UKRAINE Trends and Developments Contributed by: lllya Tkachuk, Igor Krasovskiy and Inna Kostrytska, INTEGRITES
Technology M&A Market of Ukraine: On the Way to Recovery 2024 in progress According to the DealBook report published by AVentures, after the fall in 2022 and 2023 the total private equity and venture capital invest- ments finally showed recovery in Q1 2024. More specifically, having reached USD283 million, Q1 of 2024 showed more than four times increase compared to the same period of 2023. Further progress shown in 2024 gives hope that the overall number of investments should improve even more. The statistics of 2023 show 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 edu- cation management software. The next tier can be split between classical IT outsourcing and fintech projects. Military tech and entertainment present the third tier which attracted the most financing in 2023. Considering the publicly 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 the fund- ing at Series A level which can be compensated by almost 40% increase in Seed rounds financ- ing. The division between the Ukrainian and international 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 of ClickDealer by Digital Media Solutions. The latter, evaluated at USD45 million, is a pro- vider of digital advertisement solutions. IT sector still at war Since 24 February 2022, IT business has adapted to the new reality, just as the entirety of Ukraine has. According to available statistics, more than 70% of all tech companies in Ukraine arranged for the relocation of their staff 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 relocation, whereas Odesa and Dnipro joined the movement in the second wave. In 2024 the issue of staff relocation from Kharkiv and Dnipro became more important, as the mis- sile attacks on these cities increased. At the same time the general picture looks like the IT business, with the employees being quite inde- pendent in terms of workplace, has adapted to the new conditions of work. The war increased the difference between export-oriented IT companies and those focused on serving local customers. During the
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