Ukraine today is a ground-floor investment opportunity, thanks to its highly-skilled workers, competitive cost base and proximity to Europe. Driven by a reform program that has seen the country rise 81 places since 2012 in the Ease of Doing Business rankings compiled by the World Bank, Ukraine today sits above India, Brazil, and Argentina, all countries with strong foreign investment profiles.
At Horizon Capital, Ukraine’s leading private equity firm with over $850 million in assets under management, our investment thesis is simple: Invest in visionary entrepreneurs leading fast-growing domestic and export companies, and provide them with expansion capital, hands-on strategic support, access to our extensive network and other tools to accelerate their success. High-growth domestic companies are able to outpace the effects of local currency devaluation, while export companies benefit from a natural currency hedge as they leverage competitive local platforms to succeed in global markets – whether in information technology, food and agriculture or manufacturing.
Ukraine presents some amazing investment opportunities that are available to those willing to look past the headlines and spend time on-the-ground to explore them. Horizon Capital, with four funds whose tenures translate into over 20 years’ of investment experience in the region, is capitalizing on this opportunity. We back leaders who are building true champions in their sectors, who are top of their industry, interested in growth capital and value a partner who contributes to their success. We welcome Ukrainian companies offering goods and services that are higher up the value chain, that aspire for greatness and benchmark themselves against best-in-class global companies.
To illustrate my point, let’s look at “new generation” founders whom we have backed recently:
Vladyslav Chechotkin, co-founder and CEO, Rozetka (the “Amazon” of Ukraine)
Rozetka, is the #1 brand in Ukraine’s fast-growing e-commerce sector, with the market expanding by over 25% compound annual growth rate in US dollar terms for the past 3 years. Rozetka is a household name in Ukraine and in the Top 3 Ukrainian brands by value. Horizon Capital invested alongside husband-and-wife team Vladyslav and Irina, backing the company in acquiring over 50,000 sqm of premier warehouse space in the country to expand its operations, then working with the founders to merge Rozetka with EVO (the “eBay” of Ukraine, co-founded by Mykola Paliienko) in 2018, further cementing its leadership position by a wide margin. The combined Rozetka-EVO platform reaches over 40% of Ukraine’s internet audience, has 2 billion site visits and facilitates 30 million e-commerce transactions per year over four geographies.
Vladimir Mnogoletniy, co-founder and CEO, Genesis
Vladimir founded Genesis in 2008 and has grown it to a top 100 global consumer internet player. Genesis creates leading technologies that empower and enrich the lives of millions of people in online media, classifieds and other digitally-powered businesses. Its technology reach extends from the United States to Europe, from Africa to Asia; hosting over 200 million unique visitors every month – powered entirely by a stellar team of 1,500+ IT professionals based in Ukraine. Jiji, its classifieds business, the #1 player in Nigeria and one of the largest marketplaces for classifieds in Africa, made news earlier this year by acquiring the businesses of OLX, their main competitor, in Kenya, Ghana, Uganda, and Tanzania. Mike Butcher, renowned editor-at-large at Tech Crunch, wrote “the acquisition means Jiji will now be able to access 300 million people across five markets. This is something of a coup for a company originally from Ukraine, pulling off an acquisition in one of the world’s last huge, relatively untapped regions”. Genesis also boasts many more successes, including BetterMe, a fitness app developed by the company and led by Victoria Repa, female tech entrepreneur, that is among the top-5 applications in the Health & Fitness category in the US.
Vitaliy Sedler and Mykhailo Puzrakov, founders of Intellias
Intellias is one of the fastest growing IT services providers in Ukraine, with 5 delivery centers in Ukraine and one in Poland, over 1,300 engineers in-house and more than 16 years of providing IT solutions to global clients. Founded in Lviv in 2002, the company is a direct vendor to Fortune 500 corporations, serving leading car manufacturers worldwide, with extensive expertise in the automotive space, including autonomous driving vehicles. Over 40 blue-chip clients from the US and EU depend on Intellias for their research and development. Intellias is enjoying a booming demand for Ukrainian IT outsourcing services as the industry grew an average of 22% each year for the past eight years, expanding from only $110 million in 2003 to a whopping $4.6 billion US dollar industry in 2018!
Alexander Konotopskyi, founder of Ajax Systems
Ajax Systems, the home security tech company, is another remarkable Ukrainian success story. Founded in 2011, Ajax sells to over 70 countries worldwide, protecting over 100,000 premises against fire, theft and leaks, all while producing 100% of its high-tech, wireless security systems in Ukraine. We were attracted to Ajax by Alexander’s vision, their innovative product offering, the success achieved in serving discerning international customers and their pursuit of excellence and quest to become a true global champion. With five patents and products on the cutting edge of technology and science, Ajax is the most awarded wireless security system in Europe!
These winning tech companies are not alone. We are also greatly encouraged by opportunities in healthcare, pharmaceuticals, financial services, and other sectors, and also note significant deals in Ukraine in infrastructure, renewables, real estate and more that are attracting investors today.
These are just a few inspiring examples of the opportunities awaiting investors in Ukraine, which is fast becoming recognized as the most significant emerging market in Central and Eastern Europe. In Ukraine, I believe that entrepreneurs can change the world for the better by creating wealth, prosperity and high-paying jobs. Today, Ukraine offers a rich environment for foreign direct investors like me, driven by the creativity and innovative spirt of its new generation entrepreneurs.
Lenna Koszarny is founder and CEO of Horizon Capital and a Canadian who has lived and worked In Ukraine for over 25 years.
