview and a regular one, and how did you prepare your recruiters for this kind of work? Did you hire specialists who were already involved in recruiting processes for the state in the past?

Classic recruiting is a proactive engagement of people, searching after them in business media, professional communities, etc. We do it as civil hiring and can deliver a “turnkey-like” closed vacancy. Our recruiters would search for candidates, perform interviews, and present the best of them to an employer.

We don’t provide proactive hiring for the Armed Forces of Ukraine. We only post their vacancies on our portal. Anyone who gets to the Defense Forces via our website is a volunteer who applied for a vacancy. We didn’t find them.

Why? Any commander would say that motivation is a key parameter for defining a good soldier. First of all, he must want to serve, and then you can teach him anything. Therefore, we teach military officers how to pick candidates right, especially how to conduct interviews.

By the launch of our military department, there were only a few units for which we published job openings, collected feedback, selected candidates to cover headquarters and commander positions, and even interviewed them.

But it cost us so much time. However, with increasing numbers of candidates, we quickly understood we could not do screening of their CVs. In addition, the very units wanted to check all who applied for their vacancies.

But sometimes, we can still do one or another interview. Recently, we got a request from Achilles, the 92nd Separate Stormtroopers Brigade’s Attacking Drone Company. They are really cool guys building an efficient and progressive team. Now, they are expanding from company size to a battalion unit and have asked us to organize all the selection, interview, and onboarding processes. Just today, we got another similar turnkey request for a very important position. Due to its critical importance, we will mobilize additional resources to re-launch and systematize this service.

It will be a kind of outsourcing. Our specialist will integrate into the unit, observe, communicate with all commanders, understand the unit’s culture, and establish selection routines.

In any case, it would be better that military units have their own recruiters who would do the job. This issue is being discussed with the Ministry of Defense and the General Staff. We believe the units should have at least four recruiters each. Their hiring experts must know the culture and values of a unit, their commanders, and internal affairs and get clear requests and requirements for the jobs from the commanders to select the best candidates.

Lobby X used to publish TOP 5 popular areas of service in the AFU, where IT and drone operators were among the first. To what extent does demand exceed supply in these areas?

Effective today, there are the following statistics of published job openings on our portal:

1. Paramedics — 223
2. Infantry — 212
3. Staff — 165
4. IT — 150
5. Communication — 88
6. Drone Pilots — 84
7. Transport — 80
8. Press Officers — 53

Of over 48,000 applications, the most wanted professions are:

1. IT
2. Staff
3. Drone Pilots
4. Press Officers
5. Infantry
6. Paramedics
7. Communication
8. Transport

It is worth mentioning that there are also volunteers for infantry roles despite their high-risk nature in case of possible injuries or death. These volunteers exist because they can select a unit and commander they trust and where their lives are valuable.

I will ask you questions about infantry a bit later. Now I wonder about something different. In one of your previous interviews, you mentioned the high demand for IT positions in the armed forces and that there were only a few. You also recalled the Cyber Forces of the AFU. For most of us, it remains a secret since they never appeared officially. Who hires people there, then?

The Cyber Forces exist de facto. The legalization of their existence among the Security and Defense Forces has been in progress for the last two months and is now been finalized.

In fact, they are a separate department. I cannot say where exactly, but the Cyber Forces do exist and work. We helped them recruit qualified specialists and are in touch with their leadership.

I also know that the Cyber Forces are satisfied with their output. They are not so public and organize no PR events. They are focused mainly on the results. I can give you an example: Do you remember that recently, the Russian fiscal system has been hacked by the Defense Intelligence of the Ministry of Defense of Ukraine? I know the Defense Intelligence has no separate unit that does cyber events. It means we may presume it was done by someone else.

I got your hint; it’s interesting.

Regarding the IT jobs in the armed forces, Lobby X used to publish a lot of them, but mostly tech specialists and people engaged in the sector of changes knew our platform.

So, when we started military recruiting, IT naturally became one of the most demanded. And it is obvious why: tech-savvy boys and girls can be useful in the army by doing what they know the best. At the same time, both demand and the number of vacancies are at the top here. In March 2022, the General Staff requested to hire several hundreds of system administrators for multiple units.

By the way, at the beginning of the full-scale invasion, it was a serious issue with recruiting to infantry units despite the person being a qualified communication specialist or a system administrator. How is it now?

It is a classic one, and the problem remains. Territorial Recruiting Centers have their quotas for certain positions in specific units. It is no secret that, no matter how terrifying it may sound, the infantry units have the highest personnel turnover. For sure, the Territorial Recruitment Centers try to fill those gaps with anyone available, even if a person has a rare profession.

And any IT specialist would be much more effective as a drone pilot or a communication, electromagnetic warfare, or signals intelligence officer. And there are vacancies for these positions on our portal.

On the day of signing the agreement with the MoD, you said Lobby X would participate in improving the HR policies of the Defense Forces. What are the main problems with the current recruiting methods at TRCs? How to solve them? Because now, it seems to be an unresolvable issue.

Yes, the Ministry of Defense is working on changing the Armed Forces HR and Personnel policies. We are aiding them as experts, collaborating in specialized workgroups, and consulting.

I believe Ukraine needs to review the business routines in the Armed Forces, and here, I mean not only the TRCs.

In general, I would find the causes and not treat the symptoms. When the big war began, everybody was excited about the first victories over the enemy, and there was a big hope and a lot of effort to develop this success in 2023. Unfortunately, some plans failed to succeed due to absolutely obvious reasons. And now is the best moment to stop and analyze the entire Armed Forces system.

After working more than six months on this, speaking with dozens of officers with the most different ranks, from a private to a commander, I can tell you today that the biggest challenge with recruiting is demotivation. What would stop a person from joining the AFU? I recommend identifying these main demotivating factors and solving them.

I think it’s the best time to troubleshoot and build a modernized Army v2.0.

Frankly speaking, I see the strongest fear is the fear of death, and it’s natural and normal.

No. Our studies (done by consulting with human motivation psychology and nature, social and biological factor specialists) show that people have fear only when facing death itself in one way or another.

Sure, it is an important factor, but guys who never saw the death would never call it their No. 1 blocker.

Usually, people refuse because of uncertainty, a total lack of understanding of what happens next. The more control over the future and influence a person gains, the higher the chances the person would take a step forward.

The second critical factor is the trust of a future commander. People in the army basically give their lives under one’s command. The Armed Forces are now starving for educated commanders with leadership qualities and personnel management, operation planning, tactic and strategic skills, as well as honor for human dignity.

You said the most important is to be sure of your future. Do I get it right that you also mean clear demobilization and rotation procedures?

This also. It includes an understanding of what unit a person will serve. By applying through Lobby X, people have that option. However, it remains a complete lottery at the TRCs.

Yes, accumulating proper military reserves is significant. The men and women had been fighting at the fronts for almost two years already, and they needed rest, rotation, or even demobilization.

Based on what you have heard during conversations with the MoD, do they agree with those ideas or find them yet impossible?

For sure, they at the Ministry of Defense and General Staff realize people got tired and must rest. But it is a complicated matter. I heard many populist statements from the parliament members about “simple solutions” like a Demobilization Bill. However, the same military would be among the first against the bill. Currently, there is no substitute, no reserves enough to cover some part of the front.

If we do so, we would get a hole in the frontline, Russians would march through, and it would cause even more problems. And then, the very demobilized soldiers and officers would have to return to the fray, but the threat would be much closer to our capital.

So first, the frontline units must be filled with men, and then the reserve. Only after that, we may speak of some large-scale rotation and rest for a long time.

In any case, the battalion commanders are already practicing internal rotation at the company level. Sure, it is only a few breaks, but the guys need it.

Now we are back to the infantry, one of the most pressing topics, maybe. Do you know how to motivate people to join an infantry unit? It might be a big problem, especially after statements like “robots must fight at the front instead of humans,” which is now merely impossible to do. And I am sure that infantry soldiers get angry when hearing this kind of statement.

I agree, we must use all technologies available. This war goes live thanks to drones and situational awareness systems. We must invest in our military tech. I personally evaluate our state’s efforts in the defense industry as more or less well. But we also must examine what Ukroboronprom did since the new CEO delivered no news after his appointment, and there are plenty of specific challenges, indeed.

Anyway, we won’t hold the line without people at the front in the near future. How can we motivate people? Simple mottos are not enough anymore. They just won’t work. All who wanted to join the Armed Forces due to their feelings of dignity, patriotism, and duty long serve or support the military.

Nowadays, we should work on how to motivate civilians from different clusters. The simple mottos won’t work. An infantry fighter must have all the conditions to get a clear answer on whether the army did everything that he survives and does his work with success. Only after assuring this, we will have the maximum number of applicants for infantry units.

How to do it? Surely, with the professional, trained, and educated infantry unit commanders and high command who have two priorities: complete a mission and save the personnel. If a commander succeeds in a mission but loses all his personnel, it’s a terrible commander.

We fight against a nation with a triple or even larger mobilization potential than ours. From a long-term perspective, we may not neglect the numbers. So we must show more quality and save our people.

Good weapons, equipment, and technology also matter.

You mentioned military tech. What do you think about the effectiveness of grants and funding multiple projects with the hope that one of them should be a game-changer? Some military men criticize it and say that we require FPV drones and Lancet-like battle drones as soon as possible and that they don’t want to pay with their lives for some experiments.

Speaking of miltech, I meant the drones exclusively. I think the strategy of simultaneous funding for many projects makes sense. Without developing ideas that are promising according to the experts, without letting them into the MVP stage and proving them, we won’t know their possible results. And a potential innovation could be lost.

There are problems with supply of critical things like FPV drones, for example. Now, the government also finances the massive production of FPVs, compared to the situation a few months before, when volunteers did all the work.

By the way, we signed a memo with the Brave1 cluster and the TechForces of Ukraine Manufacturer Association. We help them recruit engineers, production specialists, software developers, etc. This industry hungers for professionals, particularly those who can work with hardware. It is growing and can become a driver of the Ukrainian economy after the victory.

What plans does Lobby X have in the military area?

Our short-term goal is to provide wide communication to people so that they can choose a position and a unit. For this, we place ads in lightboxes and billboards countrywide. We prepare a radio and television promo campaign.

However, the mobilization reserve of those who seek to choose a position and a unit will be exhausted pretty soon. Then, we should go deep and destroy demotivating factors on the state’s site.

Within a military department, we will launch another campaign to employ and resocialize veterans that is to be announced in Q1 2024. Our philosophy is that society must be synchronized with veterans and integrated into their reality, and not vice versa.

It is not only because of the drastically increasing number of veterans. We all have to be on the same vibe and understand the price people paid and risked with their health and lives to protect our sovereignty and freedom.

I want to end our conversation with a question about your new project, Changemakers (Змінотворці). What does the education for teenagers from small towns that your team is involved in look like in practice? How are the classes organized? Where are they held?

We started working on the project last December, realizing the long-term perspective of our country. Even if we win the war, we still won’t be able to exterminate all the hostile population of Russia. Maybe we shouldn’t do this. It would be good if Russia were to break up into smaller states, but even then, we’ll still have hostile neighbors.

So, for our independence and freedom, it is essential to be strong as a state, as a society, as a country, as an army, and always be able to fight back or even be so strong that any aggressor would not dare to attack. All this is about the people who fill the army and government agencies, society, businesses, and all other spheres, their capacity, and professionalism.

Not to mention the fact that we now have over six million Ukrainian refugees abroad because of the war, and polls show not very optimistic forecasts for their return — about 42% of the population under the age of 20 have gone abroad, and only 27% of them want to return. And their parents make even worse predictions, wanting their children to continue living and studying abroad. And out of these 42% of people who left, 80% are children from cities.

Accordingly, in this age range, the population in Ukraine mostly lives in villages and small towns. A year ago, my team and I decided to invest in these people.

Yes, of course, we can return Ukrainians from abroad and engage in migration policy, but the most obvious solution for me is to invest in those who stay in Ukraine.

So we went to villages and small towns, realizing that teenagers and young people have fewer opportunities for their development there than in big cities. At Lobby X, we observe an obvious correlation: when university graduates come to us for interviews, they have experience in organizations such as the Foundation for Regional Initiatives, Plast, AIESEC, and so on, they are more capable and competitive in the labor market because they have a broader understanding of how the world works, its various spheres, and probably more experience in interacting with different people.

There are very few or no such opportunities in villages and small towns. So we decided to offer our educational program to the children there. It consists of twelve courses covering critical areas of the modern world: Military, Society, Economy, Business, Relationships, Technology, Media and Information, Culture, Art, Environment, State and Politics, and Health.

We hypothesize that by completing these twelve courses, teenagers will understand the modern world and how it works and thus become more progressive and capable in their development and decision-making.

In five years, we plan to have 20,000 project participants annually. Cumulatively, this will affect the average welfare of the entire society. It will become more capable and robust, and accordingly, it will strengthen the country, the army, business, and the public sector.

The training began in October, and more than 500 teenagers participated in the project. The first groups have already completed their first classes. Before the start, we spent ten months building the team, developing content, and setting up business processes. We traveled to seven regions and selected 26 schools to present our project.

The program consists of 90% of group online classes. There are 24 to 36 teenagers in one group. There are also offline components — we come to villages and towns on weekends and work with children. This work is significant for them and the country.

AIN.Capital talked with Roman Novacek, CFA and one of the Partners, about Presto Ventures’ activities and results, as well as the state of the CEE market in 2023.

It’s almost the end of 2023, could you please summarize Presto Ventures’ activity this year: How many investments were closed? How many of them were announced? Any exits this year?

In 2023, we’ve closed 15 investments so far, including Outfindo, CityPay.io, or Blindspot Technologies. Some deals are still waiting to be announced. That brings us to a total of almost 60 portfolio companies in Presto Ventures across two funds. 

Several companies in the portfolio are in exit discussions at the moment. That said, we prefer to be realistic and count on them only when the pen hits the paper. Fingers crossed two exits will close by the end of Q1 2024.

Last year Presto launched its €30 million Fund II. How much has been accomplished since the launch?

A lot has happened, I must say 🙂 We’ve proven we can effectively scale the company, analyzing more than 3,000 potential opportunities this year. Since its launch, Fund II has closed 40 deals. 

We’ve been building the firm gradually, starting with a solo GP and later a team of 2 people in the first fund. The second fund has grown from 7 people at the beginning to 15 team members at the moment. Over the last year, we’ve set up robust internal processes that enable us to cover the whole CEE+ region, including physical visits to countries such as Tajikistan or Ukraine.

Presto has also built a presence in new markets and strengthened our brand and reputation across the extended CEE region. We’ve successfully proven that our investment strategy – backing early-stage companies in Central and Eastern Europe, with the view of leading them towards raising the next round in the West – is sound and viable. 

Case in point: Keboola. This Czech data supercharger has just announced the largest Series A round in CE in 2023 (and 2nd largest in the entire CEE, at $32 million), with our participation. Presto led the previous Seed round in 2022 with the thesis of getting the company on to the VC path of raising a significant Series A. This was fully accomplished even faster than we had expected.

Last but not least, we’ve been able to select real winners – a number of our portfolio companies have successfully raised further rounds, including the ‘dreaded’ Series B of over €20 million, even in the currently tough economic conditions.

Are there any plans on launching Fund III in the near future?

Yes, we’re in the process of finishing materials for our Fund III, with a target size of €100 million. We aim to capitalize on the opportunities coming from the latest CEE market developments – one of the fastest growing regions for VC funding, yet claiming less than 10% of the total European startup funding.

We have a great track record, and a clear and proven investment focus. We’ll ramp up our activities to get to 30-50 new investments per year, as we continue to build a leading VC firm in the CEE+ region.

In November alone you had two deals announced, one with Ukrainian startup Getpin, another with British startup Magic ID. Tell us more about these deals.

At Presto, we’re always excited to back startups that create solutions we would love to use ourselves. Besides that, Magic ID is our first investment into a Greek founder, and fits with our increased focus on the Balkan region – following our investment in the Serbian-Estonian company OTASync, which closed their round at the end of October.

Ukraine and its resilient founders are among our favorites. It was quite the experience following Volodymyr through the ups and downs related to covid and the war. Getpin’s successful expansion against all odds convinced us to add fuel to their scaling machine.

All in all, we focus on finding startups with a solid value proposition and strong fundamentals, and diversify by geography.

Given your activity, are there any plans for further investments this year? 🙂 What about H1 of 2024?

Hopefully we’ll be able to conclude one more startup investment before Christmas. There’s also a number of Q4 investments that are yet to be announced.

We have several million EUR still left in the fund and plan to do few investments in 2024 before fully focusing on Fund III.

Presto usually invests in CEE, so you must understand the ups and downs of the VC and startup market this year. Tell us about it.

In many CEE countries, there has been an investment slowdown, mainly due to startups not raising late stage investment rounds. With their superior spending efficiency and ability to move to breakeven faster – compared to their western counterparts – they can afford to wait until the valuations on the market correct.

Has anything changed regarding Presto’s investment strategy? Did you need to adapt?

Fundamentally, our investment strategy hasn’t changed. Our strategy has always been to invest into startups with sustainable and recurring revenue, which provides a lot of downside protection. 

On a more operational level, we’ve realized the need to work with portfolio startups more closely to effectively manage their runway and prepare them for the situation of not receiving good investment conditions in the following round. We help them prepare to be in a position to reject such offers and continue building the company.

You’re also one of the most active investors in the Ukrainian ecosystem. What pieces of advice would you give to Ukrainian startups?

Don’t be afraid to expand quicker and test new markets – including Poland, Baltics, Nordics, or even the US.

Focus more on sales than the product (this is a ‘CEE problem’ in general).

Lean into your resilience.

What do you do in general? What is your expertise?

I’m a full-time investor since 2019. But before this, I was a full-time entrepreneur for 15 years. I also spent three years in the Swedish armed forces. After the military, I studied economics and finance in Stockholm. I started my first company as a student. I moved to Kyiv full-time in 2019 and started investing as a business angel in early-stage companies.

But the first investment we made in Ukraine was already in 2014-2015. So we have been investing in Ukraine, like Ukrainian tech startups, for almost 10 years. Back when Russia attacked Ukraine in 2014, almost nobody was investing in Ukrainian tech companies.

Overall, we have invested in a number of Ukrainian startups including YouScan, Awesomic, Cargofy, Allset, Let’s Enhance, Competera, Legal Nodes, and Datrics. Last year, we also acquired shares in Beetroot, a Swedish-Ukrainian IT company which is having a big impact in Ukraine, including through Beetroot Academy, which has trained more than 10,000 Ukrainian IT professionals. On the topic of education, in 2023 we also helped launch Pareto Business School, which offers an online mini-MBA program. We have several Ukrainian Pareto MBA alumni already.

You’re the founder of the investment company Hype Ventures. Tell me more about it.

It started with just me making early-stage angel investments. But then we took all these different investments, put them into one company, and got more shareholders on board. So it’s been a very organic process. 

Hype Ventures is not a fund. If you are an investor, basically there are two options. Either you can invest through a fund, or you have an investment company. With a fund, you are investing mainly other people’s money. If you have an investment company, you can say it’s like a small family office. 

You basically invest your own money or the money from a small group of people who decided to invest together. It’s more flexible in terms of what you can invest in. You can invest small checks, big checks. For example, the smallest check that we did was $25,000. And the biggest check we’ve done is like $700,000. There’s a big difference, and that’s a bit untypical.

This flexibility is good, because in the last 12 months, we started investing in defense tech startups, making our first investment this year. Now we’re actually actively looking for defense tech startups. I’ve been here maybe 10 times since the full scale invasion and I’m seeing a lot of activity in the defense tech space.

What is the first defense tech startup that you invested in?

The company is called HighCat. They have their R&D in Germany, but they also work with Ukraine. We were the first investors in this company. D3, the defense tech fund based in Kyiv, invested in them after us.

This year, in November-December, we hope to make two more defense tech investments. It’s a very interesting area due to several reasons. The first thing is: you can help Ukraine win the war faster. And the second thing is: you can also make money. And if you can make money out of it, it means it’s more long-term. You can take this earned money and reinvest into more, and more, and more startups in the same space. That’s the idea.

It’s good for defense, because Ukraine is defending Europe directly. Furthermore, some technology developed here can also be used in, for example, Sweden or Finland, also boosting defense there. So, if you invest in defense tech, you are helping Ukraine win. And, at the same time, you’re helping the rest of Europe.

I think you’re very correct. Defense tech is a lot more promising than other industries right now, especially in Ukraine. Now, other than defense tech, what does Hype invest in?

Well, we started with AI, big data, and cloud startups. That’s when we saw that there were a lot of cool companies in Ukraine. One example is Awesomic, a cloud-based design service. It has just amazing founders. And another company called Cargofy is doing logistics and is also doing very impressive work.

So one thing that we’ve also invested a lot of time and effort in this year is Pareto Business School. Pareto offers a mini-MBA at a price that full-time MBA programs can’t match. Usually, MBA programs take one or two years and cost a lot of money. But this one provides a very concentrated, summarized, and practical-oriented course. It takes around five hours per week. It’s based in Stockholm, Sweden, but it’s online, so you can get this Nordic-style business education anywhere, including in Ukraine. Already, we’ve graduated two cohorts of 15-20 people each. I’m also one of the guides on the program.

So, we’re very active, as you can hear. But the main thing is, we’re an investment company, investing in defense tech in Ukraine.

And why did you decide to come here and invest in Ukraine?

In 2019, I was still in Sweden doing some other stuff there. Then I broke up with my girlfriend and started thinking about what to do next, where to spend time and so on. In 2019, we had already made investments in Ukraine, for example, in YouScan. And I had a lot of friends here. So I just decided I’m going to come here and see what the startup scene is like in more detail.

Here, I started going to a lot of startup events. And just met a lot of people. It was actually very good timing: 2019, 2020, and even 2021. It was a boom time for tech companies in Ukraine. And it was just a lot of fun. It’s a very different vibe here. People are more straightforward here. If they don’t like something, they will tell you that they don’t like it.

Ukraine is also similar to Sweden in that Sweden is a country with a small internal market. So, Swedish startups usually go to the United States. For example, Spotify, which started in Sweden, expanded very quickly to the US. And it’s the same with Ukrainian startups. They test the product in Ukraine. But then they go to the US to become big global companies. This is a big benefit for investors like me.

You talked about investing in two more defense tech companies this year. Tell me more about that.

We have looked at tens of different tech startups in Ukraine. There are some areas which are really, really interesting. I spent a few years in the Swedish military and I can talk about defense tech for hours. Of course, drones are really interesting. In Ukraine, as you know, after the full scale invasion, people were improvising a lot. There were and still are hundreds of different teams building different things. It’s still quite fragmented.

But what we’re seeing now is that these startups get more and more structured and organized. It’s also important to standardize things. Because war is about mass production and standardization. That’s how you can really get the cost down and how you can win the war. If somebody hasn’t been in the army, or maybe seen how real industries work, it’s really hard to understand how complex this is.

So these kinds of drone startups are doing a very important job. But it’s important to keep in mind other things that also need some innovation in the military world, such as logistics. The question is: “How can you make logistics more efficient?” Anybody who has studied military history knows that if you can win like the logistics war, then you can win the whole war. And if you cannot feed your soldiers or give them ammunition, then you’re done.

Drones are very sexy, and very cool, but things like logistics, medical care, software and communications are crucial. In the past, war was very hardware-oriented. Now war is becoming more and more software even though the killing is mostly done by artillery. There’s lots of electronic warfare going on, and the Russians are good at some of those things. When you fly in Ukraine, it’s a kind of GPS denied environment. You cannot trust satellite navigation. This is why you have different startups who are doing alternative navigation solutions for drones. This is very important. It’s not an easy task from a software point of view, so this is where software startups can be very helpful.

Another thing which is extremely, extremely important, which, I think, doesn’t get enough attention, is training. Training is, probably, the most important thing in war, in addition to morale and fighting spirit. I would like to see more startups that are trying to improve the training of soldiers. If somebody heard of something like this please send it to me, because I’ve only seen one or two pitches that are connected to military training.

What piece of advice would you give to these aspiring defense tech startups?

I would advise them to go outside. It’s actually the same thing as with normal startups. It’s about leaving the building. The idea is: you have somebody who’s a programmer, and they sit and develop the most amazing product in the world. And then they go outside, and they try to sell it. But nobody’s buying it. This is a classic case. 

So the piece of advice to everybody who is an entrepreneur is: leave the building, go out, and talk to your customers.

Who are your customers? Well, they are the soldiers. So go out and talk with the soldiers, even go to the frontline if you can. To be fair, many entrepreneurs do this in Ukraine. Get a friend who’s in the armed forces and just talk about what those guys need. What’s their biggest problem? Ask yourself how you can help them solve this problem. Of course, they can talk about the war and killing, but a lot of the problems are very domestic and practical. You know, like, how can I keep in touch with my family? What do I eat? How and where do I sleep and wash myself? How do I rotate? And if we think it’s going to be a long war, which I think it’s going to be, then you have to think about these things long-term.

In conclusion, what would you like to say about defense tech in Ukraine?

I don’t claim to be a big authority on this, but I think many people don’t understand military stuff and this is a real problem. Ukraine changed a lot in the last ten years. The military is getting rid of the general feel of the Soviet military, as a low-status and bureaucratic thing. Back then, including during the post-Soviet years, if you were a smart person, you would not go to the military. Since very few people wanted to go to the military, because of corruption and other problems, there is now a whole generation which is not very familiar with military things.

Since the full scale invasion, and even after the start of the war in 2014, this has been changing in Ukraine. In countries like Finland and Israel most young people receive military training. So they know something about the military. It brings new talent and new ideas, which can both help to develop the military and contribute to a general startup culture in society.

In Ukraine, there’s still a lot of work to be done, regarding the defense tech industry. But you’re on the right track.

Lastly, people think that you’re either outside NATO or you’re in. Actually, it’s more of a scale. So, Sweden is not yet in NATO formally, but in reality Sweden is 90% in NATO, and Ukraine, I would say, is like 25% in NATO already. So it’s a spectrum and you’re already on the way.

AIN.Capital talked with Reima Linnanvirta, Partner at Trind Ventures, about the fund’s activities and recent investments in an interview, where he also shared his thoughts on the Baltic VC and startup market.

Tell me about Trind Ventures. What is the fund about, what startups do you invest in?

Trind Ventures is a seed-stage venture fund focusing on European software startups. We are currently investing from our second fund, which is a €55 million fund we launched in 2022, exactly a year ago. And we focus on companies with a consumer or community component, so typical examples are marketplaces, platforms, and anything with many users. Geographically, we invest all over Europe, with the core region being the Nordics and Baltics.

Can you tell me about the second fund’s performance since its launch in September 2022?

Well, it’s still so early, you can mainly measure how much you have invested. Our goal was to make 8 to 10 deals per year. By now, we made 11. So we are pretty much exactly on schedule. The big plan is to continue investing the same for the next three years and aim to build up a portfolio of between 30 and 40 companies, probably ending up closer to 40.

Is it too early for any exits?

No, no exits. So far, only one company has had a follow-on funding round. In Fund 1, we have had two exits, both positive. But in regards to Fund 2, no exits yet. 

If you have an early exit, you know it’s not going to be the best story for the fund.

Did any startups surprise you with their growth since the investment? 

In Fund 1, the best-performing startups have been Ready Player Me, which attracted Series B round led by Andreessen Horowitz. There is also Neural DSP that has been growing really well and attracted a lot of attention recently. Jobilla has been expanding quite nicely. All in all, I would say that in Fund 1, there’s five companies that are performing well. Those are the highlights. 

In terms of Fund 2, Webel is the one with the best performance so far. It is also the one that we did a follow-on investment for. So it’s been developing nicely since the first investment. 

2022 seems like quite a time ago. Have there been any changes in your investment strategy since the fund’s launch?

No, but we have seen this shift in the market, and that sort of works in our favor. We have always been a conservative and quite data-driven investor. And when the market overheated, there were quite a few deals that got funding without any data. They were just a great story and great founders, so they were able to raise funding. 

Now we see more and more that there is increased attention to traction, you have to check customer acquisition and retention. I would say that the market is getting back to normal, which makes it easier for us to invest within our thesis. We didn’t need to make any changes.

Since the start of autumn, you have had four deals announced. Can you tell me more about them? 

In the last four weeks, we have had four investments already; pretty busy during summer:

• Webel — we made the first investment in December last year. A very small ticket. It was an early-stage deal, but they had a great team and promising metrics. We wanted to see how it develops. And it’s been developing well. So, recently, we led a follow-on investment, which was a €2.1 million round.
• Boksi — is also from Fund 1, so it was another follow-on investment. Boksi is a Finnish influencer marketing platform connecting influencers and brands who want to perform influencer marketing. So that A-round was led by 3TS Capital Partners together with Nexit Ventures, and we participated in it.
• Your.Rentals — is a Danish company providing a short-term rental marketplace. It’s a platform for those who rent apartments out, where they manage the property featured on Airbnb, booking.com, and others all in one place.
• Wudpecker — is from Tampere, Helsinki. They are providing knowledge management solutions. Their main product is the automated note taker, which can take notes and make automated summaries of calls and meetings. It’s a very, very passionate team and they have really nice product growth going on.

Earlier, you told us that the market is coming back to normal. Can you tell me more about that?

I’m actually saying that this, what we are seeing now, this is the normal. In the past few years, the market has overheated, and we have forgotten what it’s like to be normal. I’ve been working in the venture capital industry since 2006, and this, in my view, is not downturn. This is what we saw in the big part of the 2010s before it got overheated a few years ago. 

A year ago, we were in a situation where some companies had cut down their burn and postponed their funding rounds because of the positive cash flow. There were deals around, but those investment opportunities were not necessarily good investment cases.

Last spring, those quality cases started to fundraise, and this summer was super busy. And that’s the reason why we have had so many announcements lately — those deals that we were doing during summer are finally public. 

Investors tend to prefer deals with a bit longer runway. So instead of going for 12 months, it’s 18 to 24 months. It means that the rounds are bigger, and the plans are less aggressive. And it also means that instead of a single investor, there are two or three joining the round. It’s true in the Baltics, and the same happens in the Nordics, even in Southern Europe.

Do you have any pieces of advice that you would give founders or VCs in the area?

From the VC point of view — stick to your investment thesis whether it’s a good time or bad time. If you follow your thesis, regardless if the market is hot or cold, you can still make good investments.

Regarding founders — I would put an extra effort into understanding what the investors seek. One thing that I noted when I participated in Latvia Startup Day, where we had four VCs on the table — everyone had different viewpoints. So, understand how different VCs are thinking. One thing that we all love is how well the founders are prepared. We love data. So, the better the data regarding the company, the easier it is to analyze it and invest in the company.

Can you tell me more about your Trind VC plans? Do you plan to invest in more startups this year?

We plan to do 30 to 40 investments from the current fund. That means we still have to do some 25 deals. So far, we have had 11, but we have something in the works as we speak. There are a couple in the closing stages. I expect that we will still announce something new this year.

Tell us about your startup? How did you come up with the startup’s idea? What was the reason/motivation behind it?

The idea for Certifier started when we (with Sergey Butko, the co-founder of Certifier) first discussed the issue of digital rewards. We noticed that we had a similar vision were interested in this topic.

On one hand, we saw a specific problem – automating the process of issuing certificates, badges, and various awards. On the other hand, people have always loved receiving recognition for hard work. In the past, it was mainly medals for participating in wars, but nowadays, it’s about certificates, credentials, and achievements in online games. We realized that this area needs to change as we move from physical to digital documents.

Tell us please a bit more about the product. How does it work?

In the past, organizations wanting to offer digital credentials usually had to create these services in-house or use outdated software designed for other types of document management. This was really time-consuming. Certifier provides a streamlined and automated solution, saving these organizations the effort and resources in this area.

“Certifier’s products are designed to be versatile, addressing the timeless desire for recognition. Our solutions are tailored to meet the unique needs of digital certificates, diplomas, badges, and achievements across various use cases, industries, and companies.”

How many investments did you manage to attract in total? Why did you decide to attract fresh investment?

Certifier operates like a typical B2B SaaS company but also has elements of a B2C marketplace. At this point, it’s not a capital-intensive business. From the company’s inception until now, we’ve raised a total of $1.3 million. We raised about $500,000 during the pre-seed stage in 2021/2022, and recently secured another $700,000 in a seed round.

Our current focus is on building an API-first platform and developing products that cater to the specific needs of larger entities. We sought the recent $700,000 to help us reach these objectives.

How quickly did you manage to close this round? How long did the negotiations with the investors last?

We started discussions with some investors as early as February of this year. By May, we had received the initial commitments from participants in the round, and the negotiations spanned about a month in July. So, from the time we began preparing investment materials and engaging with the first investors to the signing of the agreement, it took us 7–8 months.

Since launching in 2020, Certifier has over 400 international clients, including Avon, Stanford Medicine, University of Illinois, Oxford School District, and Salesforce. What makes your product attractive to top customers?

While the concept of digital credentials isn’t novel, what differentiates Certifier is our unique approach. We’ve meticulously reviewed over 50 potential competitors to ensure our solution is distinctive.

We aim to outshine the competition with a product-led growth model that prioritizes low-touch sales, top-notch APIs, and leveraging network effects. Our collective experiences and insights have allowed us to identify market gaps, leading us to craft a superior product.

How many people are in your team, and how many more do you want to hire?

Currently, Certifier’s team consists of 12 full-time members, with the majority being part of the product and technology team. Our philosophy leans towards maintaining a small yet highly skilled team capable of producing an outstanding product.

So, in the upcoming year, we don’t anticipate a significant increase in team size – we expect to have around 20 members by the end of the year.

Tell us more about Certifier’s future plans.

We’re still in the early stages of our journey. That’s why a significant portion of our resources is dedicated to product development.

“As part of our product evolution, we’re making an “up-market move” by partnering with larger organizations and corporations. Moreover, we’re passionate about establishing a globally recognized company based in Poland, capitalizing on the strengths of our region,”

Badges have been used for millennia to validate skills and achievements. With the transition from physical to digital mediums and the rise of online education, we recognize a unique opportunity in this domain.

AIN.Capital talked to Maciek Balsewicz, Founder & Managing Partner of bValue, about the ongoing activities of the fund, its nearest plans, and the state of the Polish VC market in 2023.

Tell us about the fund’s activity in 2023: how many active investments were made, have there been exits/write-offs of investments?

Over the last 12 months, we made 9 new investments, with 6 of them in 2023. With the decreased availability activity in the early-stage funding, we saw much more investment opportunities fitting to our investment policy than we have in previous years.

We have also made our 13 exit and first one from second generation fund — Renters.pl, a leading short term rental manager in Poland. It was acquired by Enterprise Investors. Fortunately, for now we had no write-offs, and we hope this will not change in the coming year.

One year ago, bValue launched its third €100 million fund focusing on later-stage tech startups from CEE. How can you describe the results of this fund?

I wanted to first clarify that our growth equity fund is not a typical later stage VC fund. We are much more interested in EBITDA profitable companies with a little different growth plan for their future.

We are actively investing and for now we see that this type of funding, although not unusual a few years back, is getting more and more interest from founders.

We want to invest in companies that look for full exit within 3-5 years and want to achieve profitable growth without further outside financing. We are investing in tech businesses as well, but not exclusively.

Are you currently negotiating new projects or focusing on supporting portfolio companies? Tell us about your plans for the end of the year?

We are finalising our early stage fund with last investments, but we are more focused on supporting portfolio companies as we made a lot of investments in the last 12 months, and we want to support them in their current development. At the same time, we are actively sourcing new investments from the growth equity fund, so there is a lot of activity in every area of our fund.

How does the Polish venture capital market look now? What trends would you highlight?

We see that more and more funds are finalizing their investment period and are preparing to raise new funds, which will possibly mean a period of downturn in the fundraising activity for startups in Poland. At the same time I see less founders starting new businesses. This may be related to the general economic situation, where people are more scared of risk, but the reality is that we see much less new startups than during 2020-2022.

Has anything changed in the fund’s approach to investing over the past six months — average check, focus, geography. How did the war in Ukraine affect the fund’s activities?

There was no significant change in our approach. We are investing in the CEE region with a focus on Poland. Russian aggression in Ukraine has impacted all of our portfolio companies, some more than others, but I hope the worst is behind us.

What do you think about the Ukrainian startup ecosystem? Does bValue plan to invest in some Ukrainian startups? Or maybe you’ve already had some examples of partnership with Ukrainian companies?

Due to the size of the Ukrainian economy, local startups are focusing on foreign markets, especially in the US. I believe this might be an advantage of these companies compared to Polish startups, as they are better prepared for internationalization and address bigger markets.

“I believe Ukraine’s startup ecosystem is developing very rapidly and we definitely want to be involved there. Among our recent investments in Ukrainian startups is Callpage.”

What is the focus for the next investments? Tell us more about your plans. 

Currently, we are focused on the growth equity fund and are actively sourcing profitable companies looking for growth capital. In terms of our early-stage fund we are focused on portfolio support and exits from previous generation funds.

AIN.Capital provides more insights of the deal.

Details of the potential deal with NewHomesMate

NewHomesMate (formerly Propertymate) is an American startup with Ukrainian co-founders and a team in Ukraine. It was founded in 2018 by Bohdan (Dan) Hnatkovskyy and Sofia Vyshnevska from Lviv. Before NewHomesMate, they worked together on Bohdan’s real estate sales automation project, Brainify. As of June 2023, the team consisted of more than 90 people, some in Kyiv and Lviv, but most new hires are from the United States.

NewHomesMate is a platform that allows buyers of primary residential real estate to find all the information about new buildings. It is an AI-based startup that helps analyze data on buyers and real estate. It predicts which properties customers will be most interested in.

The startup received its first million in 2021 from Pragmatech Ventures. In June 2023, NewHomesMate raised another $5.5 million from Ukrainian Geek Ventures, Flyer One Ventures, and SID Venture Partners. At the time, the startup’s co-founder, Bohdan Hnatkovskyy, claimed that the project had grown by 1086% in revenue as of January 2023 compared to January 2022. In total, the startup has $6.5 million in investments.

NewHomesMate serves 14 local markets in the United States, including Austin, Houston, and Miami. Also, the company has recently launched in Atlanta and Denver. According to Forbes, the startup expects revenue to reach $8.5 million in 2023 and plans to expand to Colorado Springs and Phoenix.

“The company has reached a multi-million ARR very quickly, is growing and opening its business in new cities,” comments Taras Kirichenko, co-founder of Toloka.vc.

Now, NewHomesMate is raising a third round, which is expected to be $15 million. It is unknown who will be the lead investor and, accordingly, with what valuation the round will be closed. But Toloka.vc has already received commitments from 90 of its LPs for a total check of $1 million.

“I think the total investment will be bigger. Overall, 200 out of 500 Toloka.vc partners were interested in the deal with NewHomesMate. Most of them are from Ukraine, although we have many people in the community from other countries: Georgia, Singapore, Kazakhstan, Turkey, and the Baltic states,” adds Promodo CEO and one of the co-founders of the venture syndicate, Oleksandr Kolb.

A $1.4M deal for YCombimator’s startups that never happened

At the time of the fundraising for Forta, the Toloka.vc syndicate had 300 LPs (Limited Partners). Now, according to Kirichenko, there are 500 of them.

“We want to do one deal per month. Of course, sometimes it can be a little more or bit less, but we aim to conclude about 10-12 deals a year, from at least $0.5 to $2.5 million,” he said.

His business partner Kolb added that they could invest with smaller tickets but have a limited allocation.

“So, $200-300k deals are possible. Not because we don’t have funds but because startups simply don’t allocate more shares for syndicates. We haven’t said yes to anyone yet, but we are considering such deals as well,” he clarified.

In particular, Toloka planned to invest in startups that are residents of the current YCombimator batch and even raised $1.4 million in commitments but changed their minds at the last minute.

“We understood startups were too risky. Our strategy is to invest in numbers and growing businesses. And the startups in YC were too young. It doesn’t mean they were bad, but they didn’t fit our strategy,” said Igor Shoifot, another Co-Founder of Toloka.vc and Partner at TMT Investments.

Details of the deal with Fortа Health

It was the debut deal of the syndicate, founded in May 2023. The investment was $1 million. The round attended 89 investors from Toloka.vc, with an average check of $10,000 and a minimum of $5,000. The parties finally signed documents on October 17. The same day, an official release came out.

Forta Health is a telehealth platform to help treat children’s autism. It serves as a bridge between classic healthcare providers and innovative technology providers. With the help of its platform, the company itself creates qualified specialists more affordable for parents of children with autism, simplifies the workflow, and connects them with insurance companies. At the same time, Forta Health actively uses artificial intelligence in all routines to secure a competitive advantage in using data.

The startup grew from $0 to $8 million in ARR in the eight months, compared to May 2023, with an average projected monthly revenue growth of about $1.5 million.

“We expect Forta Health to deliver x10-20 return on the invested capital. Although Toloka’s overall strategy is to give investors 2-3 times growth in 3-5 years, which is approximately 25% per annum, with every new deal, we hope for significantly higher growth,” commented Taras Kirichenko.

“First of all, guys are earning millions of dollars after starting monetization less than a year ago. This is absolutely phenomenal for a startup. Secondly, they do millions with just a few hundred customers, even though the customers are parents of children with autism-related disorders. According to various estimates, there are several million potential clients in the US alone. There are tens of millions worldwide. They started with autism, but in the future, they also plan to work with eight other severe problems, such as diabetes, Down syndrome, etc.” added Igor Shoifot.

“Parents don’t pay anything but—and this is a paradox—even make money. Insurance companies are happy to pay them for training their own children because otherwise, their checks would be several times higher in the case specialists are involved. On the other side, many players in the industry are harmed by this. In America, there is an influential group with its lobby that makes a lot of money in this market, the so-called nurse mafia. That’s why they are trying to fight against companies like Forta Health.”

Forta Health recently raised $20 million from Insight Venture Partners, the world’s largest venture capital fund. According to Forbes Ukraine, in July 2022, the startup was valued at $68.5 million within a $24.4 million Series A round. The investor was the same Insight Partners with the participation of the British Digital Horizon and the American What-If Ventures, MVP Ventures, and FJ Labs. Among the first investors is TMT Investments, one of whose partners is Shoifot.

At the end of 2023, Forta Health planned to raise another $30m at the $120m valuation. Instead, Insight Partners offered to add during the current Series A round another $15m in valuation and committed to lead it. The Ukrainian syndicate joined this round.

Scandal surrounding the deal

According to Forbes, Shoifot’s Garage syndicate also entered the deal with a $500k+ check. It couldn’t happen without a “Russian trace,” too. Screenshots of investor correspondence show many people from Russia and Russian venture capital among the Garage members.

As early as February 25, 2022, the syndicate’s co-founder, Russian-born Sergey Mosunov (currently living in London), offered to make venture capital investments in stablecoins, USDC, in a general chat for investors, arguing that “they are not subject to the restrictions as traditional international settlements.” He urged to open crypto wallets on well-known crypto exchanges and keep at least part of the assets in USDC.

The Garage syndicate members were also offered to enter the deal with Forta using cryptocurrency. It was structured on the Allocations investment platform, a portfolio startup of The Garage syndicate (the option to transfer funds in cryptocurrencies is not mentioned on the Allocations website).

“There is indeed a ‘Russian trace’ there,” says Shoifot. “There are several hundred investors in the syndicate, and most of them have Russian roots, so communications are mainly in Russian. But Garage cannot, even if it wanted to, accept investments from residents of Russia and Belarus because it is prohibited by law, and all investments are made through Allocations.com, which has to do KYC, AML, and full compliance confirming that these people do not live in Russia.

When the war started, we issued two strong statements: each of the Garage founders donated $5,000 to support Ukraine, and then, of course, we continued our support. Therefore, even if there were some vatniks (Russophiles) [among investors], they have already left, and people from Russia can’t get to us because of Allocations’ checking. Could there be some Russian citizens living in London or Dubai? Yes, but I can’t do anything about it. Any fund can have people with a Russian passport.”

Is this considered a risk factor, or do American investors not care? Shoifot says it’s not that simple.

“I would really like it if the position [regarding Russian citizens in the syndicate] was so solid, but it is not. Some take a very sharp, tough position, but only a few. Others say: “Look, we legally cannot deal with any money that has anything to do with the Russian Federation. And some don’t care at all; it’s not even a topic of discussion for them.

There is a lot of support for Ukraine here in the United States. In different cities, big and small, Ukrainian flags are everywhere, and it’s definitely made not just by the Ukrainians. But unfortunately, as the vatniks say, “it’s not that simple.”

Toloka investment syndicate launches in Ukraine. Tickets are up to $1.5 million

AIN.Capital had a chat with Andrus Oks, a Founding Partner at Tera Ventures, who told us about the fund’s activities, future plans, as well as shared his insights about the state of the Baltic market in 2023.

Tell me about Tera Ventures in general. What is your focus? What are the funds under management? And what do you provide to the market?

We are a VC seed fund investing out of our €45 million 2nd Fund. We are investing from pre-seed to late seed. And we have been investing for 15 years and, essentially, from the beginning, we’ve both been a generalist investor but also developed themes. We’ve been investing in AI and Machine Learning for more than ten years. That’s our main theme.

In terms of industries, as we have this high conviction hands-on model and some of our portfolio companies mature, we get to learn about their respective industries. And that has enabled us to actually learn from the feedback quite a bit. We were the first investors in Monese, the neobank.

And learning from them has enabled us to understand this space more. We have several successful Fintech portfolio companies. And that is our main focus: we are looking for anything within digital and hardware, which is also an interesting topic for us. But yeah, the core needs to be digital.

• We cover our home market in Estonia, as most of our companies are here, but we also cover Scandinavia, rest of the Baltics, Poland, and Czech Republic.

In our 2nd Fund, we have three LPs from the US, two from Japan, most are from Scandinavia. The most notable strategic investors are Perot Jain in the US and Itochu in Japan. Because these investors are interested in direct deals, commercial collaboration, they act as softlanding partners for companies. And this is very valuable for the portfolio companies, because the need for help entering other markets is usually the primary need that we can help with.

That is also my next question. Apart from the funding, do you offer any support or expertise to the startups?

Yes. All our partners are previous founders. We’ve actually been in their shoes. We understand what their needs are. Every startup is different. We can provide many things, whatever they really need at what time. 

And as I said, usually, the primary need is going to larger markets. That’s where we have focused on our value add. Notably, we have one of our partners, Eamonn Carey, actually living in London. That’s a well-positioned area to offer help from: connecting the startups to various networks and helping raise money from later stage investors.

What about the fund’s performance in 2023? How many investments have you made? Have there been any successful exits?

The public data is not actually reflective of the whole transaction history of this year. We’ve actually done several more deals that haven’t been announced yet. 

Several portfolio companies have certainly exceeded our expectations, we have had 6 uprounds in recent months. And two companies raised proper Series A investments. One of them has been made public recently — AI Clearing, a US/Polish construction tech focused company.

However, the year has not ended yet, there still might be news.

It’s a tough market, but it’s actually a really good time to invest right now. In the beginning of summer, we were kind of concerned because everybody’s saying the market is really tough. And well, we thought, let’s see what portfolio companies would need to raise funds. And what would the outcome be? But it has actually been very successful. They are truly impressive.

Recently announced investments include Cino, Avokaado, and AI Clearing. Tell me more details about these deals. How did you meet the founders? Why did you decide to invest?

Yeah, so, let’s take it one by one. 

• AI Clearing — I guess it’s one of the more interesting stories. They actually reached out to us. They’re an amazing team also from a promising industry, who concluded the first PoC with one of the top 10 US construction companies, PCL. Before raising the $14 million round, they had successful partnerships, rapid revenue growth, and offered very impressive innovations in general.
• In the case of Avokaado — we’ve actually known the founders for several years already. During the last year, they came up with this new product called aDoc. Instead of usual PDF-based contracts, they’ve actually built a completely new system where contracts are actually either fully digital or digitized. A year ago, Avokaado started getting customers to use this new aDoc product. All the initial feedback was very positive. So, that’s why we decided to invest in them. 
• And in the case of Cino, it’s my partner Stanislav Ivanov’s company. We are their first investors, and decided to invest exactly a year ago. At the time, it was a pre-revenue deal. They launched their product in April, and it was obvious from the beginning that the users really, really loved the product. That’s why we decided to lead the next round as well.

You told us that you thought the market would be a lot tougher this year. Were there any changes in your fund’s investment strategy?

No, not really. What has really changed is that the deals are more reasonable, and round sizes are smaller, valuation expectations are lower, or more palatable for investors. There is also more time to think about the deals. If you have more time, you’re probably doing more due diligence, and making better decisions. 

But the main struggle is still the same. It’s always the same. Where do you actually find those founders that are able to disrupt their industries and then become the global leaders, right? So, even though the Investment environment is currently better for investors, the challenge to find those founders is still the same.

How did you adapt to the pandemics and other crises on the market? Are there any differences or notable changes with today’s situation?

The pandemic feels like ancient history already. This current crisis actually started from the public market. And it’s harsh in a sense that many other investors pulled out of the market. Especially, in regards to later stage deals that are much more difficult to do. 

From my perspective, obviously, we were concerned about this harsh market for our existing portfolio companies, can they raise the next round? But as I said, they’ve actually been very impressive. However, it’s easier for investors to do new deals. 

In our initial investments, we’ve actually quite enjoyed this new situation. This is what we also heard from other investors as well. This current year may be one of the best vintage years for VCs.

Can you give any general advice for startups in CEE? What is the main thing for them to look for if they want to, for example, get financing from your fund?

It’s very easy — come and talk to us. We’re very open to talk to everybody. I don’t think you need to hack investors or learn hustle methodologies. Just come and talk about your business. That’s what we do. In case it’s in our strategy, we will invest and help you move forward.

And can you tell me about the fund’s future plans? Do you plan on launching new funds or making future investments?

Yes, we have started preparations to raise our next fund. We’ll continue with the current strategy pretty much, it will be a meaningful evolution from the current strategy. We are increasing our value-add, engaging more venture partners. We are building more substantial relationships with venture partners who are here to engage with team flow and actually help our portfolio companies.

We will do another two or three deals this year. We will also do a few follow-ons.

Did you want to share anything else with our readers?

Yeah. Regarding the current market state. I’ve heard that many people are really concerned about it. Although it is certainly tougher to convince someone to invest, you shouldn’t let the situation discourage you. I think entrepreneurial creativity is the main thing that is driving the whole economy. Great founders always find ways to keep growing or how to raise funds.

Actually, this funding environment may be different depending on the place. Even in your country or in your city, it’s difficult to grow, there are places where the situation is different. 

I recently had a call with a Berlin-based seed stage investor. He said that what they are experiencing in Berlin, in Paris, and I think it’s happening in London as well, is that most of the later stage investors don’t really want to do many Series A deals. They dropped down to seed stages. This means that in the seed stages, from this investor perspective, there’s more competition. And it’s tougher for them to invest in those cities, which means that for startups, obviously, it’s easy to raise money. If you’re somewhere in Europe, you should actually consider reaching out to those Berlin and London investors. They enjoy deals from other regions where competition is lesser. 

And of course, it matters about what the startup is really doing. If you’re in climate tech or in generative AI, these markets are certainly hot right now. In general, I guess, the disruption we will see from generative AI will be much bigger compared to anything coming from this challenging funding environment.

AIN.Capital spoke with Krzysztof Przybylak, a HealthTech investor at Inovo.vc, about the fund’s activities, investments, exits, and the details about future investments.

Tell us about Inovo.vc.

Inovo.vc is one of the oldest and largest VC funds in Poland. It has had three funds under management:

• Inovo I — vintage 2014 — size €8 million.
• Inovo II — vintage 2018 — size €54 million.
• Inovo III — vintage 2022 — size €100 million.

The fund’s main focus is:

• Central and Eastern Europe + diaspora.
• Preferably Seed stage (occasionally Pre-Seed / Series A).
• Ticket range: €500k to €4 million.
• Industry agnostic fund with special focus on healthcare (7 portfolio companies) and AI/ML/developer tools (8 portfolio companies).

The fund’s partners are:

• Tomasz Swieboda, an ex Investment Banking at Rothschild and ex Private Equity investor at Penta. Today he runs our Founders Club.
• Michał Rokosz, an ex McKinsey and Rocket Internet. Focused on B2C startups
• Maciej Małysz, Kauffman Fellow focused on ML/AI and developer tools.

How is Inovo.vc’s performance in 2023?

January 2023 — June 2023:
• new investments: 6 (Inovo III fund).
• follow-ons: 4 (Inovo II fund).

July 2023 — today:

• 1 new deal signed (Inovo III fund)
• 2 new Term Sheets currently in the process of signing (Inovo III fund)
• 1 follow-on (Inovo II fund) — AI clearing.

So to sum up, we did 9 new investments year-to-date.

Some of them are not publicly disclosed yet. The ones announced are: Embla, FiatRepublic, Pupilmed

Were there any successful exits yet?

• We have successfully exited most of our portfolio companies from Inovo I.
• Fund II and Fund III are too early for exits.

Given Inovo.vc’s activity, how many investments are still planned for 2023? What is the focus of your further deals?

We plan to invest around €15 million a year in new companies. We are still able to invest in 2-3 new companies this year.

About the CEE market: Are there any notable differences in the CEE VC and startup market this year?

We can see in Poland that pre-seed/seed rounds are about 20% below the number of previous year (in terms of number of transactions) and there is a significant decline in later stage rounds (Series A and later).

Has anything changed in Inovo.vc’s approach to investments recently?

Our Inovo I fund was focused on Poland only, with the recent funds we do more effort to cover other Central and Eastern European countries too.

Does Inovo.vc experience any effects due to the harsh geopolitical climate (War in Ukraine in particular)?

We can definitely see more Ukrainian diaspora founders in Poland and other countries since the war started.

Two of the most recent rounds joined by Inovo.vc were AI Clearing and Embla. How did the deals come to be? And are you planning to invest in other diaspora startups?

AI clearing — we invested in this company back in 2020, the founders made significant progress since then so the Series A was fully deserved. They were very international from the very beginning.

Embla — we had a thesis on the weight loss market, especially startups combining GLP1 drugs with behavioral therapy. We were actively searching for startups in this space and we got introduced to Embla’s founders from our friendly VC later-stage fund from London. After the initial meeting it was clear that this is the best startup we have seen in this space.

Regarding diaspora — yes, we are actively looking to invest in more diaspora startups.

On a personal note, can you tell us about the specificity of the healthtech investments made by Inovo.vc? Did the industry experience any changes in terms of volume and the number of deals?

• We believe that Poland has one of the strongest healthcare startup ecosystems in the CEE region with over 100 startups founded here.
• We did 2 pre-seed stage healthcare investments in Poland this year and 1 Series A outside of Poland (Embla).
• Similarly to other sectors in Poland, we can see that the number of pre-seed /seed startups is high, but there aren’t that many at Series A or later.

In your opinion, what can you advise to startups or their founders who want to secure financing from Inovo.vc in the future?

It’s difficult to give general advice, every startup is unique in some sense. What helps getting funding from Inovo.vc is knowing your customers inside out and having huge ambitions (market size $1 billion or more).

Andriy Khvetkevych and his business partners started thinking about business abroad after Russia’s full-scale invasion of Ukraine, which caused the outflow of customers of Ukrainian companies. They chose the US because Khvetkevych has lived there for about eight years and knows the market. His first business, NIC.UA, was a domain registrar, so the new business was also meant to work in this area. The issue was the very competitive US market, so they had to come up with something new.

“We were thinking about the business model and how we would differentiate ourselves from others because this industry has many large companies in the US and globally. GoDaddy is the world’s No. 1 domain registration company, and we didn’t want to be like GoDaddy. We wanted to come up with something different,” he said.

Business model

NicNames will be a domain registrar, an entity that will sell and register domains for businesses and individuals. But, according to Khvetkevych, its co-owner and CEO, it will be the first business to combine domains, tokenization, blockchain, and NFTs. How exactly will it work?

The domain market players have long discussed the transition to web3 and blockchain. Many domains work only on the blockchain (and cannot be resolved in a regular browser), such as .nft, .crypto, and .eth domains. For example, Unstoppable Domains is engaged in registering such domains. They facilitate the work with crypto wallets (using domains instead of transferring wallet data). According to the CEO of NicNames, there is a demand for domains that will work both in the blockchain and on the regular Internet.

Domains sold by the company will be registered as NFTs: a client will buy an NFT domain in the form of, for example, nickname.eth. Entries to this domain (e.g., a cryptocurrency wallet number) or other data will be recorded in the blockchain. Such a domain will work on the blockchain and the regular Internet via DNS.

One of the use cases is the identification of a company’s wallet. Clients who want to send crypto to a company don’t need to provide crypto wallet details, just the website domain. Over time, such a domain on the blockchain will be able to link business licenses, intellectual property rights (we wrote about Khvetkevych’s NFT Patent project earlier), and, in the case of individuals, digital documents such as passports.

According to Khvetkevych, NFT is used here as a technology for domain tokenization (and also provides the client with different statuses). For example, such a domain can be sold in minutes, without using escrow accounts, through a smart contract (now, if a person wants to buy a domain from someone on the Internet, it takes a month on average).

Office & Team

The project’s co-founders, in addition to Andriy Khvetkevych, are CTO Serg Pokrovskyy and CDO Sergey Bulakh. They plan to launch an office in the United States with support staff, while the main development center will be in Ukraine. To do this, they want to recruit up to 20 people, primarily programmers with experience in blockchain.

The co-founders invested about $120,000 in the company. One of them estimates the investment in the code that runs NicNames services at $2 million (this refers to NIC.UA services that had to be updated for a web3 project).

Plans

The company plans to launch its website shortly. In October 2023, they also plan to launch domain registration with a premium subscription. Eventually, the service will include the possibility of registering a business in the United States, with all the necessary legal procedures, intellectual property registration, and a bank account. It will allow a startup that buys a domain for a project to register a business, link all essential data (such as patents) to the domain simultaneously, and subsequently show it to investors.

According to Khvetkevych, the company has already received the first requests: Some NIC.UA clients want to transfer their domains from a Ukrainian company to an American one. NicNames is also currently negotiating with investors and looking for a $5-million round for further development. The company plans to become profitable within six to twelve months after the launch.

Please provide a project status update: How many users and people in the team and what product development status does it have?

The product is ready and has been working for almost six months without a single bug in both software and hardware. Now, we are working on additional features related to the full automation of teaching patients how to use crutches. For this purpose, we already have all the necessary hardware components: accelerometers, magnetometers, and gyroscopes, which can be used to record the trajectory of crutches.

In the future, we plan to eliminate the need to use human resources to train patients to walk on crutches and replace it with machine learning. Accordingly, we will be able to save tons of money for insurance companies and hospitals, as well as working hours in hospitals.

The project also implemented all the necessary regulatory parts, including FCC, Quality Management System, FDA compliance, HIPAA, a validation study, a patient and medical provider satisfaction study, as well as several studies aimed at identifying the exact percentage of complications reduction by using our product for each specific case (diagnosis). These studies now cover many hospitals in Texas, and perhaps a hospital in San Francisco will also participate—we are currently negotiating cooperation.

We have conducted over 180 free pilots with US public and private hospitals and clinics. Now, we have dozens of patients from several New York and Chicago hospitals. Many physiotherapists and rehabilitation specialists use the product. We focus on the best orthopedic hospitals and paid pilots.

The team currently has six people. Three of them are US-based, and the rest are in Ukraine.

What was the agreement on the investment with ZAS Syndicate? Did you negotiate for long?

There were a few interested foundations, but they were only somewhat relevant to us, so we could not reach an agreement. We started communicating with Andrii from ZAS around May 2023.

As for the current investor, Volodymyr Pirus, we can exchange partnerships and clients thanks to his portfolio companies in the same industry and his connections with insurance companies and hospitals. This is a win-win situation for both projects.

How much investment has Comeback Mobility secured since its inception? What is the current valuation of the startup? How much more money do you plan to raise in the future?

To date, we have raised a total of $2.2 million. We will need $4 million for full reimbursement with the six major insurance companies in the US market and to enter the top 10 orthopedic hospitals in the US. The money is also needed to manufacture at least 2,000 pairs of Comeback Mobility crutches. So now we are raising another $2 million.

It takes an average of seven years and at least $15 million to bring a medical device to the US market. We do it very quickly and with a minimal budget. Accordingly, the half a million raised now will be spent on pilot projects with insurance companies and hospitals. We will sign letters of intent, according to which, these medical institutions will agree to either reimburse our development costs or purchase a batch of our devices, if certain results are achieved.

By the way, we assemble our product in Ukraine. We are very proud of our own workshop in Dnipro. And, when we see “Assembled in Dnipro” on devices used in Manhattan,—that’s very cool.

You have also signed a letter of intent with ZAS for an additional $500,000. What are the terms for receiving these funds, and what are your plans?

Our lead investor, Volodymyr, wanted to come in for $1 million. We have already signed an agreement for $500,000 and expect the funds to be credited to our account by the end of the week, I believe. As for the next tranche of another $500,000, we agreed that ZAS Ventures, including Volodymyr, would have the option to invest at the same valuation until December 1, 2023.

We closed the previous rounds with a capitalization of $10 million. The following investments we plan to raise at our demo day will already be valued at $15 million. Accordingly, Volodymyr and ZAS Ventures have a significant advantage as an early investor.

We have also learned that you have passed to TechStars. Can you tell us whether you have attracted investments from the accelerator, what is the amount, and what are your expectations from the program?

Yes, indeed, TechStars has invested $120,000 in us. We have already completed three weeks of the acceleration program. The program is worth it, and we could realize in the three-month program many things that we would have spent years on because TechStars opens the door to vast networking.

It’s really a significant acceleration, not just a small check.

It’s a community focused on making money, change, and technology. Although we were initially sceptical, we are delighted to be part of this program. If I could make the decision again, I would still go into this program even if we had enough money in our account.

We’re only halfway through, and we’re already seeing huge benefits. In particular, we have tested hypotheses on time and discovered that we are moving in the wrong direction. Thanks to daily meetings with different mentors, some old hypotheses have disappeared. Instead, new ones emerged. And most importantly, we realized where the money is in this business.

My expectations from the program have already been met. I hope that the director of this program and a community of thousands of people become part of the team not for three months but for the rest of their lives, within this or another project. We will remain friends and, as TechStars alumni, will be able to count on help and mentoring.

Even before the sale, Paus was looking for investment for development. Was it one of the options?

Before the deal, we already raised $1.5 million in investments and had the support of venture capital.

Tell us about the terms and amount of the transaction and whether you received a share in cash, stock, or other assets.

I cannot disclose the details of the deal. However, I continue supporting the company’s initiatives and remaining a shareholder.

The startup had a team in Ukraine. What were its responsibilities, or was it relocated?

Our Ukrainian Team consisted of developers and business analysts. Ukraine is known for its strong technical knowledge, so we did not doubt where to hire tech specialists. Our Team had always been in Ukraine. I don’t remember anyone leaving.

How did Ukrainian employees work during the full-scale war?

We hired most of our employees at the beginning of the full-scale invasion. As a company, we were primarily concerned about their safety and tried to support each other.

We even had our own “headquarters” (as we jokingly called it) near a coffee shop in Lviv. We gathered there every morning as a team with acquaintances and mutual friends and planned our day for volunteering and work. After that meeting, we were volunteering and working, sometimes in shelters. One day, I could see commits at midnight—someone was writing code. I think it was an excellent way to reduce stress. It worked for me, for sure.

Can you tell us more about Paus’ business model and what’s next?

With CINDIE, we will launch a new, multi-platform product for premium movies and series that will be innovative for the market. I can’t say precisely what it will be, but we are planning some exciting innovations.

Interestingly, Dmytro developed most of the Deskree platform himself, although he is not a professional programmer. Now, Grechko is developing his startup and working on a new project. It will allow programmers to monetize their code used by others. Dmytro spoke about his new project and the details of Deskree’s first deal in an interview with AIN.Capital.

When did you move to Canada, and why?

I initially studied at the National Aviation University, majoring in aviation management. I was going to be one of the second generation of my family to graduate from there. But at one point, I realized I wanted to see how education in other countries worked

I was admitted to Harvard, but financially I couldn’t afford it at that time. So, I was invited by York University in Canada. I had heard about Canada before, but I had never been eager to go there.

I accepted the offer from the university, and it turned out that it was really great. I went there with my wife, who I had been together with since kindergarten, and my younger brother, who was 12 years old. My parents stayed in Ukraine.

How did you start your career in the IT industry?

I had no engineering background when I came to Canada, so I read extensively about technologies, entrepreneurship, and startups. One day, my 12-year-old brother asked me, “Why are you reading so much and doing nothing?” This question was my first turning point. I decided to make a startup.

For this, I required a few developers. Where should I find them? I thought the developers should visit hackathons, so I also had to go there. However, I needed to become a programming specialist myself, too.

Then, I learned of the Hack The North hackathon near Toronto. Guys with rare programming languages were welcomed there. So, to visit it and hire someone, I learned two ancient languages, Fortran and COBOL, just in two weeks.

But the Universe appeared to decide differently. I met there Vinod Khosla, Founder of Khosla Ventures. I think his venture fund belongs to the World TOP 10. And I told him my story. Surprisingly, he responded, “If you want to change the world by yourself, you must become an engineer.” It was my second turning point.

Then, I decided to study IT deeply. I founded a software development agency, Deskree Studio, and asked people I hired to teach me a few hours a week. Now, I have learned many programming languages. However, I prefer Node.js and TypeScript. Some parts of the Deskree platform have been written in GoLang and Typescript.

That is how I spent seven years. We completed about a hundred projects, mainly for middle-sized businesses striving for innovations in their industries to generate more revenues. There were also several startups we collaborated with.

Later, we established Deskree. And the studio was closed.

When did you get your first investment, and how much did you invest in your product?

I invested all I got as profit generated by Deskree Studio in Deskree. In total, I invested about $100,000 of my savings before we got the first investor.

When we started our first seed round in 2021, I had no clue about how it should have been going. I thought then it would take a month or two. It appeared to work the other way. A totally different way. We started raising funds at the worst time ever—in November when we were about out of funds. This time was very stressful.

We received our first check from our primary investor, Forum Ventures, on the first day of the full-scale war.

My wife and I couldn’t sleep all night and followed the news. And the next day, we had the final meeting with investors at 8 o’clock. And it was 7 o’clock when we stopped reading news about Ukraine. First, I thought I couldn’t go to the meeting. However, I decided to go. That’s how we got our first $100,000 check.

Later, we attracted two more investors, Hustle Fund and N49P. We received $200,000 and then another $300,000. In total, we raised $1.5 million in seed rounds and reported this in the past week.

We plan to raise another $0.5 to $1 million in the coming months. According to our plans, in Q1 2024, we will become profitable. And it is a pretty short time in the case of early-stage startups.

Tell us about your team. How many people work in Deskree? Do you have employees in Ukraine?

Currently, our team consists of eleven people. Two of them are Ukrainians living and working in Canada.

Back at Deskree Studio, we had most personnel from Ukraine. However, many of them relocated to Europe because of the war. We helped several people find jobs.

90% of the Deskree platform code has been written by myself not to distract Deskree Studio developers from their projects. Now we have a CTO who have 25 years of experience in very large companies. He comes from Panama. Then, we also have the Head of Design. And recently, CPO joined our team. All employees have got options. So, technically speaking, everyone who works on Deskree is my co-founder.

Deskree grew from 300 to 10,000 users just in one year. How do you find your customers?

It’s thanks to one of our investors, Vlad Magdalin, Founder of Webflow. For me, working with him is a great honor. All my projects from Studio times have been built on Webflow. In addition, we went a similar way—both of us made debts and invested all of our savings into our products. I asked him how they succeeded, and his answer was, “We used to work a lot.” So, there is no secret ingredient.

All our clients come to us on their own. We have sponsored various hackathons, but mostly, these people saw the product, used it, liked it, and told their friends.

What is your business model? What are your pricing and budgets?

We have a free plan and paid plans from $20 to $5,000 per month. The most popular is $70/month. It all depends on what the client needs.

Our task is not just to allow people to create the back-end but to make it cheaper than if they did it themselves. When the back-end is built independently, without our help, the project will cost $20,000. The same thing with us will cost $70 per month. When you create something on the Big Cloud, the provider can charge you in many ways. There are many different parameters that the client needs to understand.

Unlike large cloud providers such as AWS or GCP, we tried to make our pricing policy more understandable and transparent. So, what we did? We combined all these parameters and decided to charge the client for an API request that includes all the necessary resources at once. We also developed a system that navigates how the client’s product uses resources so that it is not the “biggest cloud” but the most optimal option for this client, which will work well and not lead to unnecessary costs.

This is how we save people up to 40-50% of their monthly budget in AWS or Google Cloud.

Do you have any competitors? I’ve never heard of anyone doing something similar to your product.

There are companies like Superbase, they make a database in a similar way. Many people think they are our competitors, but in fact, they are a company with which we would like to partner in the future and, let’s say, complement their solution within the infrastructure we are building.

The most similar is Railway.app, which is a very great product. But I haven’t seen any direct competitors that do what we do, and in the same way we do it.

What stage is your product at? What’s next?

The current product is already running. There are clients who make millions of API requests per month using our system. It is absolutely functional. Next week, we are releasing a complete redesign of the platform.

And in January, we are planning to launch our R&D project, which we have been working on for the last six months. I will not go into detail yet, but basically, we have found a way for programmers to earn money from people using their code, wherever they are.

That is, we as a company will not only help people save money on development but also earn it. We are doing this project in collaboration with some very big open source libraries. This is the next stage of Deskree’s development.

AIN.Capital talked to Borys Musielak, Founding Partner at SMOK Ventures, about the ongoing activities of the fund, its nearest plans, and the state of the Polish VC market in 2023.

Tell us about the fund’s activity in 2023: how many active investments were made, have there been exits/write-offs of investments?

SMOK has made 7 new investments so far in 2023, all from our second fund, silently launched early this year. We’ve written off 2 out of 24 companies we invested in via fund 1 since 2019.

Are you currently negotiating new projects or focusing on supporting portfolio companies? Tell us about your plans for the end of the year?

We’re actively investing. We’ve signed two term sheets recently, which should get us to 9 as soon as early October. We’re planning to get to 12 portfolio companies in fund 2 by the end of the year, so generally keep our pace of one investment per month this year and for the years to come.

How does the Polish venture capital market look now? What trends would you highlight?

Less public money on the market means that it’s harder for founders to fundraise in 2023. On the other hand, the funds that are still active, like SMOK, Market One Capital, Inovo, Bitspiration Booster, Simpact or OTB, are all quality funds with proven track records, so once you get their funding, you’re in good hands.

For me not much has changed as the best deals in Poland or CEE are still very competitive, and you need to go the extra mile to be included even in pre-seed financing rounds. 

Has anything changed in the fund’s approach to investing over the past six months — average check, focus, geography. How did the war in Ukraine affect the fund’s activities? 

The war in Ukraine frightened some of the French and German funds, which are less eager to invest in the region now. Nevertheless, that only means better deals and better terms for local funds that are not afraid.

In venture you don’t make money by following the crowd. You make money by being contrarian (and right). My bet is Eastern Europe is where the majority of European unicorns will be born during this decade, and I want SMOK to be the first step of their journeys.

Our average check is still around $250,000 and we invest in CEE and diaspora founders, so no major changes here.

Over the past six months, you have invested in three Ukrainian startups: Finmap, Masthead Data, Workee. Why did you choose these startups? What can you say about working with Ukrainian founders?

Ukrainian founders have a sense of urgency and competitiveness that I haven’t seen elsewhere. They think global from day one, they are not afraid, and they can keep their costs intact — basically key qualities for founders in times of recession. I’m betting big on Ukraine, and I believe some of those investments will be fund returners for SMOK with amazing multiples.

At the beginning of 2023, Ukrainian Oleksandr Yatsenko joined SMOK Ventures’ team. Even last year, you talked about your intentions to hire an investment team in Ukraine. Are you planning to do it? 

We are a small fund. Our whole team now includes 7 people: 3 partners (Diana, Paul and myself), one venture partner (Dan, based in San Francisco), one principal (Sasha, based in Kyiv) and two analysts (Tomasz based in Warsaw and Konrad in Krakow). 

So hiring an “investment team” in Ukraine is a bit of a stretch, but we definitely are looking to increase our presence in Ukraine. We’ll be very active during IT Arena in Lviv later this month, and we’re looking to make more investments in the country over the following years. If you’re a Ukrainian founder, either in the country or in the diaspora, it’s best to reach out to Oleksandr as your first contact at SMOK.

What is the focus for the next investment? What interests you?

What we require from every founder we invest in are passion, knowledge, ability to constantly be learning and not giving up when things don’t initially work out.

At SMOK we’ve funded software startups in a number of industries. We love software development tools (like Authologic, Vue Storefront, Masthead), startups operating in the world of gaming (both game studios like Madcore or Exit Plan Games and tools for gamers like inStreamly or Gitgut). We’ve done a fair share of AI over the years (startups like MX Labs, Bitskout, SLS or Gemelo.ai). But we’re also funded founders who are experts in a variety of industries like hospitality (Smart Hotel), proptech (Propertgage) or VR (ExplodedView). 

Meanwhile, the startup co-founded by Yev has already raised over $1 million in investment: about $100,000 from friends and family, $120,000 from TechStars, then another $600,000 from the Eberg Capital and IA Ventures investment companies, who recently backed the project with another $300,000.

In this interview with the AIN.Capital editor, Yev shared how he became a developer, left Ukraine shortly before the full-scale invasion, why he didn’t like living in the US, and how TechStars changed his life.

I was good at only two subjects—English and math.

And, as in any typical Ukrainian family, if a child is good at English and math, they go into IT. I’ve had a computer since I was six and loved playing games, so I was all for it.

I grew up in Chyhyryn district, Cherkasy region. So, after the 9th grade, I studied software engineering at the Cherkasy State Business College. My parents were stringent, so I went wild when I left the house. On campus, I spent all my time playing games and doing anything but studying.

I completely wasted the first two years and realized that this was not the life I wanted. So, I started actively learning programming. In about six months, I seemed to become the best student in the class.

After the second year, we had to have an internship. Many people faked it, but I did it for real to take advantage of the opportunity. I was a trainee at Interlink, an IT company. It’s a local company, also known as Software Planet Group. They have offices in the US and Lviv, with about 100 employees, so it’s relatively small.

I did the internship there. Everything went very well—we made our first commercial application. And I was invited for an internship. I was the youngest there—I turned 18 on the first day of the internship and was the first to be hired after that.

The company specialized in full-stack development, so I became a full-stack developer.

I worked full-time for the next two years. In college, those who worked in their specialty were allowed to skip lessons. We had to pass the tests only. I did not continue my studies after college, so I have only a secondary education.

When I was 19, I already had a year of experience as a programmer, and… I was burnt out. I realized I could keep living the way I was—in 20 years, I would have a $5,000 salary and secure my life. I got bored.

I started reading self-development books like Seven Habits of Highly Effective People and actively learning English. And when you learn English, you have to read English literature. This immersed me in the world of entrepreneurship, startups, and the American Dream, all that stuff. I was inspired by Mark Zuckerberg and Elon Musk, who was at the peak of his popularity (before he bought Twitter).

I was working as a programmer and wanted to transition smoothly to product development.

I talked to my managers at work, and they recommended that I become a PM. I took a few courses, but our company didn’t need PMs so much. I worked on one project but was given minimal competencies and had no room to grow. There was a stage when I had a lot of business ideas. I proposed many different changes, but the company rejected them all.

I started working on my thoughts while still working at my job. It was always an iterative process: I’d come up with a platform, make a document, describe it, find a team, and… drop it all. Then, I’d develop a new idea, find a team, launch a small website, and drop it all. There were about six such cycles before I quit and decided to engage in my projects fully.

I was 20 years old. As a person who is 90% self-taught, I saw that what is taught in colleges in IT specialization is not always relevant. It was the only problem I saw then, and I thought I could solve it for all because I had solved it for myself.

I wanted to create a decentralized education system for IT professionals. The idea was to allow people who have learned without a university to get a full-fledged certification without going to university. That is, if you have read 50 books, you know more than people who have graduated from university. So why aren’t they recognized like people with diplomas?

I moved to Kyiv, found a co-founder, and we worked on it for about six months.

As a result, I realized that I was a great programmer but a lousy businessman.

I managed to build and launch the platform but couldn’t sell it or organize marketing. I ran out of money, returned to my hometown, and started freelancing to save money and come back to this idea.

I managed to find a project pretty quickly. I knew that the company I was working for was selling us for $50/h, and I realized that I could easily bid $30/h, which would be a competitive rate.

A gambling startup approached me. I didn’t want to work in gambling but couldn’t refuse, so I asked for more money. It would be fine if they refused, but I would work a little and earn some extra cash if they agreed.

And they agreed.

That was Matt and Dan, my future Scrimmage co-founders.

They turned out to be very cool. They studied at the University of Pennsylvania, the Ivy League, and then worked on Wall Street as business analysts. They developed a framework that helped them bet on sports and win. They managed to make 40% profit annually, which is really cool. So they decided to create their own startup: something like a sports betting investment fund. They wanted to collect investors’ money and multiply it by investing in sports betting. To do this, they needed an IT platform.

They raised about $100,000 from their relatives and started looking for programmers who could do it all. Before me, they had 32 different people who coded something and left. I became their first full-time IT person.

I started pushing the project towards web3 because it was all the rage at the time. But it didn’t work out with web3. Therefore, we pivoted again and turned to the Gamification Loyalty Program. We have packaged our application in a B2B White Label Solution that betting companies can integrate into their own to make a loyalty program for customers. We have already launched the first integration, and we need at least 15 more or an integration with a top player to attract a seed round of $1-2 million. But in the future, we plan to go beyond gambling and enter other branches to democratize loyalty programs for all businesses. First of all, e-commerce.

I offered to become a co-owner and CTO.

I read somewhere that this is an ideal option for people like me: first, become a co-founder in someone else’s startup, gain experience, and then start something of your own.

At Scrimmage, I was a back-end developer at first, then I started working on the front-end, took on more responsibility, and became a kind of team lead. At some point, I was already deciding whom to fire, whom to hire, and how to develop the product.

Matt and Dan agreed, gave me a share of the company, and cut my salary. That’s how I became a co-founder and CTO at Scrimmage.

At that time, there was already news that Russia was gathering troops around Ukraine. No one was somehow worried about this in Ukraine, but they were already preparing for World War III in America.

And so, one Friday night, when I was in Kyiv smoking a hookah and programming, I got a text from Matt. “You are our Co-Founder. We can’t risk so much. Grab your bags and come to us.”

On Saturday, I was on my way to Poland. My classmate, with whom I had spent the first two years at college, lived in Poznan. He sheltered me for a while.

In the winter, we got accepted to TechStars.

I wanted to get there very much, but with American visas, everything is very, very complicated. We were supposed to start the program in three months, but there was a 6-month queue to get an appointment at the US Embassy in Poland. I decided to look for a place with no queues. I read that there was an excellent embassy in Switzerland.

And so I took a train, but instead of getting to Zurich, I somehow accidentally joined the Ukrainian refugees and went with them to Berlin.

They just asked me, “Are you from Ukraine?” I said, “Yeap.” And they said, “Go there.”

So, I ended up first in one refugee camp and then moved to another in a small town near Zurich. They settled me with 20-30 others and were even ready to give me a grant at a local university that covered my educational and living expenses. But I refused. The lady who organized it said I was the dumbest guy she had ever met.

While deciding which embassy to go to, I got very sick. I was ill for ten days; it was awful, and all I wanted was to return home.

Disappointed, I returned to Poland and started going to a local coworking because working from my classmate’s house was inconvenient. There, I met Vira, a refugee who also dreamed of moving to the United States and knew some Ukrainians got there through Mexico.

I decided to try to cross the US border from Mexico with her.

At first, I had doubts because there was no guarantee of success, and it’s not a very official way, although you don’t have to climb any fences, as Americans often imagine.

My co-founders were terrified: They were afraid that I would be involved in some drug cartel, and they would never see me again. But there were no other options.

We traveled to Mexico through Poland, Portugal, and Spain. Mexico was not as scary as my co-founders had imagined. In addition, people had already organized a camp for Ukrainian refugees who’d like to go to the United States. We joined them, signed up for a digital queue, spent the night in a hotel, and crossed the border the next day.

Everything was fine. They didn’t ask for anything, just my passport. So simple. I could not believe I would pass, but it was not very popular then. Only a few did it so.

It seemed like my dream had come true. I had been wanting to get to the US for so long!

But America disappointed me.

I rushed to Texas. My co-founders live near Austin. So I just bought a ticket and flew to them. But I didn’t like it in Texas—it was very hot, impossible to breathe.

When the time came for TechStars, we moved to Indiana (the program takes place in the state capital, Indianapolis). The accelerator invested $120,000 in us, and we wanted to save money, so we rented a place far from the city center.

It turned out that our neighborhood was a local ghetto. And one beautiful Saturday night, I was robbed.

My co-founders worked in a coworking space. I wanted to go for groceries on my bike. Right after leaving the block, a car stopped in my way, and several black men got out. One of them had a gun. They took my backpack with my passport and phone and left me without documents in the United States.

Later, I realized that living in the USA is too expensive. In my first startup, I had a co-founder from India. While we were still working together, we started dating online. However, there was little chance to meet for real—she was in India, I was in Ukraine, so we broke up. But she suddenly came to Los Angeles in the fall of 2022 to study at a college. We met again in Los Angeles. I wanted to be with her. So we started living together.

The rented apartment in Los Angeles was the most expensive in my life. We paid $2600 a month plus about $500 for utilities. We lived there for three months and realized that we couldn’t afford it. She came from a low-income family, and I had only a minimum founder’s salary of $2000.

She decided to leave the college and go home. I decided to go with her. But there was a problem.

My passport was missing, and I couldn’t leave the United States.

The only agency that could restore it for me was in San Francisco, so I decided to live in California for a while to visit Silicon Valley.

I had to live there for six months until I got my new ID. So, I decided to take everything I could from the Valley. I took courses at Stanford, visited Hacker House, attended several networking events with entrepreneurs, joined a community, and visited Mountain View. It was cool but expensive. Living in the US is very cool, but only when you have reached a certain level of financial independence.

After moving to India, our investments increased, and so my salary did. My girlfriend and I got engaged, and now we live in India. $2000 per month is enough to cover all our family expenses.

I don’t like India, it’s a terrible country.

The food here is delicious, but the streets are a mess. Everything is dirty; there are no sidewalks. For the first few months, I thought I would get hit by a car—there are simply no rules here. You show your hand to cross the street and… run.

Also, cows are a problem here. They are sacred animals. You can’t kill them. But people keep them as long as they give milk. When a cow gets old, they let it into the wild, which is why stray cows roam the streets in India.

I want to return to Cherkasy.

After joining Scrimmage, I hired my friends to the team. We now have four programmers. All of them are Ukrainians. Three of them are from Cherkasy, including me, and a junior girl is from Chernihiv.

I dream of an office in Cherkasy, on the bank of the Dnipro River. As soon as the war is over, I will return. Ukraine is the best country I have ever visited.

I’ve come a long way. I’m 22 now, and I’m a CTO at the US startup. And although I work full-time at Scrimmage, I still dream of changing the education system in Ukraine. I want Ukraine to be among the top ten economies in the world by the time I die. I have several projects that I am working on for this very purpose. For example, I share my experience in the tech industry on Kavun UA and help people find co-founders in the US market. I hope there will be more people who will not just code but also build startups in Ukraine. Although it is a risky path, it is necessary for economic growth.

I want to build a startup accelerator.

I think Ukraine lacks institutions like TechStars. TechStars changed my life, and I turned from a programmer to a tech founder there. I met fifteen other companies there. We worked in a shared office every day, and we went to dinner parties for each team once a week.

Matt, Dan and I also organized such a dinner. We listened to lectures, talked to founders of top companies like Dropbox, and built a product mindset.

I think it was a turning point in my career. And now I want to change other people’s lives the way they changed mine.

In an interview with the editor of AIN.Capital, Robert Grygorowicz, Investment Manager at SpeedUp Venture Capital Group, shares his thoughts about the state of the Polish VC market and the results of SpeedUp’s operations in 2023.

Can you share the results of SpeedUp’s activity in 2023: What is the number of investments made so far? Which startups/scaleups have you invested in?

This far we have invested in 4 new companies (including one unannounced yet) and we’re in the closing of the fifth initial investment this year. In total, these will count for €1.6 million in capital.

Our investments include Swobbee (Germany) manufacturer and operator of battery-swap machines for LEV operators, Bringly (The Netherlands) developing logistic platform for emission-free last-mile delivery companies and Anymove (Germany) targeting rental companies (especially electric fleet owners) with its software platform, integrating all needed stuff for such companies.

We have also participated in €10 million Series A round of our portfolio company Cycle (Germany), following-on our initial seed ticket from Q1 2022.

Were there any successful exits yet?

Two in total, so far this year, one still in the making. One really successful, not announced yet. Closed just a month ago. The investment took almost 8 years and resulted in really good cash on cash (>10x) and IRR. In Q1 2023 we have also liquidated shares in one of the investments from 2021. Just 1,5 years later. Unfortunately, this one was just a liq-pref situation, resulting in 1x return. Fortunately, better than nothing. I wish all the fire sales would bring us a money-back result.

Are there any tangible changes in the Polish VC and startup market in recent
years? What are the most recent trends?

On the capital side, it’s hard to compare recent years as 2023 is a significant change compared to the previous ones. We experience similar trends in round sizes and their number as other European countries. Hence, thanks to the public funding (mostly public-supported funds) the last quarters in Poland resulted in lower decreases than in other developed countries. On the other hand, this is connected to the European budget periods with one finishing its execution by the end of this year. Most of these funds, helping in lowering the downturn in the first half of 2023, could become inactive investors in the next months or even the whole of 2024. Only a few Polish management teams have already announced their new funds, private or invested by the European Investment Fund. I wish it would be better. 

Fortunately, there are other positive, more long-term trends in Polish ecosystems. More and more foreign venture capital investors are investing in companies with Polish roots. I use the term “roots” on purpose because there are usually Series A and later stages, which means that these companies are quite often international or global ones. 

Although, early-stage companies still struggle to attract foreign investors. There are multiple reasons limiting their possibilities to fundraise abroad. Local customers, local network and communication (English) or pitching skills. For multiple companies it’s reasonable to launch on the local market first but there are industries where it’s not, like: marketing, education, and many others. Usually, if the solution is software only — you should try to launch abroad from day one. Even small successes can increase your fundraising chances exponentially.

We also experience a broader quality deal flow from Ukraine, with a lot of talented teams working from Poland. Unfortunately, this is of course due to the war and Russian aggression in their country. Nevertheless, Polish VC funds benefit from a higher number of attractive opportunities.

Does SpeedUp Group experience any effects (temporary or long-lasting) on the market due to the Russian war in Ukraine? And how did you adapt to it?

I can’t say that we experience any major negative effects. Some of our portfolio companies had, e.g. because of energy prices volatility after the beginning of the war. I would say that most of the Polish VC investors rather benefit from the quality deal flow of Ukrainian startups, working in Poland and attracting Polish investors. Also, a lot of IT specialists come from Ukraine or work remotely which also helps portfolio companies in hiring new people. 

In the first year since the war started, we participated in the initiative of Google for Startups, aiming to support Ukrainian startups — the $5 millions Google for Startups Ukrainian Support Fund — with its equity-free grants up to $100,000. We were part of the assessment team, thanks to the cooperation of Huge Thing, which is part of SpeedUp Group, and GFS in previous years.

Furthermore, heard a lot of fears from our LPs in the funds that they would like to move their assets to Western Europe, perceiving it more safe than Poland. I also think this effect, after the first shock, has already stabilized.

Has anything changed in SpeedUp’s approach to investments? Did the average ticket size, focus, or geography change in any way?

Yes, we also need to adapt to market situations. After years of investing from public-supported funds, we’re launching a fully private one. It will be a small fund, just slightly bigger than the last one but without any public LPs. The reason is simple, we want to increase our chances to invest in the best pre-seed and seed companies, and the general quality of our capital. In past years, we couldn’t invest in a bunch of opportunities because of the limitations the public-supported fund has.

We’re now focusing on helping founders in pre-seed and seed rounds. Investing from €100,000 to €500,000 in the CEE teams. We’ve been targeting energytech and cleantech fields. That hasn’t changed. However, right now we invest in people and planet tech which means we are also investing in digital health, edtech, and HRtech.

As we know, the recent investments made by SpeedUp Energy Innovation include Swoobee and Bringly. How did the deals come to pass?

For the past few years, energytech and cleantech solutions have been core areas for our fund. Unfortunately, these fields are significantly more mature in Western Europe than in Poland. That pushed us to actively search for startups in Germany or the Netherlands, extending our geographical focus on the CEE region. 

These particular deals came from our active search through LinkedIn, ranking lists, and other lists of startups. Nevertheless, we have established multiple connections to other investors in the energytech field or startup founders who quite often send us projects to invest in.

In your opinion, what is the best advice you can give to startups or their founders who want to secure financing from SpeedUp Group in the future?

The team is key so take care of building it properly in the first days of your project.

• Find talents that cover different areas of the company’s operations.
• Keep most of the knowledge and expertise inside.
• Share stocks but also engagement fair, keeping all co-founders focused on the startup as their professional number one priority.
• Avoid any advisors or dead equity in the cap table.

With such a clean and comprehensive structure of the team, you will have a higher chance to secure funding not only from us.

The company’s main product is Zibra Effects, which automates the creation of 3D resources and visual effects in game development, metaverse, and other related areas. The startup was founded in 2021 and is based in Kyiv.

In an interview with an AIN.Capital editor, the Zibra AI co-founder and CEO Oleksandr Petrenko told why they applied to Speedrun, what is the current stage of the product, and how they managed to raise millions of investments amid the full-scale invasion.

Why did you decide to apply for the Speedrun program? How did you manage to pass the selection? What are your expectations from the program?

Since the startup was launched, we have dreamed of working with the a16z team. In October 2022, we managed to meet several partners of the fund. After that, we continued communicating, exchanging updates, and meeting during gaming conferences.

After one of these meetings, I saw a post on LinkedIn by Andrew Lee, who wrote about the launch of the Speedrun program.

I intuitively filled out the form and immediately received a letter saying I was the first who did so.

The Epic Mega Grant from Epic Games, which Zibra AI received in 2022, also helped me to get into the accelerator. It was an additional validation from one of the most prominent players in the tech industry that added credibility to what we were working on.

However, the team, the right product, and the fantastic demo we prepared for the final selection played a crucial role in getting us into Speedrun.

It is reported that the company has already raised $2.5 million in total. How did you manage to raise investments during the war?

Yes, that’s right. In total, we raised $2.5 million during the war. Part of this investment is related to the seed round, which we will announce very soon.

In 2022, we completed a $1.2 million pre-seed round, and now we are working on closing the seed round, in which a16z invested.

It wasn’t easy to attract investments. We met war in the fundraising process.

In early February, we had a few commits, but the first email I received on the day of the full-scale invasion was from one of the potential investors who refused to invest in us because of the war.

I was devastated. But later, we realized we had two options: either to give up and close the project because funding was minimal or continue working no matter what. We chose the second option, and by the end of March, I could close the first tickets from angel investors for more than $300,000.

We decided to close the angel tickets first because getting venture capital investments is a very long process. We wouldn’t have had time to do it physically.

We managed to attract investments thanks to the coordinated work of the company’s management and co-founders Vlad Zavadskyi and Den Dmytrenko. We should also mention our COO Roman Mohylnyi and CTO Oleksandr Puchka, who were also actively involved in the fundraising process. However, of course, all this would not have happened without the phenomenal performance of the entire team. They not only actively volunteered from the beginning of the war but also worked almost 24/7, implementing milestone after milestone. The tech company Roosh also played an important role, helping us with its networking and constantly supporting our team.

Receiving angel investment eliminated the threat that we would run out of money at some point. We made several strategic iterations and initiated negotiations with several venture capital funds. Then, SID Venture Partners and Gismart helped us a lot, supporting us with more significant investments and enabling us to close the pre-seed round.

Currently, there is a boom in AI technologies in the world. Has it helped you with fundraising in any way?

At the end of 2022, the world saw a boom in the field of generative AI, which we have been working in for almost three years. This has made it easier for us to access venture capital funds but also complicated our work. Over the past eight months, many companies have announced their solutions based on generative AI, which has caused a lot of noise. It has become more difficult for funds to determine which projects are really worth investing in and which are just trying to raise money amid the hype.

At what stage is the product? Do you already have customers and users? Please share the traction figures.

Our product is very complex. It takes years to complete its development. We cannot afford to wait, so we build it based on the principle that each component can be implemented separately.

We started with water physics, then added smoke and fire, tissue simulation, and much more. Now we are working on adding functionality for generating 3D objects and packing it all into one platform to create 3D content for all virtual worlds.

Several components of this extensive product, namely solutions for creating realistic water, smoke, and fire physics, are already on the market.

Zibra AI technologies currently have more than 90,000 users worldwide. It is a significant achievement considering that we launched our first solution, Zibra Liquids, just before the full-scale war in early 2022.

How many people are in your team, and how many more do you want to hire? Are they all in Ukraine?

There are 25 people in the team now. Twenty-three of them are in Ukraine. Even during the full-scale war, we expanded the team by hiring an engineer from Poland and a sales manager from in the United States.

Diia app was launched in Ukraine in 2022. It provides Ukrainians with ID documents, allows them to register businesses, and obtain various government services online. The participants of the World Economic Forum’s annual meeting also became interested in the use cases of Diia app during the full-scale war. In particular, eVorog, a chatbot that helps to inform about the locations of occupation troops.

The AIN.Capital editor met with Mstyslav Banik, Head of e-Services Development at the Ministry of Digital Transformation, and asked him about all areas of development of Ukraine’s main digital product and how the Ukrainian team works on Diia.

Let’s start with the numbers: How many users got the Diia app?

It’s over 19,425,000.

What’s that? MAU, total downloads?

No, it’s the quantity of unique identification tax numbers of users logged into the system. At least once. The number of downloads is much more — over 44 mln. But this is not a valid figure, because people change or lose their smartphones, uninstall and reinstall applications. I should also note that this figure is only for the Diia app, without the website, which has more than 4 million accounts.

But let me tell you about another important metric that I constantly monitor: the audience over 55 years old is 23%. These people also use the available functions: They applied for light bulb exchange, received ePidtrymka, and downloaded COVID vaccination certificates. It is important for us to see this, as we are focused on a mobile-first story and want to make an application that is convenient for everyone. I should add that 55+ people also actively use the website when they find the functions they need, such as subsidies, work experience, pension services, etc.

You’ve paid so much attention to this, so what’s with the idea of smartphones for older people? I remember that, apart from the Ministry of Digital Transformation and the president, only vendors who could make much money from tenders liked this story.

Let me remind you that the idea was presented shortly before the full-scale invasion. We considered giving smartphones to pensioners who cannot afford them but still need to access Diia services.

We then started analyzing this issue, studying the audience, volumes, and, of course, thinking about security: We didn’t want a conditional grandson to sell a phone on OLX on the very first day. Manufacturers have features that make this impossible, so that we would solve this issue. Of course, this story is irrelevant now, and we will return to it after the victory.

So you didn’t reject the idea?

No, and I can tell you why. The digitalization of services is happening despite everything, and we are moving many things online. Suppose we can give a person a smartphone. In that case, they won’t have to go to an ASC or other government agency, won’t have to produce bureaucracy, unnecessary paperwork, and workload, and can do everything at home. In addition, let’s stop underestimating the older generation, who will learn to use online services in the same way if necessary and often already knows how but not always can afford the required device. This is a story about accessibility.

OK, let’s return to this topic after the victory. Let’s continue with Diia. The app has ~20 million users. How many people are working on it?

We have two teams working in tandem. This is the team of the Ministry of Digital Transformation and the team of the Diia State Enterprise. On the surface, everything seems simple, but it is not.

Diia is not just about a function in an app. First, it is the work that the user does not see and should not see — laws and regulations. This is a team of about ten people who have to ensure that everything works properly in the app, per the current legislation.

The team I lead is responsible for the development of digital services. It is about 30 people.

Speaking of the Diia State Enterprise is a product history, and they do everything you see when you tap on the Diia icon on your smartphone. About 30 people are responsible for the development. So, in total, there are less than a hundred specialists.

Tell us how the work is organized. Let’s say you want to add a new feature, for example, military bonds. Describe the process of doing so.

An idea comes first. And they can come from everywhere: the president, the minister, authorities, or our team. For example, I was one of the initiators of the polls.

We discuss ideas almost every Monday on the board where the core team meets. There, we first discuss the feasibility of the service because the idea may be great, but it’s for peacetime, not when the country is at war. We evaluate the feasibility.

Since there can be a lot of good ideas, we start counting the potential audience for the service. We also look at whether systems already allow us to launch the service quickly or whether we need to develop it from scratch.

For example, military bonds. The idea was to use the entire resource of the Diia audience and motivate people to buy military bonds, a vital resource for the state. It is essential that we do not have to sell these bonds ourselves. But we have experience in quickly connecting banks, vendors, and partners, and we can mention ePidtrymka and other services.

It was clear how to launch the service, the feasibility, and the size of the audience.

But military bonds were not a new service, and our goal was to attract as large an audience as possible. We had to reach out to those who had previously ignored military bonds for whatever reason. The idea came from Mykhailo Fedorov: “People don’t just buy war bonds; they invest in the liberation of Ukrainian cities.”

We had an important function, a broad audience, everything we needed on the technical side, and an excellent, clear idea of how this service could become popular among the audience. The puzzle was put together. The service was launched in a few weeks.

Just in case, I’ll also add that this is an open story, and if your company also wants to sell military bonds through Diia, you are welcome to do so, to avoid speculations about the choice of companies.

How do you choose what goes into the app and what to the website?

The website does not offer super-mass services. Everything with the broadest possible audience goes into the app. That’s why light bulbs and military bonds are there. But on the portal, you can get business grants or construction services.

The second point is the complexity of services. The construction industry is accompanied by a large number of documents and its own bureaucracy, and it takes time to fill them out. It’s inconvenient to fill out all this on a small screen on a smartphone, so obviously, a computer is a more convenient option.

The last point, but we rarely address it, is speed. If we need to add a new service very quickly and realize that we have almost no time, we go to the website, which is easier, and then to the app.

Not long ago, I had a conversation with Fedorov, and he said he wants to turn Diia into a kind of Super App and add a whole range of services. You mentioned that you discussed different ideas at your Monday meetings. How do you prioritize them? What should be done first?

There are two general criteria: relevance and technical feasibility. It happens that we do not undertake a task but plan it for “six months from now” because a particular ministry will implement changes or certain functionality in only six months. Not everything depends on the Ministry of Digital Transformation or our desire — we launch functions in tandem with other ministries and must also consider their capabilities. At the same time, we clearly understand the situation on the outside, as we have CDTOs who monitor this in other departments, and we communicate with them and, accordingly, make plans.

For example, we cannot quickly issue a permit for a child to travel abroad because only some things depend on us. We are just a platform in the form of an application. But military bonds are an internal project, so we did everything quickly.

And let’s not forget about sudden unexpected projects, such as the light bulb exchange. But the path is the same: We reach a broad audience, and the problem is clear — the load on the power system from old light bulbs can reach 10%. The Ministry of Economy, Ukrposhta, and European partners have joined in. Therefore, we shifted our other tasks, and the team promptly launched this function, and all other participants also agreed on the necessary changes.

I guess you have a big vision of how you would like to see Diia in the next five years and what tasks it could accomplish. Could you maybe describe it in a very brief way?

The citizen is at the center of our ecosystem. And this is the key concept. What do I mean by that? Yes, you can have a business but are still a citizen. You can be a civil servant. You are still a citizen. You can be a parent of a schoolchild, but you are still a citizen. And so on.

And this is a big field for providing people with services from different categories. Since we have everything for business on the portal now, we need to integrate it into the mobile application gradually. We are working to ensure that a person can use different services as a citizen in the future but in various manifestations.

Therefore, we cannot divide this into several applications, such as PrivatBank, where there are separate apps for businesses and individuals. And it’s not about profiles. We have a citizen in the middle, a different entity. A person who should have access to different services. And our challenge is to combine everything in one application.

Basically, we already have a super app because we have access to various functions and services; it’s not a mono-product with just your ID. But there is much more to come. It takes time, unfortunately, not all at once.

When building the Super App, aren’t you afraid that there will be too much information about every Ukrainian in one place and the next minister or president will use it unfairly?

It’s about the control risk. We design the architecture so that we have no influence or access so that it is transparent, secure, and largely anonymized. You can go to the App Store or Play Market and see what accesses Diia requests. We even ask for geolocation only once — from those who apply for IDP certificates and assistance or change the address of their actual residence.

Of course, there are various risks. However, we live in a democratic country, and I am sure that a society that monitors everything will not allow this to happen.

You gave an excellent example of the light bulbs. It was a super-urgent task, and you jumped in and launched it quickly. How do you feel when you realize that all very complex tasks like this are thrown at the Ministry of Digital Transformation, and Ukrkosmos’ budget for this year is more significant than yours? And you have only 30 developers.

I won’t say that we look back at who gets how much, to be honest. We have a lot of support from donors. Up to a certain point, Diia was developed only with the help of international technical assistance. There is a vast amount of this support; it comes for different areas and from different countries. The primary donor, in terms of the amount of funding, is the United States through USAID.  Our partners include Sweden, Switzerland, Spain, and Estonia. Japan is also joining in.

By working with these international donors, we produce results. They see that they can continue to invest and invest in projects.

How do I feel about this? My dad served in the special forces when I was little. And there, they have a “no one but us” attitude, like a specific mission. I used to think that this is our task.

Let’s go over another point. At some moment, Diia became very popular outside of Ukraine: everyone was talking and writing about the international expansion of the service. Tell me more about what’s going on.

To begin with, Ukraine has never been super-powerful in digital, so we communicated a lot with international partners and studied their experiences when we started. We kept in contact, and over time, we began to tell them what we were doing and, how we were doing it, what we had achieved.

After the start of the full-scale invasion, millions of Ukrainians left Ukraine, and they began to show and tell the world what Diia is and why they love it — they became ambassadors of state development. This drew even more attention to us from the international community.

At this point, everything changed: we were no longer being consulted on how and what to do; they started coming to us.

A new area of work is the export of Diia.

You could say that. We don’t have a separate team for this; we use our existing resources, which we direct to consultations.

But, right away, we are talking about something other than selling our developments for money.

If we are talking about exports, the number one idea is the following. Ukraine has received a lot of international aid during the war, and we want to give something back. The second point is that international donors also support this story of exporting our developments to the world. USAID has allocated $650,000 for a project to study the possibilities of implementing our products in other countries. Because it’s not about a “passport in a smartphone,” it’s like an iceberg: It’s about fighting corruption, transparency, and reducing bureaucracy. That is why our international donors are also interested in sharing our experience.

How does it work? Say, Nigeria calls and says, “We want Diia,” and you tell them to hire 30 developers and go ahead?

To put it simply, yes. The uncomplicated version is as follows.

An interested party asks us to tell them more about what our platform can do and how it works. Let’s pretend they are interested.

The next stage is technical consultations. We tell them how everything works from the inside, how security works, how to work with registries, integrations with services and products, and what is needed to make everything work.

Usually, after that, the stakeholder takes time to think or do some homework: Theyselves need to understand whether they can take our approach and implement everything. One country, for example, does not have TINs in its registers, and it will be challenging to work in the Diia format without them. Either the architecture is such that implementing our developments will not be possible, or it will be difficult. Let’s imagine everything went well here, too, and the country is ready to work further.

Diia is a fairly large project, and we have many functions and services: We talk about the possibilities, and the stakeholder indicates where it is interesting to start. Plus, you must understand that we work very fast in Ukraine, and only some are ready to keep up with this pace. Therefore, an imaginary MVP is being assembled with what the country is prepared to come out with. This is where additional technical consultations for this MVP begin. Then there are the point-by-point clarifications about which design they will use — their own or ours — which part of the code to transfer to them, and so on. They also choose the name of their service themselves, and there is no “call it Diia” clause anywhere.

The other country should have an implementing company responsible for this MVP’s content and its further development. We only advise and help.

Again, this is an essential point: The Ministry of Digital Transformation or the Diia State Enterprise do not have access to their systems, registers, or anything else, and we do not work with their information.

There is a certain irony that Estonia is now learning from you. What are your feelings?

At first glance, maybe. Let’s take a broader look at the situation. We studied the experience of Estonia. They were the first to go digital, while others were not even thinking about it. And we all learned from them. But at one point, the Estonians put everything on the web, and we put it on a mobile app. And what did Estonia do? They did not reinvent anything and borrowed our existing product and experience. Just as we once borrowed their expertise.

So, yes, it’s great when Estonia borrows your product, but let’s be honest — without all the achievements in Estonia that we used, it’s not a fact that we would have been so successful.

You said that you wouldn’t sell it — you just share your achievements with other countries. So don’t you think about earning money, having so many opportunities?

We are a government agency, and we must create an affordable and user-friendly service for our citizens. Therefore, I have no comment on this question right now.

Last question. Are you going to change the operator that processes payments? According to my information, it is a matter of time.

I will give a brief comment: we are working on this matter. When we started the current cooperation, this company had the lowest fees, and no one else, no matter what they wrote on Facebook, had such rates. And in some projects, funds are transferred with no fees at all. For example, all donations through Diia are commission-free. If you donate to the Army of Drones on Diia, the funds go directly to the National Bank’s account. Now we will have to reconsider our cooperation.

AIN.Capital editor interviewed the co-founder of the startup, Oleksandr Sobolenko, to find out what the plant will produce, how much such a project costs, and what the team’s plans are.

Tell me, please, about the plant in France: what will you produce and how much does the project cost?

The plant in France is our first-ever in-house production facility. Before that, we used to outsource all our production. We will produce pulp, processing leaves or another biowaste — the raw material for our main products, paper and packaging.

The cost of this project is 3.5 million euros. The lead investor is the European Commission. The rest of the financing we are securing ourselves. It took us almost a year to find a site. And now we have finally chosen the Ile-de-France region, which is about 50 km west of Paris.

When do you plan to launch? What will be the capacity of the plant?

The building is expected to take two years. It officially started on May 1, 2023. We anticipate that around November-December 2024, the equipment will be in place, and we will be producing trial batches. We plan to complete the project in early 2025.

The capacity of this production will be ~10,000 tons of pulp per year, and we need 25,000 tons of leaves, which will come from the surrounding cities and towns. The production will employ 25 people.

Are you looking for additional investments for this project?

We are not looking for additional funding at the moment. However, this production is only the first of many in our roadmap. Therefore, we are already starting the process of selecting a co-investor for the second and third production facilities. The next investment round will amount to €8 million — the European Commission is a co-investor for €4 million, and we are looking for a lead investor for another €4 million. The production will also be located in one of the Western European countries.

Is it challenging to launch production in Europe regarding rules and regulations? Was it difficult to find the staff?

It isn’t easy to open a production facility in Europe. For us, it was a challenge and a stress test. First, we had to choose a jurisdiction to register the company in. We initially decided it would be France, then we got investment from the European Commission. Since we received funding as a French company, we had to establish our business in France.

The whole process of launching a company is complicated and time-consuming. Even a supposedly simple question of finding leaves took us a long time to solve. We spent nine months looking for a place to get the leaves, despite the fierce interest of cities, political parties, and government bodies eager to help us. Nine months later, we finally found a source of leaves willing to provide us with large volumes for free.

Hiring is a different story: Finding and hiring people is challenging, and labor law is very rough. The labor cost is significantly higher than in Ukraine, plus high payroll taxes.

Regarding regulations, it is not more complicated than in Ukraine. But besides the difficulties, there are many advantages. Honestly, despite all our innovations, no one in Ukraine needed us. Since 2018, the creator of the technology, Valentyn (Frechka — ed.), has been running around every possible threshold, from politicians to business people in Ukraine, with his idea and has not even come near to getting any funding for production. There are no problems like this in Western Europe.

Also, despite the high taxes, France offers many opportunities and favorable conditions for new businesses. Government financial agencies are providing excellent financing for innovative companies. We can count on loans from government agencies for several million euros at meager rates—however, the main reason we started in Western Europe is closeness to the consumer. We had no consumers in Ukraine as of 2021, and our product was either not recognized or too expensive.

Will you expand your Ukrainian team?

Our Ukrainian team now consists of eight people, most of whom are in Ukraine: sales managers, PR, and marketers. We are not actively growing our Ukrainian squad because we are focused exclusively on the Western, Northern, and Southern European markets, and we need to know their markets.

But we are planning a production project in Ukraine. It is still confidential; we are still planning and considering various options. Should we build this production site in Ukraine, we will undoubtedly have a standalone technical team.

Can you tell us the financial indicators like sales or income? Can you tell us about customers?

Unfortunately, I cannot give you any figures. Firstly, it is confidential, and secondly, we have several companies involved in the process, and it will be technically difficult to summarize these figures.

Most of our clients come from Northern, Western, and Southern Europe. These are b2b clients: packaging manufacturers who buy our paper or brand owners who purchase both paper and finished packages. Among the famous brands we collaborate with are L’Oreal, Samsung, Schneider Electric.

Also, we are starting active cooperation with the LVMH group: Christian Dior, Louis Vuitton, and Balenciaga. We have been honored with the LVMH Innovation Award 2023. We are also a member of the LVMH accelerator program, which starts in September 2023 in Paris, with the opportunity to offer our solutions to all companies in the LVMH group.

Do you plan to build production sites in other countries as well?

Indeed, there are plans to expand to other continents, including North America (the United States and Canada), South Korea, and Japan, but relatively long-term. We will have enough work in Europe for another 5-7 years. After covering Europe, we plan to implement a pretty large project in Ukraine, and only then will we start further expansion.

Why did we choose those countries? The markets are vast, there are many producers of paper and paper packaging, and they are also large importers and exporters of pulp. It is also essential that these countries have quite strong trends in sustainability, i.e., environmental work. After all, we deliver not ordinary paper and cannot compete with the normal one by price.

Our strengths are innovation and ecological friendliness; we produce the most eco-friendly packaging paper in the world. Because of this, it has a particular added value and is sold only in countries where customers care not only about price and quality but also about ecology.

However, this will not happen overnight because we are engaged in production projects that take much longer to develop than IT projects. Each of them requires funding of 3-4 million euros if the project is small and 10-15 million euros for a medium-sized one.

We will most likely enter other continents with a different business model, and it will be a licensing model. This will be tentatively after 2027.

Tell me why you decided not to go to Burning Man last year.

Last year, Kurenivka planned to build a camp at Burning Man for the third time. But in February, the Russians invaded our country… In early March, when the primary issues related to personal safety were resolved, we held an online meeting with the camp team. We publicly decided that we had to cancel our participation because almost every participant was busy defending our country. Some joined the Ukrainian Armed Forces, some volunteered, some joined the IT Army, some were involved in our refugee assistance initiative, and some bought armor, helmets, and turnstiles…

Therefore, like all Ukrainians, we understood that Mission No. 1 was to confront the enemy.

Who from the Kurenivka team will go to Burning Man this year, and why did you decide to go?

We decided for the participation this year because we can’t miss the opportunity to speak loudly about the war in Ukraine on the international stage.

Burning Man is a community with the highest concentration of leaders, people who influence the opinions of others. Telling them about the war through art, through emotion, and not through a smartphone screen is a very effective tool of cultural diplomacy.

In addition, we have another goal, but we can talk about it after Burning Man.

Speaking of the team, I want to mention the entire Kurenivka camp, which is involved in both the construction and financing of the project, and especially the key members of the art team, Oleksandr Slobodianyk, Mitya Zinoviev and Leila Zhdanova.

Tell me about The Hedgehog Temple project. How the idea came about, why a hedgehog, what structure it has, how long it takes to assemble it, and other exciting details about the exhibition.

For me, the hedgehog is one of war’s most widespread, simple, and meaningful symbols. It is elementary, but at the same time, it stops enemy tanks. Before the war, the hedgehog was a civilian, used to build houses from this C-channel, but when the war started, it became a military man. It is a symbol of danger, protection, and unity simultaneously. It is very close to me personally because at the beginning of the war, I worked for a construction company, and we made hundreds of these hedgehogs to defend Odesa. And when Burning Man announced the theme for the year, Animalia, it all became obvious: We had to make a hedgehog, an animal made from anti-tank hedgehogs.

But creating cool and visually exciting art is not enough to achieve the goal we set out to achieve. I wanted it to have the energy of war, to convey the emotions we experience daily in Ukraine. We added a goal to dedicate the project to my fallen friends, and this is how the puzzle came together.

The hedgehog itself is a pavilion built of 3 tons of metal, with 100 giant hedgehogs inside and covered with a camouflage sand net. And inside, there is a war memorial with stories, photographs, and personal belongings of the fallen heroes.

You got a grant from the Burning Man administration. How? What is the amount of the funding, and what are the terms?

Every year, the Burning Man Project announces the theme of the year and invites applications for grants, this program is called Honorarium. Anyone can participate. You don’t have to be a professional artist or have any history with Burning Man. So I just submitted my application according to the general procedure.

This year got over 700 applicants, and the organizers selected 70 for partial funding. Under NDA, I can’t disclose the terms, but usually, it’s 50% of the project cost — in our case, this money was enough for construction materials.

With the support of our very cool and influential friends, we settled the logistics and lighting of the project, and the production itself was done at the sites of Oleksandr Slobodianyk and Mitya Zinoviev in Kyiv. I want to take this opportunity to say a big thank you to everyone who is helping the project reach the desert! Thank you!

Do Ukrainians have to pay to participate in the festival? What is the ticket price this year?

Of course, they have to; there are no exceptions because the first principle of Burning Man is radical inclusion.

The tickets cost $575, but the art team received free gift tickets, for which we are grateful to the organizers.

To what extent do you think the ideas of the Burning Man festival correlate with what Ukrainians want to convey to visitors? Will the reminder of the war not irritate the participants?

Burning Man is about radical self-expression and community, so we don’t think our art will annoy anyone. But we definitely don’t want to be a decorative art object or a background for Instagram photos. The Hedgehog Temple should evoke emotions.

I would also like to take this moment to invite Ukrainians to join the project and send the stories of their loved ones who were lost in the war. They can do that on the project’s page.

In the interview to AIN.Capital, Sacha told about how Glovo is operating in Ukraine during the full-scale war and why this market is important for the company. He also shared the details about the company’s plans for further expansion and development in the CEE region.

In which countries is Glovo currently operating? What markets are the biggest in terms of business?

Glovo operates in 25 markets across Southern and Eastern Europe, Central Asia, and Africa. We’re in over 1,500 cities with over 4,000 employees and 60,000 active couriers on the platform. And finally, we have over 170,000 partner stores and restaurants on the application, and 90% of those are small businesses.

Our largest market is Spain. Before the war, Ukraine was our third largest market and continues to be our core market.

What countries does the company consider for further expansion?

We regularly evaluate the competitive landscape and economic conditions across countries to make decisions for future expansion. Before entering a new country, we consider three main criteria. The first criterion is how developed our industry is in this country, whether there is a need for delivery services, and whether competitors are there. We also study the prevalence of smartphones in the country because no one can make an order without one.

The second thing we evaluate is the general development of the market, related sectors such as banking, and the number of partners with whom we can cooperate. The third thing is demographics. And the political situation is no less critical.

At the moment, we are focusing on growing the markets where we currently operate.

What is the share of Ukraine in Glovo’s overall business? How important is this market to the company?

Ukraine is essential to Glovo. Currently, it is one of our five largest markets and a strategic hub for regional development. In addition, Kyiv hosts one of our four global technology hubs, with the other three in Barcelona, Madrid, and Warsaw.

How did the full-scale invasion of Ukraine affect Glovo? Did you consider exiting the Ukrainian market, and why did you decide to stay? 

Well, first of all, we stopped operations here. Our priority was and remains the safety of our team, couriers, partners, and users. However, within a few days, the local team said we needed to resume business as we’re an essential service. Сouriers started using messengers to do social orders. Restaurants and shops wanted to continue working, as well. So all that made us reopen very quickly. We developed a phased recovery plan, starting with the safest areas. We also adapted our technologies. For example, we do not operate in cities when there is an air raid alarm.

What dynamic are you currently observing in Ukraine? How are things going for Glovo in this country, considering constant air raids, inflation, and consumer attitudes? Are you planning to invest in this market before the war is over?

We are proud of the Ukrainian team — they exceeded all our expectations regarding business recovery in the conditions of a full-scale war.

Despite all the challenges — shelling, blackouts, temporary suspension of the activities of some partners — as of March 2023, the Ukrainian team managed to reach 100% of the pre-war level of business and continue to grow.

All essential indicators increased, from turnover to the number of orders. In some cities, orders rose 2-3 times over the last year. For example, in Khmelnytsky, orders increased by 318%; in Vinnytsia by almost 300%; in Ternopil by 275%; in Rivne, Ivano-Frankivsk, and Lutsk by nearly 250%; and in Chernivtsi by 200%.

Moreover, the Ukrainian team started several new services for users and, at the same time, supported the development of local partners, in particular SMEs. Thanks to this, Glovo remains Ukraine’s largest multi-category delivery service, cooperating with over 8,000 partners in 35 cities. And this shows how much the team could adapt to new realities.

How is Glovo developing in the CEE? In 2021, the company acquired competitors in Bosnia-Herzegovina, Bulgaria, Croatia, Montenegro, Romania, and Serbia. How are these markets doing? Did those investments pay off? 

At the end of 2021, Delivery Hero acquired the majority stake in Glovo. Joining forces with the market leader created unique conditions to grow with a long-term vision.

We have a strong market position and are currently leading in more than ⅔ of our markets. Moreover, we see great potential for the future of on-demand delivery and continue to see strong growth in the countries mentioned above.

What cultural differences are you facing while expanding in Europe? How did you overcome them? 

Each market where we operate is unique, which is why we rely on local expertise to grow in those markets. We listen to local teams and get their feedback about the regions, countries, and cities where we operate as we strive to be a dynamic technology company that can make quick decisions, make adjustments, and have a strategic vision for the long term.

Do you have active competitors in CEE? Who are they, and what part of the market does Glovo occupy?

The on-demand delivery business is a highly competitive industry. However, Glovo is unique as we do not only focus on restaurant or grocery delivery like many of our competitors but we are truly multi-category. Having been multi-category from day 1, Glovo has witnessed this development first-hand, and consumer demand for other retail categories is getting stronger. In 2022, we saw a 120% increase in non-food orders by Glovo users across our markets.

Is Glovo profitable in the CEE markets and particularly in Ukraine and Poland? Can you share the numbers? 

Glovo has seen strong growth in both markets, and we continue to see an increase in demand from both partners and customers.

The business in Ukraine is profitable. Moreover, it is in the top 5 for Glovo not only in terms of the number of orders but also in terms of effect and contribution to the overall business in terms of profit.

What countries are the biggest markets for Glovo in CEE? What are the next steps for development in the region? 

Ukraine is one of the largest markets in the region. We also see strong growth in other countries like Poland and all across Eastern Europe. We will continue to invest in Ukraine and other markets to build our market position.

Let’s start with the most important point — what are the results of ICLUB now?

In 2022, 27 companies were invested.
Over the entire period of its existence since 2018, there have been 80 startups.
The total amount of the club’s invested capital is $35 million.

At the same time, our investors have had exits, there were six of them for a total of $8 million. We can’t talk about the investment performance of ICLUB because it’s not an investment company: we don’t invest a notional million in ten startups for $100,000 each, waiting for results. At the same time, there are projects that have done well and multiplied their investment.

We also have two written-off investments. Saying “written-off”, we mean two companies that have already closed down, and we failed to save them. I won’t name the companies, but they worked in the areas of mobility and delivery.

What is the geography of investments?

About 41% are American, and 50% are European. The remaining percentage is a few cases from non-priority regions. These are startups from the MENA region — an Indian company and a Mexican company. Ukrainian ones can be counted on the fingers of one hand (OVO, Liki24, etc.).

In which sector do your investors invest the most?

I have prepared statistics to be as accurate as possible:

Healthcare and biotech are the most popular.
Second place is occupied by consumer goods (direct and consumer brands – companies that create some goods and sell them through their own communication channels, not through retailers).
The third is enterprise soft (B2B software).
The fourth is mobility and logistics.
The fifth is fintech (divisions: insuretech and taxtech).

How much do you invest?

Again, let’s separate TA Ventures and ICLUB.

TA Ventures usually provides $50,000 for pre-seed companies, and at the seed stage — from $250,000.
At ICLUB, the average investment ticket per company is from $150,000 to $350,000.

Did you make additional investments in your projects in the past year? There were a lot of problems for sure.

When a company needs more money, internal investors and funds try to save it first. However, ICLUB will not hold the company alone. If all the investors invest and say we need to help the company survive this period, we offer it to ICLUB and justify it. Funds should reserve part of their capital to reinvest in companies that perform well and support those that are worth to be supported. So if a company is having difficulty raising external funds, we tell ICLUB and explain that there is an option to help it survive the problematic macroeconomic situation and get it to the point where it can do fundraising. So yes, we do offer this option.

Explain to people who have never heard of ICLUB what it is.

It is an organization that helps non-professional and novice venture capitalists understand how to select and check companies before investing and building their venture portfolio.

Our focus is startups: ICLUB’s main value proposal is to reduce risk by co-investing with TA Ventures.

For example, suppose an investor needs venture capital investments as an asset in his portfolio. In that case, he can look for companies on his own, negotiate with them on terms and conditions, and invest on his own. But, like any other asset, investing without competence, without networking in the industry, means that success is very unlikely. Therefore, if an investor is ready to work with this type of asset, the easiest way is to start co-investing with those who know it better.

We do this even as the TA Ventures fund: In most cases, we do not go it alone but with other funds with more experience, capital, etc. ICLUB offers the same to private investors in the chain: enter together with TA Ventures and capitalize on the fact that our professional team has already selected the companies provided to our investors. If we look at the funnel, the startups selected and chosen by TA Ventures and then by a private investor through this filter are much less risky.

It is essential to add that ICLUB only invests if TA Ventures invests. At the same time, the fund self can take risks and invest where we will not lead ICLUB investors. That’s why I’m talking more about those who want to start investing in startups than about ICLUB as an offer for startups — they will go to TA Ventures in the first place.

Here I can only say that our strength is networking. We can introduce you to any foundation and help you with fundraising. In addition, we have a development team in Ukraine and can contact you if needed. Usually, we are a minority investor and not present on the board. We provide funds and do not intrude on operations. Our strategy is to find companies that do not need us.

How much does it cost to participate in ICLUB?

Now, ICLUB has two options:

• You can be a paid member with access to a closed community, events, and a contact person who helps you and answers all your questions. It costs $3500 a year.
• You can join ICLUB online for free (we launched this option in 2022). It will be enough to pass the document verification and get access to the agreements. Such a member pays only investment fees: a 2.5% annual management fee and a 25% carry fee, a share of the profit on exit.

The fees mentioned above are also included in the first type of ICLUB membership, but the member receives a more personalized experience and assistance in decision-making. In the online version, the member reviews the startups on the platform and makes an investment decision independently.

ICLUB used to host offline events for its members. Now they are gone, and the reason is clear. So how do people feel about the events being gone?

ICLUB in Ukraine continues to operate mainly online, as most of the Ukrainian community is not in Kyiv. Therefore, we don’t hold offline events — it doesn’t make sense to do it for the number of people who stay in the capital. However, we can organize events at the request of our audience, more like brand awareness.

We learned that people who invest, and even new people who join ICLUB, are ready to invest without those events. We couldn’t afford it before, but now the topic of venture and venture capital investments has become more understandable to people who join us. That is why there is no need to present a company offline.

Are there many investors who want to invest in startups?

Just look at the statistics: We have grown four times since 2020. Back then, we started by talking about venture capital from the basics. Now we almost always move to companies right away. This is because more people are interested in this asset. It’s just that time has passed. Plus, in the current economic situation, conservative investments bring almost no profit. People are starting to look around.

There are very different investor profiles. The more professional ones understand that we can do due diligence, but we don’t know what will work. But there’s a math — the more you invest, the more likely you will find a “new Facebook.”

This is because there are people interested only in innovation. So they make investments more cautiously but consider them more lifestyle investments to test and check their skills. We tell everyone that nobody could have predicted that the company performing the best right now would be so strong. The profiles are different, but they all share an interest in technology because venture capital investment is a very niche area and attracts people ready for a non-conservative approach.

Anton moved to the United States right after the company was acquired by Facebook, but he maintained close ties to Ukraine. Among other things, he became an angel investor for many Ukrainian companies, including Petcube. Today, Borzov is working on launching a $100 million venture capital investment company in the Valley and plans to continue supporting Ukrainian startups.

In an interview with AIN.Capital, Anton spoke about his time at WhatsApp, why he decided to leave the company to work at the search engine startup Neeva, how he switched from design to venture capital, and what startups he will invest in.

You have studied physics. How did you become a designer and get to WhatsApp?

My way to becoming a software engineer began in my school. At the university, I studied physics and informatics. But there were mostly physics in the studying program. The director of the Solid-State Physics department and I were friends, so my first experience with Internet use happened there. The engineers worked there during the day, and at night came we the students and worked on our projects. We literally spent nights at those computers! One of our first biotech startups arose in this solid-state physics department.

As a student (and after), I worked in the first design studio in Dnipro, New Damage/ELRO. Later, I established my own studio. For example, we made toys and other interactive things for Yahoo! It was excellent cooperation. That’s how I met Jan Koum. I was recommended to him after he left Yahoo! Then, I started to develop my mobile app.

Initially, it wasn’t a messenger but an app to replace native call apps where you could see your status next to your name, e.g., “My battery is low.” It became a messenger after Apple introduced push notifications.

The first thing Jan asked me to do was an icon. That’s how it all started. After that, I developed a website and internal tools. With push notifications, we launched the messenger function. Later, a group chat function came. And the project rapidly expanded.

After Facebook acquired WhatsApp, our whole team moved to the Valley and became the core of the future Product Design department. I handed over the ongoing projects of our agency to my friend, who left before the acquisition deal, and he continued to work in Dnipro.

How did you feel at WhatsApp? What changes came with the acquisition?

WhatsApp had a fantastic team and atmosphere. The situation was different before and after the deal.  We stayed in our office and did not move to the Facebook campus for a while, so there was no quick culture change. The shift was gradual. And I think it was good. We hadn’t faced such a confrontation as in Twitter, for example, after Elon Musk purchased the company. So yes, there were both positive and negative changes guys weren’t ready for.

You know, these values that we’ve built at WhatsApp — I’m talking about privacy and encryption, user trust, approaches to product development — I think they’ve had a significant impact on Mark and the further development of Facebook in general.

He saw the trust in product development and its influence on user retention. In my opinion, Zuckerberg tried to implement that experience in other products of Meta, Messenger or Instagram, where he also wanted to create an end-to-end encrypted messenger.

I believe it doesn’t matter which one of the products would embody your ideas. The idea lifecycle goes on. Once you get inspired with the idea that works perfectly, you want to take it in your product, but others also mention that wonderfully working idea and realize it in their products. The ideas live independently from the product they once rose.

Nokia, BlackBerry, ICQ, Skype, etc., all influenced products we use. Just look at the story of emojis that first appeared in Japanese cellphones as monochrome 8×8 pictures, and what are they now! Once it comes with one product, the other products better it. I have fun watching innovations spreading.

Did you get any financial benefits from the deal? Options or bonuses?

I can’t share this information, but I can say that everything worked out pretty well for us.

Tell us how things turned out for your colleagues from Dnipro who moved to the US with you to work at WhatsApp?

There were three of us, and all of us have already left WhatsApp. Alisa is now in New York — she continues to work in a startup of engineers and BizDevs who left WhatsApp. The startup is called HalloApp/Katchup. And Taras is now starting a career as an artist. He is studying at college in this field.

Tell us how things turned out for your colleagues from Dnipro who moved to the US with you to work at WhatsApp?

There were three of us, and all of us have already left WhatsApp. Alisa is now in New York — she continues to work in a startup of engineers and BizDevs who left WhatsApp. The startup is called HalloApp/Katchup. And Taras is now starting a career as an artist. He is studying at college in this field.

You worked at WhatsApp for ten years and then left to become Head of Design at Neeva. Why did you decide to leave corporate work for a startup?

I’ve always been more used to working at small companies. And for a long time, WhatsApp was not a large company for me but a startup. So when WhatsApp became so big, I thought I could build something new.

Neeva is a private ad-free search engine. Now they have added AI search to the regular search. It’s like ChatGPT, but your own one where you can see sources, etc.

Neeva’s office was very close to Red Rock, the cafe where WhatsApp started before the first office. I came there, just like in WhatsApp — also a startup, at a similar stage. I worked there for three years and left to move on.

How did you start as an investor?

After moving [to the USA], I wanted to support founders in Ukraine and made my first angel investment in Petcube. It was my first angel check.

I met Alex Neskin, co-founder of Petcube, long before Petcube existed. In those days of Flash and VR, we both were interested in technologies and discussed them in our studio in Dnipro. Then, they opened an office in San Francisco, and our communication organically resulted in this partnership.

The investments went on, and at the moment, I have a solid portfolio with 15+ Ukrainian (3DLOOK, Spin.ai, Pawa, Fuel Finance, Propertymate, Workee, Nutrisense) plus foreign companies. The Ukrainian enterprises got $50,000 checks and above, and the American ones might get more.

I collaborate closely with the companies in my portfolio; I advise them on design, product, product market fit, etc. When you support several founders, you can transfer all the knowledge from different areas from one company to another. I love this.

Nowadays, my WhatsApp colleague, Summer Kim, and I have created a venture fund that will support the idea of joining UX and AI. The first STRATMINDS fund was created in 2018, and now we are fundraising for two new STRATMINDS funds worth $100 million. We already have the first commits; then we will do the first closing, after which we will do the deployment.

Investors make money on exits or cashouts. Does your current business allow you to be financially independent?

You can’t have a continuous cash flow when you are just an angel investor, but the fund is a different story. Funds do not work like angels — they have management costs, part of which are spent on partners’ salaries.

What is the ticket size of your company, and at what stage does it invest?

From pre-seed to Series A. Depending on the company we invest in, from $250,000 to $500,000, in some cases — up to $1 million.

Will you invest in the US or in Ukraine too?

Mostly the US. However, I won’t stop my personal angel activity. I still follow Ukrainian stories, Ukrainian founders who come to TechCrunch or Startup Grind, and other events.

Is this more like help to Ukrainians or a business where you focused on the investment returns?

In the case of Ukraine, the financial component plays a minor role. But it’s different with a fund where you manage not your but the LPs’ money. So the approach is different too.

I like to find founders with whom I have a common background and who share the same interest in products. I don’t want to waste my energy and help if I don’t believe in a success story. But there is always a chance your investment won’t pay. Later, you pay attention to how people acquire the unit economy.

When was the last time you were in Ukraine, and what activities, besides startups, are related to your homeland?

The last time my family and I were in Ukraine was in the summer of 2021 for a month. We spent a lot of time in Dnipro and Kyiv and even on the shores of the Azov Sea, which is now occupied. Also, we were in Melitopol. We used to come every year, and we want to start coming again.

A year ago, my friends and I, with whom I moved to work at WhatsApp, started a charitable foundation called Sunflower Fund. We have been helping with protective and medical equipment, first-aid kits, etc. And we continue to do it until now, although not on the same scale as it was at the beginning of the full-scale war.

It was so important for me. When everything started, it was impossible to sit idly by. Somehow we became more involved, and in the first months, we volunteered even at night. I slept in a separate room so as not to wake my wife. We tried to deliver everything needed when supplies were not yet properly organized.

Osnovy Publishing, with Dana Pavlychko on the top, and I also published books in Ukrainian in the last few years. I came up with books worth to be published and helped with art direction and editing. We have translated and published two books so far: The Timeless Way of Building by Christopher Alexander and the second about Zen called Zen Mind, Beginner’s Mind. It was one of Steve Jobs’ 10 favorite books, written by a Japanese monk who moved to San Francisco and founded the Zen Center here. I have practiced Zen for four years, grown fond of it, and have friends who like it.

Why did Zen become one of your interests?

I had a free week between two jobs (WhatsApp and Neeva) to refresh myself. I was lucky to visit the San Francisco Zen Center functioning for the last 40 years, when a week meditation retreat started. I came there and spent the whole week on this practice.

On the one hand, it was occasional, but on the other hand, not because I found what I really needed. Working on products and Zen are organically united because I think everything we do is about people, their lives, and how to improve them.

As an investor, you can see the whole picture. The more projects you see, the better perspective you have.

And it makes fun, especially now, if we followed the command line in the computer industry 50 years ago that changed with innovations to iPhone and mobile industry and compared it with ChatGPT, which is a command-line interface that can turn into something.

What experience would become essential, and how would the world change? What would grow, and what would disappear?

A year ago, YEP.com went online. The team hasn’t made any big announcements since the search engine has been in beta. But in just under a year of operation, it has already received more than 250 million search queries.

It also has an image search, a news section, and an AI summary — an LLM-based tool that allows users to get a summary of their search query generated by artificial intelligence.

Dmytro Gerasymenko and Ahrefs Head of PR Daria Samokish told AIN.Capital how YEP is working today including how a team of 16 people is creating an AI-based search engine that aims to one day topple Google from the top of the search market monopoly, and about the problems YEP is facing due to the refusal to track users.

At what stage is the product?

Dmytro: The Yep beta version has been running for a year, but we have not announced it. In June 2022, Techcrunch wrote about the launch of the beta version of Yep. There has not been an official full-fledged launch of the search engine yet. The search engine is already working and shows good results. They are imperfect, so it is too early to launch a full-fledged search engine. We are not yet ready to compete with Google in terms of search results. We are currently working on improving our algorithms.

Daria: Nevertheless, we have done a lot during this year. In June 2022, when we announced the beta, we only had a web search. But the YEP interface and capabilities have expanded now: current news, image search, etc. We are considering the possibility of acquiring some ready-made map solutions this year or in the near future.

DuckDuckGo, Neeve, Ekosia, or other search engines offer features that users are already used to. If we want to compete with them, we have to provide a search service that is already established as a benchmark in the market. We can’t compete with a search engine that is still worse than Google’s one. We have to take into account all the expectations that the market already has. And we want to finalize all the issues while we are in beta so we can meet the expectations of users during the official launch.

Competitive advantages

Dmytro: First, it is our unique business model — we will give 90% of our profits to content creators, while large search engines take all the money.

Secondly, privacy. From the very beginning, YEP did not plan to collect cookies and sell user data to third parties, as Google does. Even though this creates some problems for us.

We already have a couple of million search queries a day, and we know that some of them are people who make queries.

But there are also scrapers. These may already be our competitors — search engines trying to get our search results and then work with them. Since we have very high privacy guarantees, we can’t track which queries are from real people and which are from robots and filter out the latter.

Daria: Privacy issues have been discussed in Europe and the United States. Google and Apple are facing lawsuits due to this issue. We want to comply with all the governmental requirements of the European Union, the US, and other countries. The infrastructure of our search engine makes it possible to exchange extensive search data and not transfer them to any third parties.

Even if we use some data on clicks (which we are not going to do), this data will not leak anywhere, like it was with DuckDuckGo, which recently had a scandal: it turned out that they had shared some data on users in the United States with Microsoft. Such a situation is impossible with us, because the development was initially set up to be a private search engine.

Dmytro: Thirdly, we want to develop competition in the search market for the benefit of companies and users.

There are many search engines that do not have their own index or have a very small one. Therefore, they buy search results via API from Bing, but offer them in their interface with additional features. There are a lot of search engines, but only Google, Bing, and YEP have their own large indexes that cover most of the internet, different languages, and countries.

Google does not have an API. It does not allow third-party programs to use its search results. And Microsoft has recently announced a significant price increase. For some features, the price will increase by nine times! It is clear that Microsoft is simply getting rid of competitors this way. Now all these services have to pay 4-9 times more. For some of them, it will become unprofitable.

We want to offer an affordable API and allow people to use our search results for commercial purposes in their programs, AI applications, ChatGPT tools, etc. We have the third largest index after Google and Microsoft’s Bing — so we can do it.

Other search engines will either find a way to solve the problem of raising prices for themselves, or most competitors in the search market will simply disappear. Of course, some search engines have their index, but it is 100 times smaller than ours. We can also mention Yandex. Sometimes it ranks third place in terms of index size. But if we are talking about international search engines, it is unlikely that Yandex’s index will be bought for political reasons.

How the third most active web crawler was built

Daria: In general, how did Dmytro come to the idea of launching Ahrefs? One day, while he was running several projects simultaneously, Dmytro needed search data for one of them. Then he contacted the biggest search data seller at the time, Majestic. After reviewing an invoice from the company, Dmytro thought: “For this money, I could make a similar system and would collect the search data.” That is how Ahrefs, with its web crawler, began its way to currently being the third most active crawler in the world.

Dmytro: It took years. We had no money like Google or Microsoft, so we had to optimize everything so the program could function with minimal costs.

The Google Index is already 26 years old. Microsoft’s Bing Index has been for 14 years in development. And the Ahrefs Index YEP is now using has 13 years of development experience. Considering the volume, the available infrastructure base, and the developers’ expertise, we could technically and morally compete with those giant companies.

Investments and development

Daria: We have already invested $60+ million. Most of it was spent on data centers. Initially, the entire infrastructure was in Singapore, but now we are starting to index from the US, and we are in the process of opening an American data center. That will increase our crawling and data processing capabilities. Although our data center is currently only in Singapore, this does not limit the use of YEP.

Dmytro: The infrastructure we invest in is not only for YEP but also for Ahrefs. It serves tens of thousands of Ahrefs users worldwide. We use 80% of what we need for YEP in Ahrefs. We need a crawler to have data in Ahrefs. We need to index this data to have Ahrefs data. YEP is just another kind of index.

We expect the greatest number of early users of YEP in the US. It is essential to be close to the user for a search engine. That’s why we want to have a data center there. Also, if something happens in one data center, we can serve all our Ahrefs and YEP users from the US or Singapore. That will make the service in the US much faster for US users.

What is YEP TLDR (AI Summary in the search field)

Daria: In December, the first word about OpenAI was spread in the USA by geek journalists who used to write articles for developers. And in the late February-beginning of March, ChatGPT was booming in the USA so loud that it echoed in Ukraine within the next month.

Then Microsoft invested in OpenAI by declaring its great comeback to the search engine market: “Google, hold on!” So Google made a move — Bard. Both tech giants announced their AI Summaries to ease the users’ search experience.

While everybody was talking about whose AI was cooler, we developed our first AI Summary prototype and rolled it out to be used in Yep. Our AI Summary is called YEP TLDR (too long, didn’t read).

This technology creates AI-generated summaries of the top search results after a given request. For example, you enter “What is blockchain” in the search field and don’t need to read all 10 search results pages to get an answer. Instead, YEP TLDR will read them for you, keep only the core meaning, and form a concentrated text after reading which you will clearly understand what blockchain is.

YEP TLDR is available as a widget on the search page in YEP. A summary will be done in a few seconds the program needs to read the top results and write it shortly. I use YEP by default, and TLDR helps me a lot.

Why YEP TLDR is better than others

Dmytro: We didn’t make big announcements since it was a new tool requiring many refining steps. It is an advanced technology driven by an LLM (large language model). And here we have several problems.

Daria: American specialists said such tools could hallucinate by producing conspiracies instead of facts. For example, an AI made a story based on an article in The Wall Street Journal about a child kidnapping that never happened. Likewise, ChatGPT or any search engine with an AI summary can provide users with inaccurate or fake information.

Dmytro: We are hardly working on YEP TLDR to avoid such failures. We don’t try to force the AI system to generate a text. Instead of it, we offer: “Here are ten pages; read them and make a summary for us.” Now I believe we have achieved the breakpoint where no “hallucination” is possible in YEP anymore.

However, we can’t assure users of fixing the issue entirely. But here you get a bonus — the users can check the accuracy of our data. Our summary always has a source link below. So you can check where the AI has this information in one click. And any user can leave feedback under this source link. So, if you read information that looks inaccurate or a bit hallucinating, you may always inform us about an issue.

How 16 people could create an AI with extras

Dmytro: Our team is small. Ahrefs has 110 employees in total. Only 16 of them are working on YEP full-time. For example, our biggest competitor has 1500 specialists there. Our revenue is also significantly different: We planned to earn $100mln a year. But Google makes $160bn only on search.

Daria: Our smallness is our advantage. We work like a startup without bureaucracy. How I see the creation of YEP TLDR. OpenAI launched the sensational ChatGPT. Somebody shared the news in our developer chat, and then Dmytro said: “We will gather five to ten people and make the same for YEP. One will develop a prototype; another, the interface. The third one trains the model; the fourth will do tests, etc.”

Now you can imagine the process in a large corporation. The clue is lost on the team level, where managers supervise managers with all their approvals, calls, and negotiations with investors. Our team can create a product without unnecessary calls. One guy comes and says, “Hey guys, what can we do to make this?” The developers, designers, and I gather and think out a solution very fast. I think we have got a clear vision of the AI summary integration procedure for YEP just after a few days.

Ukraine-made search engine

Dmytro: Although Ahrefs and YEP are companies based in Singapore, we have very close ties to Ukraine. The founder & CEO is Ukrainian, and the leadership team is from Ukraine. In general, about 20-25 people in the company (one-third of the entire workforce) are from Ukraine. Some of them are geographically located in Ukraine. During the war, some left, some stayed on principle, and some returned.

Daria: The human intellectual capital of Ukrainians is extraordinary and noticeable in the world. When we announced the beta, we made one announcement, after which 200 media outlets wrote about us. And after just one announcement, we have two million daily queries on YEP. So, you can imagine that we did not involve advertising or marketing — we have not done anything in this direction yet.

When will the beta release be, and what else needs to be done

Dmytro: Currently, when you submit a search request that we cannot answer for some reason, we offer you to use Bing, Google, or DuckDuckGo results. All the competitors of YEP are achievable with one click of a button.

We made this because we first want our users to have the most effective and fastest access to the relevant information. We like them having a simple and superb search engine that pays content authors for their contributions. This is the goal of YEP.

The moment I wouldn’t have to click this button to look at Google or DuckDuckGo search results because YEP always provides me with a great outcome would be the time for the beta release. I hope to have it by the end of this year. But nobody can forecast the future.

Nowadays, language models have a drastic impact. The things that could take years now are doable within a month. E.g., you make a search request and get results. Some of them are good; others aren’t. Recently, we have had no fast tool to check them. For sure, we could ask a person to evaluate the results, but we have no time for this — just 200 milliseconds. Now, we can install a language model to check every result’s relevance. We have used such technology since the last year.

Today, an immense LLM automatically checks our search result relevance.

How can YEP break the monopoly in the search engine market

Daria: According to Statista, Google had a 92% share in the past year. However, its market share is shrinking. Statista reports 87% for Google in 2023. The competitors never sleep. To improve the competition, the biggest player must free some space. It is basics the of the market economy: The more competing and innovative players we have, the better experience users have. But if there is a monopolist, he sets the rules, and everyone else follows them.

Many American media reported Google monopolized the path to the users. Google is present by default on smartphones and tablets. You may buy a new phone and download a browser you like but with Google as the default search engine. To change it, users must edit some settings. We developed a button on the main page of YEP — “Set YEP as your default search engine.” You could do that quickly, without having to read half of the Internet as I did to set up an alternative search engine.

The European lawmakers are also very concerned about this issue. Laws are demanding that companies pull back to increase the competition. So we can expect a situation when, for example, Apple will provide iPhone users with default search engine options. That already happened to Google: Android smartphone users must be able to choose a search engine from the list — the same thing in India. So we expect some help from national governments to win some part of the market from the monopolist.

Could YEP win some part of the market from Google

Dmytro: We want YEP to become the most popular search engine. Therefore, in the first stage, we would like to help alternative search engines and allow them to reduce the monopoly of Google and Bing. Since search is costly to maintain, Google and Microsoft actually control everyone else with their prices. We can fix this and allow alternative search engines to develop as well.

And, of course, we will try to make YEP as good as the top search engines, maybe better. Then we will start a marketing campaign to get more and more users. And with the business model, we can convert many people who would be open to it.

Daria: We are often asked, “How will you compete with Google?”. It always makes me smile. It will take years to start competing with Google. The investments Google or Bing make in search are incomparable with what we can invest. Regarding budgets, it’s like a massive whale vs. a small rabbit. But we keep up with the market, trying to offer features that users want. You can look at the search, and although it’s still a beta, it is already a very awesome beta that works and follows the market trends. When the story of ChatGPT broke in the media, YEP reacted very quickly and created a feature creating an AI summary with a team of only 16 people! And if something else comes up, our team will gather

AIN.Capital spoke with CEO of the startup, Hoan Ton-That, about how Clearview AI helps to identify perpetrators of the war crimes and look for missing people, as well as about plans to open a Ukrainian office.

Are you planning to launch an office here in Ukraine?

We are considering it right now – there is so much great talent here for software development. Also, it’s an excellent place to test new products, especially security related because there is a stronger need for security products here now than anywhere else. Your guys have to develop drone-based tech, AI, and other digital warfare really quickly. 

And all the Ukrainian software developers I’ve met here are really great, as a software developer I can confirm that. There’s a lot of potential here, after, and even during the war. 

You are working with the Ukrainian government. How it all started?

When the war started we reached out to them, thinking that our tech could be helpful, though we didn’t understand at the time the scope of its potential usefulness here in Ukraine. We passed a message to Ukrainian agencies with a former ambassador and a week later got an email from the Ukrainian Border Service and Ministry of Defence. 

During the Zoom call, we demonstrated how it worked. They sent me some test photos and right away our service identified who the people in those photos were. So Border Service started using it, and the word spread amongst other agencies. During my first visit to Kyiv, I met some of the people I had seen only via Zoom. 

Now 14 government agencies are using it, it’s been used to identify thousands of war criminals and over a thousand missing people. That’s just one Ukrainian agency using it. And IAd I think there’s a potential for more collaboration. We are constantly learning new ways to use our software so we can improve it. 

Our Board Guard Service said they were able to identify 10 000 Russian war criminals via ClearView. Is it accurate?

I think they meant 10 000 identifications overall. It includes 50 people involved in the recent human trafficking of Ukrainian children put up for adoption in Russia, more than 700 civilian prisoners of war, and over 3,900 servicemen of the Russian Federation. The National Police of Ukraine also worked a lot with Clearview to identify war criminals. In previous wars, there was little or no way to identify who the person committing war crimes was. Now we have photo and video footage. So for the first time, there is an option to run the search and find a VK profile or other related information. And after the verification, they know who did this. 

Do you have datasets of photos of Russian soldiers and other representatives of the occupation forces?

We have over 2 bln images from VK. And that was before the war, now we have much more data from VK and other social media sites. 

How accurate is your tech? There was this horrid video of Russians decapitating a Ukrainian POW. Could your tech identify them?

I saw the video at the meeting with Ukrainian government agencies and I just couldn’t make myself look. But our tech is quite accurate and surprisingly effective in such cases, if there is a face or part of a face visible. 

I could show you some examples we cannot share. There were photos of dead Russian soldiers with faces and bodies mutilated to the point of being unrecognizable but still, Clearview was able to match those with VK profiles. 

Even as software engineers we are constantly surprised by what AI can do, it’s on the verge of magic.

There is an agency in the US called the National Institute of Standards and Technology (NIST) that tests thousands of algorithms o facial recognition. And ours is the second best in the world, number one is a Chinese company. One of the tests is to pick a particular photo out of 12 mln. So our accuracy is about 99.85%. 

 And even if our service should make a mistake, Ukrainian agencies always make sure to verify the info.  

Are there cases of people being identified and prosecuted due to your tech?

There was a video of Ukrainian POWs shot in the head on CNN and I remember texting a National Police representative about it, and Clearview was used successfully in that identification. 

There is another thing to it because with this level of deanonymization if you are on the Russian side you might just start thinking – do you really want to go to war if they know who you are? This might be the very first-time war criminals have nowhere to hide. 

Also, Clearview could be used to find missing and kidnapped kids. We have a feature that gives an alert when a particular missing child has another photo appears on the internet. 

What are non-warfare use cases for your service?

Missing persons, and missing IDs, there’s a strong security need for such tech, even after the war ended. For example, If I’m opening a bank account and opt-in to use face recognition to log on to it, that could prevent loads of scams and fraud schemes. 

Many opinion leaders in tech share their concerns about AI use, because it is not quite controllable. What do you think?

Our philosophy is that AI should be a regulated technology. That’s why we only sell it to government agencies and law enforcement. If we’d sold it to anyone it would be a lot more of a misusage. ChatGPT has lots of potential and many people use it, but we still do not know all the bonuses and downfalls of such tech. I think there’s gonna be a lot more positives than negatives about it. But still tech companies should be more responsible about it. They hold lots of power and responsibility comes with it. But I’m still a huge believer in AI. 

This war has been named the war of technologies many times. Do you agree? 

There’s a lot of new tech that could help to win a war. And I believe Ukraine will win it. The first reason is the resolve of Ukrainians and morale being really high. But I do think that it is one of the first wars in history where digital tech has a lot of impact, the first digitally enabled war. 

It is basically streamed online and it helped Ukraine to gather so much support and isolate Russia. War atrocities are hard to look upon but being constantly present online they are hard to look away from. All the imagery from cell phones, satellites, and CCTV could also be used in future trials to condemn those who are responsible.

The goal of the project was to make a cheap UAV adapted to solving combat tasks. Particularly, in regard of overcoming the EW and anti-aircraft defence of the enemy. According to Yatsenko, there was a case when one of the drones handed over to the army could not be shot down by the enemy for 10 days. So, to destroy it, they used a BUK missile. That is, they spent $200,000 on a basic UAV model costing $5,000.

The editorial staff of AIN.Capital publishes a small interview with Yatsenko about how production operates now and how good the drones are at work.

You said that the goal of the project: cheap and efficient drones. Is it possible to make a UAV that costs, say, less than $100,000?

Yes, the Dovbush T10 UAV costs UAH 500,000, and I believe that mid-range UAVs with conventional optics should not cost any more. Anything that sells for more than $15,000 is speculation on war.

At what stage is the project now?

Currently, Dovbush is a mid-range UAV on an operational-tactical level with the ability to work as an artillery adjuster at a range of up to 35 km, in particular, using its inertial navigation system if there is no GPS signal, or as an impact drone with a payload of up to 12 kg of munition.

Is it possible to purchase components?

Almost all of our components are of our own production.

How are your drones performing on the front line?

Usage on the front line depends on the skill of the operators. The omnipresent use of EW significantly raises the bar for such skills. But it solves the tasks that it is capable of.

Can you talk about the scale of production, how many UAVs are produced per month?

Unfortunately, I cannot provide figures on the scale of production. But for now, these are industrial volumes.

What happens with the drones after? Sell or transfer to the military?

All aircraft are handed over to the Armed Forces free of charge after training and passing exams. There is a request for the purchase of our UAVs from the Ministry of Defence.

What do you plan to do next?

We plan to double the production capacity. The total investment in the equipment has now exceeded $3 million, the total investment is $8 million. The plans are to start production of a DJI Mavic analogue but with the use of a EW-protected control channel.

AIN.Capital found out why Nova Poshta is not afraid of competition in the Polish market, how it is doing in Moldova, and what the company’s plans are for 2023.

Now Poland is the second-large market of Nova Poshta beyond Ukraine. Why Poland? Why is this market so attractive for the company?

Statistics say over 9 million people left Ukraine (Reuters referring to the United Nations High Commissioner for Refugees), three million of which Poland has welcomed. During the full-scale Russian invasion, we have got an increasingly growing number of requests like: “When will Nova Poshta follow Ukrainians who are temporarily abroad?” We knew people needed to send their luggage from home while leaving with a minimum in hand. So that’s how we introduced our new product, a package from home in Ukraine to Europe with a 75% discount.

But we had plans for Poland before the big war. And it just forced us to follow our clients who migrated from Ukraine. So we started looking for a credible partner in Poland with an extensive network and close to Ukrainians, allowing them to receive packages from home comfortably. Our choice was InPost, which has the largest parcel locker network in Poland (about 20,000) and courier delivery to any settlement on the Polish map.

Since then, Ukrainians got a chance to receive their belongings from home safely. This partnership also resulted in 2.5 times cost decrease for the delivery to Poland. We also planned to help our citizens quickly and easily send parcels home and back. So our next step was opening our own offices in Poland with those two services: “A package from home” and “A package for home.”

We are not currently competing with local postal operators in Poland. We focus only on helping our displaced people from Ukraine.

How many post offices do you have in Poland? What services are available there?

We opened our first post office in Warsaw on October 3. Today, there are 18 Nova Post locations in eight Polish cities: Six of them are in Warsaw, two each in Krakow, Poznan, Gdansk, Wroclaw, Lublin, and one each in Rzeszów and Łódź. To open our branches, we are looking for places with a concentration of our citizens.

All our branches are open every day, and we hire Ukrainians to work as operators. The delivery time takes an average of five days.

You can send clothes, shoes, food products in its original packaging, appliances, generators, batteries, etc. However, there is a list of goods that are not allowed to be shipped by customs, such as tobacco, alcohol, narcotic substances, money, medicines, etc. You can find the full list here.

You can also easily send a parcel from any Nova Poshta office in Ukraine to Poland: to a Nova Post branch, to pick up station or by inPost courier delivery.

What are your first operation results in Poland? What are your numbers?

At the beginning of October 2022, 90 to 100 parcels went to Ukraine daily. This number has been assured thanks to the NP Shopping service as well, which was launched long before. Our customers can buy anything online in Europe, and we deliver it by using our warehouses.

Every new point of sale in Poland resulted in growing revenue. Nowadays, 800 parcels are sent from Ukraine to Poland daily, 25% of which are conducted between Nova Poshta units, and 1,500 go in the opposite direction, with a 55% share correspondingly. Warm clothes like coats, jackets, and boots are the most sent to Poland, and personal summer things return to Ukraine.

What is about Moldova? Please share some information about locations, services, and market numbers there.

In 2014, Nova Poshta entered the Moldovan courier delivery market. In 2021, we had 19 standalone post offices in the biggest cities countrywide (Chișinău, Bălți, Cahul, Edineț, Căușeni, Orhei, Fălești, etc.) with the largest locker network, including 300 units.

Today, the company is on TOP 3 Express Delivery Providers in Moldova. Last few years, there was a stable growth of 20-25% per annum. For example, 2021 ended with 216,000 parcels and cargo. And for 9 months of 2022, we already have reached 308,000 or 30% more.

In our offices, customers can use the whole package of services, from the in-country parcel and document delivery to cargo delivery worldwide. Most ordered in Moldova are goods in beauty & health and home electronics categories.

To support Ukrainian refugees in Moldova, we decided to lower our rates double. We want our citizens to have a stable and easy connection with their homeland. This year, we will continue to develop the network of post offices and parcel lockers in Moldova, introduce new digital tools, and improve our service to make it more comfortable and convenient for customers to use the services.

Nova Poshta Moldova also actively participates in humanitarian aid activities. Since March 2022, Nova Poshta, in cooperation with the Congress of Ukrainians in Moldova, delivered over 10,000 kg of humanitarian aid to charitable organizations and hospitals in Ukraine. It was drugs and essential medical equipment.

What other markets does Nova Poshta operate in?

We currently have our own post offices and pick-up stations in three countries: Ukraine, Moldova, and Poland. However, our Nova Poshta Global can deliver an international parcel or cargo from Ukraine to 200 countries and territories of the world.

Also, for Ukrainians who want to shop on the websites of international online stores that do not offer direct delivery to Ukraine, Nova Poshta Global has developed the NP Shopping service. This service helps people to buy clothes, appliances, household items and more from online stores in nine countries: The United States, the United Kingdom, Germany, Italy, Poland, France, Spain, Turkey, and the Czech Republic, and order delivery to any Nova Poshta post office or pick-up station.

Please tell us about the plans of Nova Poshta for both the Ukrainian and global markets. Which countries or cities are waiting?

This year, we are going to open two new terminals in Odesa and Kyiv. The construction works renewed in the summer. We will continue to automate operational routines to accelerate the delivery.

Nova Poshta will continue its foreign expansion in neighboring countries. In 2023, our financial company NovaPay will launch its mobile app and conquer Europe as a financial service.

We will also improve our NP Shopping service and make it so simple that when a customer enters the app, it will be like visiting a regular online store. We continue to negotiate aircraft for our own airline, and we will be able to tell you more about this later. The plans are ambitious, as always.

In September, NovaPay opened an office in Lithuania. Have you already hired a team? What is the team working on?

We want to unite Ukrainian families and friends separated by the war. We want to strengthen Ukrainian business in the world, and provide foreigners with not only high-quality logistics, but also financial services. To achieve this ambitious goal, NovaPay decided to open an office in Europe.

Currently, part of the senior management is working in Vilnius to form a team. We plan to obtain an EMI (Electronic Money Institution) license in Lithuania. The EMI license gives you the right to provide payment services to customers, open accounts, issue payment cards, and much more.

According to Lithuanian law, in order to obtain a license, a company must have financial monitoring, lawyers, accountants, and other employees on site. We are hiring the specialists who understand the intricacies of the local market and the Baltic countries.

What are NovaPay’s global development plans?

The discussion about entering the international market has continued for several years. As a result, we plan to enter the European market in two significant areas:

1. Supporting financial transactions at Nova Poshta offices abroad, similar to our Ukrainian business.

Nova Poshta is expanding and entering European markets. NovaPay’s goal in this project is to support all the financial services abroad provided for Ukrainians, plus cross-border transactions, lending, and many other benefits.

However, for NovaPay to start operating fully in Europe, we must obtain licenses and certification in the European Union.

• We plan to develop a separate financial service, primarily for Ukrainians and secondarily for Europeans, which will be localized for several markets first.

The project’s announcement will depend on how quickly we get the license. We will make a big announcement after obtaining permits and developing the product, which we are actively working on.

You were supposed to get $5 million from BGV Trident Capital, but you didn’t get. Why did that happen?

It was a classic force majeure situation. We concluded and signed an agreement and should have received the money on March 1, 2022. But a full-scale war broke out. It was a very understandable reason for not fulfilling such an agreement. The investor explained his decision by saying that with the outbreak of the war, there were problems needed to be solved. So, they paused the investment.

We had to survive at that time, so we evacuated, started working on the new projects, and looking for a new investor.

How have you been surviving? How was it for you to be in the middle of a war?

We weren’t actually prepared for it. I spoke to my team a few days before the invasion: “A war could not reach Kyiv. It is nonsense because if they would attack, we will fight them back. They do not have enough troops to take Kyiv. Russia will have terrible losses.” I thought then that Russians had some clue in their heads. I was sure that Russia would never do such a stupid thing. But unfortunately, it appeared I was wrong. The luck became a bad joke, and I had to organize people and business relocation in a rush.

On the first day of the war, we did not think about business — all thoughts were about ensuring the safety of colleagues, family, and friends. We returned to trying to save the company only the next day.

Your company is a hardware startup. How difficult was it to transport all the equipment and robots?

If Nova Poshta hadn’t worked, it would be practically impossible. Those days, everybody was evacuating, and all trucks were fully loaded. They gave us trucks and drivers for free. At the time, it was unclear where Russian troops were, in fact. There was news that their paratroopers landed next to the capital. However, the information was constantly changing. It seemed possible to face invaders everywhere you might have come.

Finally, we decided to move when we were assured that Nova Poshta will provide us with a test facility in Mukachevo for the project we were working on in Bila Tserkva. The demounting, loading, and transportation to Mukachevo took only a day.

By the way, it was more difficult to relocate not the equipment but the people. There was no accommodation at all. It was impossible to place our team together, so our employees moved to different cities in western Ukraine. Some of them had to drive 2-3 hours to the office.

Housing prices were also unbelievable: you had to pay for a 2-bedroom apartment in Mukachevo like you would pay for 3-4 apartments in Kyiv. But there were no options.

Could you share some details on the Bila Tserkva project for Nova Poshta? Was it the same you had to evacuate?

Before the full-scale Russian invasion of Ukraine, we performed robot tests there but didn’t start production yet (so the clients and staff hadn’t used the robots).

After relocating to Mukachevo, we continued with tests to guarantee a smooth launch. After Russian forces ran out of the Kyiv region in April, we returned with all the hardware in May and launched our robots in August, as they should be.

How did you become acquainted with SMRK and raise investment during the war?

We have known Vlad Tislenko (Editor’s note: SMRK partner) since 2017. Back then, I told him about my dream: to create industrial robots. We kept in touch, and even before the war, were communicating with his investment fund, but at that time, we had no projects under development to show them. Besides, before the war, as we said, we had attracted other investments (which we have never received).

The fact that we could launch a commercial project despite such difficult conditions: the war, lack of funds, and having to relocate, was the crucial criterion for the investors, which ultimately affected their positive decision. After all, most hardware projects do not even reach the market in peacetime. Developing hardware is hard — that is true. Of course, the war affects investors’ decisions and startup evaluations. Business is business, and any evaluation considers risks, which are high for Ukrainian businesses right now.

You had previously negotiated a $5 million round, but this time you only raised $1.5 million. Was the war the reason for that?

We could have raised even more. The sum was affected not by the war itself, but by the fact that we changed our plans because of the war. We were supposed to spend $5 million on building a robot factory in Kyiv. But we decided it was too risky to build it now and started manufacturing robots in the existing factory under contract. So we needed less money.

I would not say that investors have less money now. They are simply investing less frequently because of the fall in the global market and the financial crisis. Investment companies have money, but startups just need to work harder now.

How do your robots look now, and what can they do? Do you plan to expand the line?

The production line remains the same, but we made some improvements, for example, for the sorting robot. Sorting is an essential process in a warehouse. Postal companies need to sort thousands of packages in various directions every day. In big companies, thousands of employees work with costly, many-million-euro worth sorting lines, like in airports.

However, every line requires human operators who put and take packages off the line. Our robots can triple (if there are no sorting lines in use) or double (if there are) warehouse human work efficiency.

We have another robot that transports racks. It would be proficient in fulfillment centers that process online shop orders. For instance, there is an order with 10 articles. Either it’s a guy running from one point to another to get all the stuff or a robot approaching a standing operator with racks. In the latter case, the human order processing effectiveness is multiplied by five.

If you visit any warehouse, you will notice that employees there run a lot. On average, an employee of a warehouse can run up to 10 kilometers per workday. Our task is to transport goods by robots from point A to point B, so that warehouse employees run less. If robots do all the moving of goods around the warehouse, the efficiency of such a warehouse increases significantly.

It is too early to talk about new robot models. For that, we will need to increase the team and raise more funds. Some new work is possible next year.

A core of your technology is artificial intelligence. Could you explain what data it processes?

I think a robot, by default, is a physical incarnation of artificial intelligence. We apply AI in different areas. First is obstacles and people recognition during the movement. Our robots are safe. The AI can recognize close objects and decide whether the robot should take a detour or stop. Second, robots analyze the space with their sensors to calculate the current location. And third, we use AI to plan robot routes. Our system can operate 100 or 5,000 robots, and they must not interrupt each other movement.

The system plans an optimal way and even can forecast robots’ whereabouts in the future. That’s how we avoid jams in the storage.

What are you going to spend your raised funds on? Marketing, finding clients abroad, new people in the team?

We will spend most of the money on marketing and promotion in the US. We plan to open a sales office. So we are already looking for people who will deal with sales and business development there.

Now we are also looking for robotics engineers to join the Ukrainian team.

Who do you see as clients? Big postal companies, maybe Amazon (but is has its own robots, I suppose)?

We are particularly interested in postal operators. As for Amazon — why not? The fact is that there are no robots yet that will cover 100% of the processes in warehouses. So there are logistical complexities and challenges in every company’s warehouses, and that’s where we see an opportunity for us.

After a year of the war, are there any other occasions that affected the function of your robots?

For instance, the highest load of our hardware is during air alarms when employees must leave their workplaces. This is where robots can show their usefulness because they are not afraid of an air alarm and continue operation.

They also make it possible to work in the settlements and towns close to the front line where people can’t risk their lives. Our robots could be great in military storage.

AIN.Capital spoke to Pavlo and shares his story about building a business.

What was your experience and what did you do before moving?

I’ve never done anything else in my life but video: filming, and editing. It all started back in school: my friends and I used to get together in basements and play punk rock. I always had a camera with me, and we would shoot videos, edit them, and post them on YouTube. Then I ended up in a production company that made content for TV. We filmed news reports, interviews, and so on, which were later bought by channels to fill the airtime.

But I always wanted to be location independent, I wanted to be like the programmers who can code anywhere in the world.  I slowly studied motion design and animation, and did it in Ukraine for several years, building a portfolio. I was working as a freelancer in productions, collaborating a lot with NLO-TV, and local Cherkasy TV channels. However, I also started looking for clients abroad.

Why did you decide to move to the USA?

I believe that the decision to move was a logical one in my career.  I wanted to see if I could live and work there initially. I worked on Upwork at the time and had some clients from the US. I thought it would be cool to go and meet them. Maybe they would introduce me to someone, and recommend my services. The plan was rather slow: to go to the US, do some networking, return to Ukraine, and work from here. But things turned out differently.

When I left for the States, I had only a backpack with me, because I didn’t plan to stay. A few big clients came up pretty quickly, I decided to stay until my visa expired, and six months later I had already launched a company there. When I was leaving Ukraine, I didn’t even say a proper goodbye to my parents, thinking I would return in a few months. In the end, I managed to return 3.5 years later.

How was your move?

Of all the possible places in the United States, I chose New York, which is one of the most expensive locations. At that time, I didn’t have a lot of clients to pay for a permanent place to live. So I rented a room for the first couple of weeks and set myself a deadline: I had to earn enough money to rent a decent place during this time. When I arrived in the US, I had $2000 on my card. I didn’t even have my own website.

You have a story about how you asked someone in a coffee shop for a Wi-Fi password, and as a result, they ordered your services. How did you find your first customers?

It was my first week in New York, I was in a coffee shop doing something on my laptop and asked my neighbor for the Wi-Fi password. We started chatting, and it turned out that he ran a startup that was in need of a video, so he offered to work together. I had heard before that it is common here to tell you how cool you are and discuss joint projects, but then nothing actually happens. But he called the next day, made a job order, and even paid in advance.

This gave me the faith to believe in myself. I’m a guy from Ukraine, I moved to New York, even though it seemed like New York was the best and it was impossible to make it here. But I did it.

I was looking for my first clients at conferences, meetups, and some sort of hangouts where people from the creative world gather. I just approached strangers, got to know them, showed them my work, and said that I could do creative design, animation, and motion design. And gradually it worked. I didn’t try to spread emails, I just went and met people. Some people immediately offered to work together, others recommended who I could approach and exchanged contacts.

I probably went on such client hunts 3-4 times a week, and it worked. Over time I realized that I wanted to work with big brands rather than startups.

Why is it so?

It is always more interesting to work with startups or a young, exciting company. However, from a business point of view, a startup always wants to pay less and make the coolest product. Sometimes I took projects from startups just to satisfy my creative streak.

In most cases, however, in recent years I have started targeting large companies: they are more or less stable and pay well. I wanted to switch from a person who “makes videos for everyone” to a specialist who makes more specialized content that not everyone is capable of making. Large corporate clients are ideal in this regard because a lot of people will be able to see my work.

You have worked for Microsoft, Puma, and the City Hall of New York. How did you start working with them?

New York is the perfect city to meet the right person in a random place. I was introduced to the agency that did the New York City Hall project by my friends at a party. They did all the creatives for the mayor’s office, all the stuff that could be seen in the subway, on billboards, and on New York’s Time Square.

I joined them as a creative director, developing billboards and subway kiosks, and making videos for the SMM campaign. It was very cool that the then-mayor of the city tagged me in an Instagram post.

The cherry on top was a video projection onto Washington Square Park’s arch. The video was reposted by a bunch of people. It was a very cool project, not particularly well paid, but it became a strong and recognizable case for the portfolio.

New York is one of the world’s coolest cities, and it was nice to walk around and see my work. Some guy from Cherkasy, Ukraine, came here thinking: “What can I possibly give to New York?”. But it turned out that I brought something to this city, and made it better.

Tell us about the JPMorgan case, how did you start working with them?

That’s an interesting story. I was in a “Motion Designers of New York” Facebook group and saw that someone was looking for a motion designer for a project. I responded but was ignored. A few months later, they were looking for a motion designer again, and this time we got in touch (and I didn’t even know who it was). It happened to be the creative producer of JPMorgan.

So I go to a meeting with them in their skyscraper on Park Avenue, go up to some super-high floor, we sit down at a table, and I realize that I know nothing about the financial world. And the project required me to explain some complex financial terminology to users through motion design.

Still, as they say, fake it till you make it. So I told them I was quite good at it and started working. To be honest, it would have been hard for them to find any motion designer who knew a lot about finance.

We worked with them for a year, it was my only client, and I learned a lot. When I added that I worked with JPMorgan on LinkedIn, other banks and investment companies started contacting me. That’s how I started working with Fidelity Investments, which is one of the largest investment companies in the United States, and I’ve been working with them for 3 years now. Our main task is to educate people about investing and to make these training videos fun: so that a person can watch 3-minute videos and understand how to manage their account, for example.

Were there any unsuccessful cases or any mistakes?

There was a project that I still feel ashamed of – a case with Google. I had an acquaintance with whom I did some small projects, and six months later he offered me to work with Google. He invited me to their office (one of the coolest offices I’ve ever seen in my life). He told me a little bit about the challenges of working with Google:

that sometimes they don’t have a clear vision of what they want to do, and it sounds like: “we want something, but you have to tell us what it is”. You have to think like a “Google person”.

I gathered a team for that project, it was a very specific, very technical motion design, somewhat related to UX/UI. We kept pitching them different ideas, and they kept responding: “Doesn’t feel like Google”. We tried our best and offered the best options, but everything was “not right”.

In the end, the time was running out, the deadline was tight, and they agreed to one option, which we modified several times. We submitted the project and got the money, but the guy never contacted me again. I even wrote to him several times, asking if there was anything from Google, but he didn’t answer. Google hasn’t used our work anywhere, even though we tried very hard to do a great job. It’s just that we probably didn’t do it the way Google saw it. We didn’t turn out to be “Google-minded”. Although it’s quite possible that the manager who led this project didn’t know how it should be done, he mentioned that he hadn’t been in the company for long.

Which project are you proud of?

We did a cool project for Microsoft, and both we and they really liked it. We worked successfully with smart Europe (you can watch the video here).

It was also interesting working with Puma. It was one of my first experiences working specifically for social media: all the content was vertical, all for stories (stories, by the way, were just beginning to become a tool for business promotion).

It was a challenging but interesting project: we had to be as technical as possible and handle everything professionally, but in a way that made the videos look sincere and natural at the same time. For example, part of our job was to get content from Puma influencers, people like Selena Gomez or Formula 1 champions, and make it look like they filmed it themselves.

It was a very cool experience because I worked with one of the coolest agencies in New York, they are located in Soho, and it was a dream come true for me. I always imagined myself as a creative director walking through Soho with a cup of coffee for a meeting to some cool office and team. This was an incredibly creative environment: people do very professional work and right away go up to the roof to do yoga, everyone in the office has a dog, everyone is dressed casually, and some got tattoos. The ultimate New York experience.

The project turned out to be great because the tasks and the team were great. Puma even sent me a bottle of whiskey afterward.

We can also mention one educational project. I met the guys from Fresh Ed at a tech conference in New York, and they presented their project, the idea of which is that they make rap for children in schools: about math, history, and literature. I offered them to create a series of animated music videos of their tracks for literature and history classes. The following day, we were already sitting in their studio in Soho and coming up with ideas for the videos.

You mentioned that you incorporated a company in the US, what does this mean for the business? Was it difficult to do?

It was easy to set up the company, we just needed an accountant to do everything. It cost up to a thousand dollars to register the name, address, and office. Our company has a New York address, and this is important for our clients. Sometimes we were told: “We have an office in Soho and we would like to work with those who understand the Soho culture.” So, for a creative business in New York, having a local office that can be found on Google Maps helps a lot.

Are there any specifics of doing business in the US compared to Ukraine?

I’ve hardly lived in Ukraine for the last 9 years, so I can’t compare. But there are no pitfalls to doing business in the United States. If you want to work and earn money, there’s everything for that here. You do business and you feel safe, you don’t have to be afraid that you will have a tax nightmare or get raided.

Do you monitor the war or contribute to the aid?

Absolutely. My family, my parents, and my friends are in Ukraine. I try to help as much as I can, to support the cause financially. All my clients know that I am Ukrainian, and they always ask me how things are going. I tell them the news. In general, Americans are very supportive of Ukraine. 

There is no one like it.