Lydia Linna: Could you give me some background on yourself and the Ukrainian Venture Capital & Private Equity Association (UVCA)?
Andrey Kolodyuk: I’m a Kyiv-born serial entrepreneur and venture capital investor. I started AVentures capital as a first VC fund focused on Ukrainian founders back in 2001. We basically have been investing in Ukrainian founders and building business globally, mainly in the US, with 36 investments, 14 exits so far.
All of them have been focused on different verticals. As you can imagine, 36 investments, that means we’ve been diversified in terms of verticals.
But UVCA, I initiated that in 2014 [the same year Russia invaded Crimea, part of Ukraine, and illegally annexed it], when actually investors were making choices: are they going to leave Ukraine? Or are they going to fight for their portfolio companies? That was in the summer 2014, when I called all investors and said, ‘Let’s set up the association.’
We immediately became a member of Invest Europe [an association of private capital providers]--we even used their charter for the UVCA establishment--and we’ve been a member since 2014. Currently, we have over 50 members, predominantly venture capital and private equity funds, and also a few investment banking funds, Big 4, M&A divisions and a few other players of the investment market in Ukraine.
Two-thirds of our members are local ones and one-third is international GPs [general partners], international funds that are invested in Ukraine.
You have founded and built companies in the IT, telecom, internet and media sectors. What sectors are you most excited about for the future?
Personally, I’ve invested in many sectors, or sub-sectors. But in the future, I’m excited to invest in the sectors that are solving problems--that’s number one. That means that I’m interested in healthcare, I’m interested in, let’s say, human-centric types of technologies.
And also because I’ve invested for more than 10 years already in the verticals related to artificial intelligence, like computer visions, for example, and some other ones. I’m interested in the verticals where AI can enable new solutions in different verticals. AI is not the vertical; AI is the enabler, the technology that can actually change or impact many industries. And that’s what I’m excited about.
Russia's full scale invasion of Ukraine has been going on for over a year and a half now. Could you give some insights as to what the VC scene currently looks like in Ukraine? And why should investors continue to invest in Ukraine?
War for us was started back in 2014. And since 2014, more than 2,000 startups have been invested, with almost $4bn, with 300 international funds co-invested with Ukrainian ones, and we’ve created seven unicorns so far. Two happened, by the way, last summer: airSlate and Unstoppable Domains. And we have 50 more in the pipeline. That shows you the confidence that the Ukrainian ecosystem is not only resilient, but also producing good companies.
Also, exits are happening. Just to give you an idea, for the last five quarters, during the full-scale war, we had a total of 52 exits and 200 deals happened as well. And this is still happening.
We continue to perform and produce not only unicorns, but also good companies as well
This is the main point for any investors: the market is functioning, the investments are happening and the exits are as well. The markets have not stopped and continue to perform. And we have many new investors, by the way, that entered or invested in the last 600 days in Ukrainian founders. So we have new funds as well.
By the way, UVCA also has grown by eight members over the last few months. This also shows you not only the appetite, but the confidence in the market. We continue to perform and produce not only unicorns, but also good companies as well.
What do you want investors and other contacts in Luxembourg’s financial sector to know about investing in Ukraine?
There are a few things. Number one is that, it’s already known in Luxembourg, because of the president of the European Investment Bank Werner Hoyer, that Ukraine is a more than €1trn opportunity. So it’s a very sizeable opportunity.
I want to share with investors what’s happening currently. We have also 17 funds that are raising capital towards Ukraine, different funds, from private equity to venture capital, different alternative asset funds as well. And we have already had successful cases, like Horizon Capital, which closed their fund with $300m of investment. So the opportunity to invest in Ukraine by being LP [limited partner] already exists… We believe that there will be hundreds of funds that are going to participate.
You can also be a part of the unicorn market and make good returns
Second one is that, as I mentioned, there have already been for the last nine years, many happy investors that have become part of the seven unicorns that have already been developed in the Ukrainian ecosystem. But more importantly, there are 50 more in the pipeline. You can also be a part of the unicorn market and make good returns… And it’s also an opportunity to co-invest with UVCA members.
And message number three is, because it’s a sizeable opportunity… you need to start early. We are sharing with you co-investment opportunities, and some of the bankable projects need time to be prepared. But you will have a first-mover advantage: when the war is over, then you’re going to be already ready to deploy the capital.
Ukrainian reconstruction is a very sizeable opportunity as well, especially in infrastructure, agriculture, food processing, energy, medical, housing and so on. In order to have first-mover advantage, we are offering you to team up with our members and their portfolio companies, through joint ventures, as well as start preparation today to address the opportunity when the war is over.
The majority of the opportunities are available now. You don’t have to wait for post-war
But the majority of the opportunities are available now. You don’t have to wait for post-war. That is a message that is already coming from the international community and governments like the US government. The special envoy on economic development, Penny Pritzker, said, ‘We have no time to wait until the post-war. We need to invest in Ukraine now.’
It’s become the US policy and also the European one, because, as you know, the European Parliament will support Ukraine with the €50bn Ukraine facility over the next four years.
Could you give a sneak peek of what you’ll talk about during your session at the conference?
Of course. I will share information about the investors that continue to invest in Ukraine, as well as some datasets… Investors, they like not only the motivation or emotional or strategic trends, but also who’s already in the game, who has already invested.
The main message is: invest in Ukraine now
I will also share the mechanism that UVCA is offering for our international partners, co-investors, how co-investments can happen, what are the vehicles, what are the programmes, what are the instruments in order to invest in Ukraine now, not even waiting for the post-war.
My presentation will basically showcase the data and [tell] investors in Luxembourg about the opportunities to address the €1trn opportunity in rebuilding Ukraine.
Your main message?
The main message is: invest in Ukraine now. The best help is to co-invest with us, with our members… Follow us, co-invest with us--and this is how we can do great things.
The LPEA Insights conference will take place on 19 October at Luxexpo The Box. Andrey Kolodyuk will speak about investing in Ukraine at 14:55. Find the full programme here.
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. Subscribe using this link.