Foreign venture capital flowing into Ukraine.

My name is Konstantyn Soloviov. I help startups scale their business and find investors and partners.

?This month, I got positive confirmation from two of my clients regarding investments. Considering the ongoing war in our country, this is a very good indicator and a positive impulse for other projects that have been launched, scaled or?"pivoted".

?I decided to analyze what is happening on the VC markets and compare the situation with the Ukrainian market. While I was figuring it out, I prepared some materials for you.

?? Part one. The situation on the world market

?In the second quarter of 2022, the global venture capital investment fell to an all-time low amid a full-scale war in Ukraine, high inflation, and rising interest rates.

?8,420 deals were closed this quarter for a total of $120.2 billion. Researchers say this is the first time the industry has seen such a low level of investment in the past six quarters.

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$62.3 billion and 3,374 deals — more than half of the global market of venture capital investments fell to the USA.

$27.3 billion and 2,220 bargains were closed in Europe. (VCs fell in most individual EU jurisdictions).

$24.5 billion and 2,206 deals were made in Asia (VCs fell for the second quarter in a row due to relatively smaller deal sizes).

??Part two. The situation on the Ukrainian VC market?before the start of the war.

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Record level of VC deals

?In 2021, the total volume of VC and PE investments in Ukrainian technology companies reached a record level of $832 million, which is 45% higher than in 2020.

?Annual VC investment volume, in mln US dollars In 2021, funding for early-stage projects increased by 50% with a doubling of seed investments. Early-stage deals (Seed and Series A) exceeded $240 million per year.

?Ukrainian investors are particularly active in early rounds of up to $1 million in seed rounds and up to $7 million in Series A rounds.

A certain role in the development of the startup ecosystem was played by the state Ukrainian Startup Fund, which was founded in 2019 and since then has been systematically providing grants to Ukrainian startups without equity participation.

?As of January 2022, the Ukrainian startup fund held 35 days of pitches, thanks to which 166 Ukrainian startups received 174 investments. Grants range from $25,000 to $50,000. In total, the Ukrainian Startup Fund invested $6 million during 2020-2021.

??Part three. Ukrainian VC market during the war.

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?34 initiatives have already received funding from international entities since the full-scale invasion, with 20 of them having received more than $195 million. The amount of funds allocated to other 14 projects is still undisclosed..

?The five largest investments in Ukrainian startups:

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5th place: Salto X

?The investment amount in 2022 is €5.2 million.

?It is a young crypto startup created in late 2021. The team is developing a Web3 alternative to stock options.

?The company’s solution replaces traditional employee option programs with distributed tokens using a smart contract.

?The funds will be used to scale the product in different jurisdictions and expand the team in Ukraine.

?4th place: Spin Technology (formerly Spinbackup)

?The investment amount in 2022 is $16 million.

?This startup works in the niche of cyber security, which is very relevant now. The team created unique antiviruses for third-party SaaS services. The software detects threats on various platforms: Google Workspace, Microsoft Office 365, Salesforce, etc.

?The funds received will be used for further development, expansion of services, and increase of marketing, sales and engineering teams.

3rd place: Preply

?The investment amount in 2022 is $50 million.

?It is a platform for selecting tutors who help learn a foreign language. Preply has more than 49,000 teachers from 185 countries and about 50 languages to choose. Since its launch, students have signed up for more than 15 million lessons.

?2nd place: AirSlate (formerly PDFfiller)

?The investment amount in 2022 is $51.5 million

?It is a SaaS workflow automation service. The platform collects solutions for the development, integration, and automation of a document flow from the cloud. AirSlate has about 100 million users worldwide.

?In June, the company raised $51.5 million in a Series C round from G Squared UiPath Ventures. But it became a "unicorn": its valuation exceeded $1.25 billion. A little later, AirSlate bought the document signing platform DocHub with almost 83 million users. The amount of the deal is undisclosed.

?1st place: Unstoppable Domains

?The investment amount in 2022 is $65 million.

?Storing, transferring, and receiving cryptocurrency require a separate wallet with over 30 random tokens. It is difficult to remember them, but it is easy to lose them. Startup Unstoppable Domains offers its solution to the problem. The company creates and sells short NFT domains to which users can bind the addresses of all their crypto wallets. Simply put, this is a kind of a single card analogue for all banks and currencies.

?After another round of funding in July 2022, Unstoppable Domains' valuation increased to $1 billion, and the company received the "unicorn" status.

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??Аlso from fresh good news:

?A New York-based firm FF Venture Capital launched a $30 million fund to support Ukrainian-founded startups. The Blue & Yellow Heritage fund is reportedly the first Western venture capital fund focused exclusively on the Ukrainian startup market.?

?Over the next five to 10 years, the fund will invest in 15-20 early-stage startups founded by Ukrainian entrepreneurs or employing Ukrainian refugees. For that, FF Venture Capital aims to raise another $20 million, making the overall support reach $50 million.

?While other economic sectors are overcoming the consequences of crises, financial infusions into IT startups are increasing from year to year.

?The IT sector has become one of the few that continues to steadily fill the Ukrainian state budget, despite the full-scale invasion. It is positive enough and very critical? nowadays.

?Take care and keep in touch.??? ??

Переклад на укра?нську за посиланням.

Sources: Venture Pulse from KPMG, AVentures Capital, mind.ua.