KMCore, a holding company that manages the assets of high-tech companies, makes money by investing in innovation. It has parked more than $100 million in the last six years in a portfolio that focuses on three fields: information technology, microelectronics and nanotechnologies.
Bohdan Kupych, the company’s Canadian-born vice president for business development, says that although Ukraine has huge potential to pioneer technical innovations, it is not utilizing it.
A lot of people are talking about the hot IT market, but few understand what it is, he says.
“Those are mostly the outsourcing companies that hire specialists, developing products for export,” Kupych told the Kyiv Post. “By the way, the IT market – in terms of system integration and selling of computers – has fallen by 50 percent in each of the last two years; we’re now back at the level of 1998. People are not buying computer systems; neither do they care about their modernization.”
IT companies sell Ukrainian brainpower abroad, Kupych said, adding that those people have bright ideas and want to make innovative devices here, but they lack financing, as well as government support. Ukrainian government officials “are putting out fires, not thinking 20 years ahead.”
Ukraine’s Defense Ministry is one of the government agencies KM Core has been talking to. “Our idea for the Defense Ministry is that the devices they need to buy have to be Ukrainian – if there are ‘made in Ukraine’ ones,” Kupych said. “The ministry also has to help (Ukrainian companies) to produce new technologies.”
With this in mind, the firm about a year-and-a-half ago started the Ukrainian Advanced Project Agency (UaRpa) to develop defense and security products. The agency is currently working on at least 18 projects such as anti-sniper technologies, secure radio communications and tablet computers for artillery systems.
While most of them are still under development, UaRpa has already sent 5,000 tablet PCs to Ukraine’s army in the wartorn Donbas, Kupych said.
KM Core provides UaRpa with seed money so that developers have enough money to build a prototype – a key element for drawing in investors.
According to Kupych, his company works in this way with each of its portfolio companies. Apart from UaRpa, KM Core has six innovation startups. All of them are at the early stage of development, with each showing potential, Kupych said.
The startups are developing dual-use drones for military and civilian purposes, nanopowders, microchips, software products for physical microcircuit verification, smart farming technologies, and virtual reality devices – from interactive schoolboards to Kalashnikov simulators.
Physical microcircuit verification, Kupych explained, involves using a device to perform final checks on whether a microchip actually works.
“If you go to production and find out that your chip has flaws and it isn’t working, it could cost you millions of dollars – plus you’re wasting time,” Kupych said. “Microchips are getting smaller and smaller, and we need software to verify these chips.”
Smart agriculture, according to Kupych, is another important field.
“Ukraine has black soil, but Ukraine’s agriculture is five times less productive than in Germany, which hasn’t got such good soil,” Kupych said. “Ukraine needs new technology.”
KM Core’s e-farmer project is working on tablet computers that farmers can use together with GPS and agronomist maps.
Its data center operator, De Novo, which is also a cloud service provider, has already achieved success. De Novo counts some of Ukraine’s biggest banks and businesses among its clients, Kupych said, including Raiffeisen Bank Aval, mobile operator Kyivstar, and oil company BRSM Nafta.
“Big banks need big data centers, as they have lots of transactions, lots of users, and lots of affiliates,” Kupych said. “They can put their computers in their own data center or rent someone else’s. If they put their equipment into our data center, and we provide all the necessary infrastructure – cooling, electricity, and security. About 40 percent of the financial transactions in Ukraine now go through our data center.”
Kupych is a veteran of the Ukrainian IT industry.
Born in Canada to a Ukrainian family, he came to Kyiv in the early 1990s to open the office of Digital Tech Company for his employer. In Ukraine, he met Evgeni Utkin, the founder of Kvazar-Micro Company, which was a distributor of Intel microchips and later started making computers. Kupych joined Kvazar-Micro. In March 2010 he and Utkin started KM Core that incorporates Kvazar-Micro.
About 400 employees celebrated the company’s 25th anniversary on Nov. 12.
Another goal, Kupych said, is to create a tech incubator – a laboratory where inventors from all over Ukraine can come and “play with the technologies” like lasers or 3D printers, to bring their ideas forward to the prototype stage.
“We’re working on creating a competitive industry, whether it is defense and security, IT or technology. We know that Ukraine has this potential, but it hasn’t been realized,” Kupych said.
“And Ukraine needs more like us.”
Kyiv Post staff writer Alyona Zhuk can be reached at [email protected].
