Ukrainian Venture Capital and Private Equity Overview 201823 Apr 2019

Ukrainian Venture Capital and Private Equity Association (UVCA) has presented its annual overview of Ukrainian investment market - Ukrainian Venture Capital and Private Equity Overview 2018. Deloitte - the leading audit company in Ukraine, was the research partner.

The Ukrainian investment market is growing steadily, and the total volume of venture investments into Ukrainian IT companies has reached $336.9M, which is almost one and a half times more than the last year's maximum.

The number of deals has also increased compared to 2017. Last year (2017) 89 deals were made, whereas by the end of 2018 their number totalled 115.

Ukrainian Investment Market Overview 2018

This year M&A transactions (mergers and acquisitions) were included in the Overview for the first time. In 2018, there were 7 transactions worth $25.2M.

Last year, the overview also covered statistics on fund raising through ICO, which was on the rise. The results of this year confirm expectations and forecasts of the instability of the instrument: the number of deals fell from 19 to 4, and the amount of investment from $160.3M to $58.3M. The reason for the decline of investors’ interest can be explained by the weakened trust and the demand for guarantees through tangible assets, profit or income of the company. This has led to the development of STO (Security Tokens Offering).

Online service & Software companies prevail by the number of deals, while Software and Hardware companies are in the lead by deal value.

Overall, the average VC check this year increased by 112% compared to 2017 and amounted to $918K.

Another 2018 trend is the active participation of domestic corporations and banks in the innovation sector supporting incubation programs and accelerators and investing in startups.
In general, the positive changes in the sector (both in terms of quality and quantity) are obvious, which is why in the Overview, we tried not only to analyze the market as a whole, but also noted the best and brightest "innovative stars" this year.
The growth of investments we mention in the Overview is possible only thanks to the dedication and constant work of all of our investors, entrepreneurs, and our team. We are grateful to our members for being a part of the Association - the voice of venture capital and private equity in Ukraine! And for those who are not yet with us - join, invest and grow together with UVCA!

Olga Afanasyeva
Executive Director of UVCA

In the annual investment Overview, UVCA and Deloitte have also conducted research on market forecasts among active investors. The funds are positively evaluating the prospects for the development of Ukrainian innovation market, and the presence of competitive advantage, market volume and team strength are among the key factors in making investment decisions.

The volume of VC investments in Ukraine continues to grow along with the market of direct investments, despite some political instability. This suggests that the IT sector and innovation sector are the ones least exposed to political risks. The conclusions of the research again confirm the competitiveness of Ukrainian startups on the international market, professionalism of specialists, as well as the quality of products produced in Ukraine. We are confident that with the improvement of the geopolitical situation in the country, the volume of investments into other sectors will also increase.
The mission of Deloitte is to make an impact that matters. Through such projects potential investors and other market players have the opportunity to see the real picture of what's happening in the sector. Ukraine has something to be proud of. And our report is exactly about the prospects of the market for venture capital and private equity investment in Ukraine.

Vladimir Yumashev
Partner, Tax & Legal, Deloitte

Raising funds through crowdfunding platforms and grants remains a popular choice. Thus, in 2018 it is worth highlighting the 7 campaigns through which tech companies have raised $1.4M for their development. Startups received grants totaling $322.7K: 6 grants from the European Bank for Reconstruction and Development (EBRD) and 5 grants from the Open Data Challenge.