Startups in new Ukraine: How IT-sphere helps to restart economy

Startups in new Ukraine: How IT-sphere helps to restart economy

The demand for Ukrainian startups on the global market is growing annually. Despite the continuing financial crisis, the IT-sphere shows positive results, especially in the sector that is focused on foreign users. The buyers for such projects are often large companies from the US and Europe.

These days startup investments are considered to be the most cost-effective types of capital investing. At relatively low cost of development, such projects are sold for millions (or even billions) of dollars. It depends on the startup complexity, as well as the appeal of the investment. The prices quoted in hundreds of thousands dollars look relatively modest against such a backdrop. Even though the majority of the projects are similar. One million dollars for a project is not a limit at all.

IT-product investors know plenty of super successful startup promotion cases.

Thus, Y Combinator, Looksery funded Petcube project, having invested around $5 million in it in due time. After a while it was purchased by Snapchat – at the cost of $150 million by that time. Google purchased Viewdle startup for $45 million in due time.

Great interest among market participants was expressed in the acquisition of the Canadian company Mobify. The final sales price, paid by a buyer for the startup Jeapie, was never announced. But the rumor is that it was over 10 million dollars.

However, not only the biggest IT deals allow the investors build up capital rapidly. It’s a common thing when the sum of selling of ordinary projects is way above the initial investment. Both developers and investors, who inject the capital in the early stages, profit from this.

The overall price of the online lending service Taplend reached 120 thousand dollars. By the way, the startup has successfully entered the US market. Basically the same thing happened to Kwambio, a platform for designers and 3D printer users, that was purchased at the price of $650 ths. by the TechStars company from Boston. Its European subsidiary eventually acquired Preply, a platform for finding private English tutors. The deal resulted in 100 ths. dollars.

What’s new on the Ukrainian startups market?

An influential British newspaper “Independent” in the article «Startups at the

heart of a new Ukraine» dated May, 2016 acknowledged a new Ukrainian startup BetOnMoney.com, that has been in headlines of Russian and Ukrainian media a number of times.

Investment appeal of the given startup is indirectly confirmed by the fact that the project founder, Denis Minin, a famous sportsman, the founder of an international organization Street Workout, who regularly stays in contact with American team Barbarians and its leader Hannibal For King, rejects all the proposals of project purchase that he has received up to now.

A number of financial analysts conclude that the sportsman has ambitious plans

to join the ranks of successful businessmen who have created the most expensive internet projects from scratch. It would be interesting to know if he ever gets an offer that will make him change his mind.

Moreover in 2016 a number of Ukrainian startups have already managed to impress the market with new ideas and incomes for investors.

What is the reason for the growing attractiveness of the Ukrainian startups?

According to expert opinions, the popularity of Ukrainian startups can be explained with four principal factors:

1. Low cost of project development with highly qualified specialists. The reasons for this situation are considered to be the low wages in Ukraine and instability of the national currency.

2. Ukrainian investors refrain from investing their capital in tangible assets due to the high economic and political risks. But they put money to good use by developing startups, which later on move abroad.

3. High level of development of IT technologies and the sphere of startups promotion.

4. High level of expectations from the Ukrainian startups, as investors tend to encourage and favor such projects.

However, all of these benefits will work out solely on the condition that the project idea is good enough to obtain thousands of target audience users. Otherwise, you are unlikely to get investors interested in your project.

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