UKRAINE Law and Practice Contributed by: Illya Tkachuk, Igor Krasovskiy and Inna Kostrytska, INTEGRITES
1. Market Trends 1.1 Technology M&A Market
The division between the Ukrainian and interna- tional fundings remains close to equal. The market has high expectation from the USD350 million fund of Horizon Capital which is the biggest technology-focused private equity firm in Ukraine. The fund was closed in early 2024 with the participation of IFC, EBRD, DFC, JICA and others. Furthermore, in March 2024 the Ukrainian Ven- ture Capital & Private Equity Association official- ly presented the Ukrainian Fund of Funds with the expected initial amount of USD300 million. In 2023 the authors also saw a number of suc- cessful exits in Ukrainian product companies. The most noticeable among them was the acqui- sition by Digital Media Solutions of ClickDealer. The latter, evaluated at USD45 million, is a pro- vider of digital advertisement solutions. 1.2 Key Trends According to available statistics, more than 70% of all tech companies in Ukraine performed the relocation of their specialists to safer regions of Ukraine or abroad. Indeed, the cities with a high level of concentration of IT business, such as Kyiv and Kharkiv, were in the first wave of relo- cation, whereas Odesa and Dnipro joined the movement in the second wave. In 2024, the question of relocation of specialists from Kharkiv and Dnipro became more impor- tant since the missile attacks on these cities increased. Most key pre-war trends are still there now, in 2024. Among them are the following. • As before the war, corporate structuring remains the issue for most start-ups, as well
Impacted by the war and the global market slow- down, the technology M&A market in Ukraine has gone through a considerable decline in the investment volume; however, 2024 gives the signs of gradual recovery. According to the DealBook report published by AVentures, while reaching USD283 million, Q1 of 2024 showed more than four times increase compared to the same period of 2023. Further progress of 2024 gives us hope to improve the results of 2023 even more. The statistics of 2023 shows that EdTech became the worthiest tech industry in terms of raised financing (mostly thanks to Preply results). This includes education marketplaces and platforms, language learning tools, as well as other educa- tion management software. The next tier can be split between classical IT outsourcing and fin- tech projects. Military technology (MilTech) and entertainment are in the third tier which attracted the most financing in 2023. Taking into account the disclosed information, only Preply (education marketplace), Fintech Farm (neobank), and Dressx (retail digital fash- ion) raised USD107 million. On an international level, in 2024 Creatio, a technology company co-founded by Ukrain- ians, raised USD200 million from Sapphire Ven- tures, Volition Capital and Horizon Capital. This allowed Creatio to become the unicorn with the global valuation of USD1.2 billion. The year 2023 showed the decrease of funding at Series A level which can be compensated by almost 40% increase in Seed rounds financing.
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