“A credit line from the EIB will allow us to accelerate the development of UNIT.City in Kyiv. This is an important signal for the market, proof that we are on the right track and have the support of European institutions,” commented Vasyl Khmelnytsky, Founder of UFuture holding company (which includes UNIT.City).

Funding details

The funding is provided under the European Commission and the EIB’s initiative InnovFin Science as part of Horizon 2020 innovation and research program.

InnovFin Science provides loans and equity financing for research institutes, universities, and research organizations. Thus, the EC improves access to funding for state and private organizations’ research and innovation projects.

The funding comes directly from the EIB and involves up to 10 tranches, minimum EUR 5 million each. UNIT HOLDINGS LLC, created by UFuture Group, will act as the borrower. The legal partner of the deal is Everlegal, and its financial partner is Ukrgazbank.

What will the money be spent on?

The financing was attracted under the Ukrainian Innovation Campus Project, which, according to the investors’ vision, will make UNIT.City one of the largest innovation and IT hubs in Central and Eastern Europe. It will create 549 permanent and 2,400 temporary jobs, as well as indirectly support 15,000 jobs at the tenant companies located in UNIT.City innovation park.

About half of the projected costs will be funded by the EIB. The bank’s money will be spent on building new UNIT.City campuses – B15, B16, B17, U1 – with a total area of 70,000 m².

The total project cost is estimated at EUR 110 million. It is planned to complete the project by 2023.

What will the campuses accommodate?

The innovation campuses will feature:

• private learning IT center;
• multi-functional adaptive areas for a number of office spaces;
• digital production labs (fablabs);
• communal facilities and a collaborative space;
• breakout rooms and premises for seminars and events;
• auxiliary and infrastructure facilities.

The most interesting market figures

• The most popular business model is SaaS (52%).
• Almost 77% of companies operate in b2b segments.
• 68.4% of R&D centers are located in Kyiv.
• Most of the companies’ revenue is generated by the Ukrainian market (39%). The US market is in second place (17%).

Labour market in Ukrainian MarTech and AdTech

• About 65% of companies have less than 40 employees.
• Approximately 25% of all specialists work in three companies: Depositphotos, Terrasoft, and MGID.

Similar practice can be found at many international events. For example, on the stands of the states at WebSummit they offer brochures with conditions for doing business, as well as state and private support programs. Sharing company catalogs is also not a new practice.

In the UNIT.City report, nine dozen companies are mentioned, but the principles of their selection are not described: investments, turnover, revenue per person, traffic, customers, staff, transactions. It is obvious only that the numbered list is not a rating: the first numbers in 2 of 4 categories are the sponsors of the report, and the established procedure often contradicts the data of AIN.UA on state and income of companies.

After reviewing the report, the editors of AIN.UA recalled 40 more companies that are not inferior to those listed, and often surpass them, but are not represented in any of the categories. Here is a partial list of such companies in alphabetical order. The list can be supplemented.

R&D

• Amadeus is a Spanish GDS (Global Distribution System), one of the largest in the world used by airports and airlines for booking tickets. In 2017 its revenue amounted €4.852 billion, net income was €1.161 billion. The company has 300+ employees in Ukraine.
• GSN is an American social casino game developer. The company is a gaming division of Sony, the Ukrainian office originated from the purchased idle games in Zaporizhya. In 2019, the division has a $600-700 million value and fifty employees in the Kyiv office.
• Magento is an American open source platform for managing online stores with great R&D in Ukraine. In 2011, it was sold to eBay, in 2015 – to the investment company Permira, in 2018 –to Adobe for $1.7 billion. In 2017, the company’s revenue was estimated at $150 million. In 2018, it was decided to close down the Ukrainian office.
• NetEnt is a Swedish social casino game developer. In 2009, the company entered the IPO, revenue for 2017 was $178.7 million, and the Kyiv office counts 70+ people.
• OLX is a Dutch classifier, held in Ukraine on the basis of Slando.ua. It belongs to the South African group Naspers. According to InAU, OLX is one of the most popular sites in Ukraine.
• TransferWise is a British international money transfer service with an office in Cherkasy. The company’s revenue for 2018 is $151 million, net profit is $8 million.
• Ubisoft is a French developer of AAA games, best known for the Assassin’s Creed series. It was founded by the five Guillemot brothers, who, before the unfriendly takeover by the media holding Vivendi in 2016, also operated on another Ukrainian R&D, Gameloft. The latter were engaged in porting Ubisoft games to mobile devices and consoles. €1,732 billion was its revenue in 2018, with 400+ employees in Ukraine.
• Waze is an Israeli navigation service bought by Google for $1.3 billion. There is a small development team in Ukraine.
• Wix is ​​an Israeli website builder which made an IPO in 2013. There are about 300 people working in the Dnipro and Kyiv offices. The revenue for 2017 is $425.6 million.

Product

• Admixer is a large SSP, which allows publishers to automate the sale of traffic. The company had 6 thousand publishers with 17 billion views per month in 2017.
• Adtelligent (formerly VertaMedia) is a large advertising grid. In 2016, its revenue was $43 million.
• CEX is one of the largest Ukrainian crypto stocks. Over the past month, they have conducted transactions for $73 million.
• Hotline.ua and Price.ua are the largest price comparison sites. Hotline has 12.2 million visits per month.
• Invisible CRM is a developer of CRM, ERP and workflow solutions. It began as a Salesforce integration with Outlook.
• LetyShops is the largest cashback service in the CIS with an office in Vinnytsya. The total revenue of the stores from customers, led by the LetyShops team, is $35 million monthly.
• Livestream is a video streaming service with an office in Zaporizhya, in 2017 purchased by Vimeo.
• LUN is the largest in Ukraine (5 million visits per month) real estate offer aggregator. Under the brand Flatfy it operates in 30 countries around the world. The company has about 100 employees.
• Megogo is the largest video service in Eastern Europe for watching online video and TV. They have 50 million unique visitors per month.
• PDFFiller is a service for electronic document management, which began operating as solution for electronic signature and text recognition in pictures. Now the company has about 400 people, and the revenue as of 2016 was $10 million.
• Rabota.ua and Work.ua are the largest Ukrainian sites for job search, in December 2017 they exchanged shares.
• Rozetka is the largest Ukrainian online store. In August 2018, they bought a majority share in the largest Ukrainian marketplace EVO company (ex-Prom.ua) from Naspers for an amount that could range from $12 million to $15 million.
• Serpstat – a Netpeak’s company revenue, Serpstat’s developer, in 2016 was € 2.5 million.
• SkinsCash is a solution for exchanging and displaying game skins for real money outside the marketplace. In 2017, there were 1.7 million users, 95,000 transactions, and 912,000 items sold. On the basis of SkinsCash, the blockchain solution DMarket mentioned in the UNIT.City report was built. The latter recently fired 50 people, but this did not affect SkinsCash’s core business.
• StarLadder is the largest Ukrainian agency in the market of e-sports competitions and broadcasts.
• Talkable is a system for referral marketing in e-commerce from the co-founder of the auction of technological talents Hired Allan Grant (Mykhaylo Sapov). In 2018, Talkable customers earned $150 million through the system.
• Tickets.ua is one of the largest ticket searches and booking services in Ukraine. It is included in the Ticket Travel Network holding with 650 employees, 400 of which are located in Lviv. The GMV is €500 billion, the share of Ukraine is 12%.
• Uklon is Ukrainian car service online. The monthly audience was 500,000 people in 2015.
• Nova Poshta is the largest Ukrainian logistics operator with 174 million parcels delivered in the 2018, and more than 3,000 branches located throughout the country. The company has its own NovaPay payment system, the mobile application has 1.7 million users.
• PrivatBank is one of the most technological banks in Ukraine. Privat24 has 8.9 million users. 2,000 of bank employees are developers and engineers.

Startups

.IO (dashboards for media publishers, $1.5 million investment), 3DLOOK (solution for scanning the body followed by clothing selection, $1.4 million investment), ESM.one (esports tournament platform and analytics with revenue of $300 thousand for 2018), PromoRepublic (the service helps small and medium businesses and marketers to create content for social networks, which attracted $1.2 million investment), Djinni (service for anonymous job search in technology companies from the creator of the largest Ukrainian community of programmers DOU. Now there are 10 thousand questionnaires on the site).

Outsourcing

Cogniance (400+ people), Daxx (300 people), ISD (700+ people), Lohika (700+ people), OSF global (100 people), Provectus (400 people), SiteCore (200 people), etc.

Sales / Representative office

BlaBlaCar, Google, Microsoft, Payoneer.

UNIT.City notes that this guide is primarily intended for foreign investors and potential partners of Ukrainian companies. “Our goal was to create a product that Ukrainians would take with them to international events and together with the presentation of their project they represented the country and its achievements in recent years. Over the past 5 years, the growth dynamics of the Ukrainian IT industry is calculated in double digits. Therefore, today is the best time to open or expand your innovative business here. This guide will help international partners to make sure of this,” says Max Yakover, CEO and managing partner of UNIT.City.

General information

• About 185,000 developers and 4,000 tech companies operate in Ukraine. The technology sector became the country’s second export industry in 2018.
• 20% of the world’s leading companies have their offices based in Ukraine. Among them are Microsoft, Samsung, ABBY, Huawei and others.
• More than 100 of Fortune 500 companies use the services of Ukrainian companies. At the same time, 18 outsourcers from Ukraine are in the top 100 best outsourcing companies in the world.

Ukraine in the IT market

• Ukraine is the largest exporter of IT services in Europe.
• The country ranks 24 in the world in the attractiveness of software development. At the same time, Ukrainian developers are at the 11th place in the ranking of 50 countries with the best software developers according to the version of the HackerRank portal. And freelancers from Ukraine rank seventh in quality and efficiency in the world.
• According to UNIT.City, Ukrainian exports of IT services will be $5.4 billion in 2020 and $8.4 billion in 2025.
• More than 110 international companies and startups have opened R&D offices in Ukraine, more than half of them are located in Kyiv. The largest partners are the USA (45% of companies), the European Union and Israel. The expertise of Ukrainian R&D centers covers games, e-commerce, the Internet of things, as well as work with big data and artificial intelligence.

Investments and startups

• In 2017, companies and startups from Ukraine and the ones with Ukrainian roots made 44 deals for a total of $265 million, which is a record figure for the industry.
• The top largest public deals in 2017-2018 included Gitlab with a $130 million round (according to AIN.UA, the round was $110 million), Grammarly with a $110 million round and BitFury, which attracted $110 million.
• City also ranked the most promising Ukrainian startups. The top five included People.ai, monobank, Allset, Solar Gaps and Kwambio.

IT ecosystem

• More than 20 cities have created their own IT-clusters. The largest are Lviv IT Cluster, Kharkiv IT Cluster and Kyiv IT Cluster.
• In Ukraine, there are more than 50 co-workings and hubs. Most of them are located in Kyiv, Odesa and Lviv.
• Every year more than 1,000 events related to technology, start-ups and investments are held in Ukraine. The most ambitious ones are Lviv IT Arena, iForum and IT Weekend Ukraine.

To recap, Snap got its first office in Ukraine after the purchase of Odesa startup Looksery. The amount of the transaction conducted in 2015 amounted to $150 million (of which almost half came from premiums in the form of shares and payments). Over 200 developers work in the Snap residence in Odesa now. They are developing AR masks and related technologies.

Shares of Snap are now experiencing a fall. Since the beginning of 2018, the company’s value on the stock exchange has decreased by 55%. Now Snap’s capitalization does not exceed 7.83 billion. The number of daily active users of the service, according to the results of the financial statements for the third quarter is 186 million.

To participate in the program, candidates must possess basic technical knowledge and programming skills. The organizers will select students on a competitive basis. Selection for school includes online and offline testing, an interview, and an express course. At that stage, 40 best students will be selected to begin a full training in January 2019.

The program is designed for five months of study full time, completely in English.

Within the Cyber School, students will take intensive courses on the security of networks and applications, operating systems, reverse engineering, etc. The best graduates are promised to get guaranteed job offers.

The School was founded by Alexei Baranovskiy, associate professor of the Information Security Department of the Kyiv Polytechnic Institute, co-founder of the Ukrainian “white” hacker community “Hacken” Yegor Aushev, and creator of “uData School”, also known as UNIT.City managing partner – Dmytro Yeremin.

“There are about 40 universities in Ukraine that produce IT-specialists annually, and there are still not enough professionals in the field of cyber security. And, by the time the students graduate from universities – the relevance of the data is lost, new challenges appear, and the new graduates are simply not ready to face them,” – Baranovskiy explains.

According to Yeremin, today there are only a few hundred information security professionals in Ukraine (which does not prevent them from being the best in the world). The task of the school is to increase its number tenfold.

Maxim Bakhmatov commented, “We went out from VDNG, because we realized that we would spend a lot of time with uncertain result due to many unclear things, which take place in the legislative environment. For the same period of time here we will finish construction. It is a private business and private territory, and we can do here whatever we want based on the concept that we now develop and improve.”

We are going to make considerable investments to the project: for the period of four years the main and sole investor Vasiliy Khmelnitskiy intends to spend up to $200 million on UNIT.City. He said, “In the world such projects are commonly referred to as innovative parks. However, we would like to create something more than that – the whole innovative city that will become a unique ecosystem for companies, operating in the sphere of high-tech and creative industries.”

UNIT.City project goal is to integrate educative, business, cultural, medical, sports and entertainment facilities, aiming to provide small and medium-sized innovative business with access to all infrastructure and expertise, required for rapid development, in the same territory. Something like that was described by Dave Eggers in his book “The Circle”. This book will soon be filmed in a movie starring Emma Watson.

A city within a city

Now we have opened five facilities in UNIT.City, which will be described below. According to Maxim Bakhmatov’s evaluations, it is about 2% of the future city. The total area will cover around half a million of square meters.

By the way, the first stage of UNIT.City already makes quite strong impression. The territory with its buildings and decorative elements reminds well-known campuses of Google, Apple and other Silicon giants.

Total area of future innovative city is rather impressive – about 25 ha of the old Kyiv motorcycle factory, which is going to be fully built up. Construction works are in progress and, for today, the work is humming just behind the building of business campus.

Meanwhile, the team of UNIT demonstrated already finished facilities. Business campus, sports complex (free for residents) and café are located on the area of 4,000 square meters.

Another 3,000 square meters are occupied by free of charge programming school named UNIT.Factory that we were talking about earlier. It is the key educational element of the city that, in fact, UNIT.City started from. Here they also have one more educational project -Bionic University (course of studies started on March 1, 2017).

It is noteworthy that when AIN.UA had a tour of the school, all these new buildings in high-tech style were absent around the school. The city is growing with really high speed.

Who are those that UNIT.City is built for?

The center for entrepreneurship creative development, as partners see it, is primarily intended for representatives of innovative business: small Ukrainian and international product companies, R&D-centers and startups.

A building with mirror walls is the first business campus on the territory of the city, but not the last one. For today, 25 residents, including the well-known Ukrainian startup Concepter, the companies Forland and SmartFarming, the associations Hi Tech Office Ukraine, two laboratories: virtual reality (Sensorama) and 3D-prototyping (FabLab Fabricator), have settled in this campus.

The infrastructure is provided to the residents by a partner of UNIT.City —Technology Companies Development Center (TCDC). It is a project, focused on technological transformations of resident companies. TCDC render them assistance in search for ideas, talent management and team building. Project partners are represented by Kyiv-Mohila Business School and Hi Tech Office Ukraine.

Concepter will move to UNIT.City in May and will occupy the entire floor in business campus. Oleg Malenkov, a cofounder and COO of Concepter, told: “We have chosen UNIT.City, because it offers all required conditions to the companies, which create innovations in Ukraine and sell it throughout the world. We met these guys and grasped their vision. It is similar to ours. We also found out who our neighbors would be. We came here, viewed this place and liked it.”

Previously, office of Concepter was located in the notorious business center that the team was forced to move out. Today, the team of 30 people temporary works in coworking space.

Ukrainian creative agency Fedoriv, which, by the way, is engaged in brand development, communications and design for UNIT.City, will also become the resident of UNIT.City

Andrey Fedoriv, a founder and CEO of the agency, told: “We understand that there is a number of tools that we would like to work with, but have no skills to do it – it is not about classics, like SMM, but about certain experiments. Therefore, we decided to open here a new digital segment Fedoriv Digital Lab, and the experiments will be carried out within the framework of this segment.

Initial office of Fedoriv in UNIT.City will cover an area of 150 sq. m. Andrey Fedoriv shared his vision, “We are not going to make a classic office where people come in, sit at the desk and do their job. It will be like in case with Fedoriv Hub —multifunctional space. Fedoriv Hub proved that it is justified and makes a good story. In “Arena” we already have 1,000 sq. m, and we will continue building up capacities there and, at the same time, will make progress here.”

Andrey Fedoriv also added that it is important for the agency to stay within UNIT.City, in order to remain an innovator in their sphere. He explained, “The clients have divided into two categories: those, who are in the future or seek to be there, and those, who stay in ultratraditional categories. We can cooperate with the companies, which deal with cheese and alcohol in Ukraine and Belarus, as well as with startup, incorporated in Germany and focused on Swiss market. Although, these companies are very different mentally. That is why we need to have faster speed of our internal changes in the agency than the speed of external transformations.”

How campuses work

Business campuses work in the format of club offices under sharing principle. Max Yekover clarified, “Imagine, you have a small company intended for 10 employees. In fact, all that you need is a small premise. You don’t need all other office infrastructure – meeting-rooms, etc. Therefore, you share this infrastructure with other companies. WeWork operates according to the same principle.”

Sharing principle is one of the key ideas of business campus organization in UNIT.City. Therefore, it is not so important how the offices are built in here, but it is much more critical who dwells in these offices. Yakover exemplifies, “Upon completion of repair works, Fab Lab will move in. It means that the opportunity to prototype will be provided in UNIT.City.” Accordingly, presence of Sensorama provides the residents with access to their own VR- and AMR-laboratory.

What is next?

By the end of 2017 they promise to open 20,000 sq. m more for business campuses on the territory of UNIT.City. If the first premises of UNIT.City are the reconstructed buildings of motorcycle factory, the new ones are built from scratch. These facilities will have high ceilings, special ventilation system, required for hardware laboratories, and other constructive solutions, taking into account demands of future residents.

The first building of the second stage is half-finished – the construction completion date is scheduled for June. A huge coworking space will be located on the first two floors and club offices – on the third floor.

Nearby they lay foundation for one more object, much larger in scale. According to Max Yakover, it will be a seven-storied campus with an area of 11,000 sq.m. Old buildings of motorcycle factory will be demolished. On this place they will build a few more facilities that will be finished approximately in November and January next year.

Max Yakover states, “All this will be completed during the next 12 calendar months. Now we hold negotiations with those who will become residents of these spaces. We have a lot of interested people. One building has already been sold for leasing.

UNIT.City expects to become the key location for creative layer of Ukrainians, particularly, those who are engaged in IT sphere. In fact, it will make the project a competitor for such projects as “Chasopys”. However, Max Yakover, being the owner of “Chasopys”, does not worry about it. He explained, “In “Chasopys” I have a management team and here – I am a management team. We will compete, but it is absolutely different scales. “Chasopys” is a nice place in the downtown of Kyiv. And here we are building the city! We also don’t worry about Creative Quarter. We wish them good luck and are ready to cooperate, cooperate with everyone.”

What does the government think?

According to evaluations of Khmelnitskiy, UNIT.City will contribute to creation of up to 15,000 high-paid jobs and will provide the talented youth with an opportunity for self-realization within their own country, thereby reducing brain drain.

Such aspirations and noble intentions, of course, draw attention of senior state officials. On the day of official opening of UNIT.City, Vladimir Groysman, the Prime Minister of Ukraine, visited the territory of the city. He personally inspected the facilities and declared that the government will create all conditions for development of the innovative city.

As for now, the team of UNIT.City is just doing its job. Max Yakover promises that we have a lot of interesting discoveries ahead.