Ukrainian startups have returned from Las Vegas. And so

    Ukrainian startups are back from an electronics show in Las Vegas. Some of them flew directly to Ukraine, while others drove into Silicon Valley and made a series of presentations at the BootUp incubator / accelerator. This is not the first time Ukrainian startups arrived in California, but four years ago, startup presentations were so weak that it was inconvenient to even describe them in a post about UTGEM-2014, the first ever international Ukrainian high-tech conference in San Francisco. Over the past time, the level of startups brought has risen significantly, and now they can be discussed on the Hamburg account.

    Ukraine Venture Capital and Private Equity Association (UVCA), which consists of venture capitalist Andriy Kolodyuk (Aventures), Ph.D. Olga Afanasyeva (Ukrainian Academy of Banking), and several investors, and not only Ukrainian ones, are involved in the importation of startups from Ukraine. For example, a member of UVCA is Alexander Galitsky, most of whose projects (ELVIS, Parallels) are related to Russia and Zelenograd.

    UVCA in California is helped by marketer Nikita Safronenko, who, in addition to the social burden from the Ukrainian community, works on Facebook, where she analyzes spam. Here is Nikita with Olga:



    In general, UVCA and its assistants are a non-profit organization, but at the same time an effective structure. With startups brought, the situation is more complicated:

    1. The first speaker was from Kray Technologies, a company that produces drones. Drones fly at a height of 1 meter and spray the fields. The main cost over competitors was total cost of ownership. Is this a presentation for venture capitalists? It’s strange. VC is not impressed with the words "we are the same as competitors, but cheaper." They want a quality difference that competitors cannot defeat by lowering prices.

    The words “artificial intelligence” and “precision argiculture” were also spoken in the presentation, but the speaker did not reveal their meaning. Well, about the “artificial intelligence”, you could still guess from the words that drones can fly around obstacles. But the topic of "precision argiculture" was not disclosed at all, but in vain - this could well be a distinct competitive advantage for VC. Usually, by "precision argiculture" they mean the following: based on the readings of the sensors, a map of the field is compiled, on which the content of various elements in the soil is noted. For example, in this place there is an excess of phosphorus - do not add it here (since phosphorus is poorly washed out, a regular excess of phosphorus for several years leads to the need to replace the entire soil). Then a smart tractor rides, which brings into each point only what it needs. Well, where did the words “connection with sensors” sound in the presentation of Kray Technologies? What form of precision agriculture are we talking about?

    At the end of this case, one of the judges asked the question: “You already showed this presentation in September. How many drones have you already sold in North America? ”It turned out that there are only five. Amid words about a million farmers and a multi-billion dollar business, I experienced cognitive dissonance. Which got worse when I saw a slide with a dozen potential buyers for the company, including Lockheed Martin. However, I probably misheard, but you can look at the video presentation (you can find it on the UVCA Facebook group) and figure it out.

    2. The next startup was Kwambio. He was represented not by the founder, but by the investor in this startup, so the presentation was stronger than others (the investor understands how the presentation looks from the point of view of other investors). De facto Kwambio is engaged in three different businesses: 1) the manufacture of ceramic vases and cups to order; 2) design and sale of 3D printers for ceramics; 3) designing a 3D bone printer for medicine, which uses the precipitation reaction of a compound in reaction with Ca (NO 3 ) 2 .

    A ceramic printer costs $ 25K, uses patented technology (patent pending for protection against cloning), and requires the source material that Kwambio controls. This gives the startup some protection from competition and the possibility of growth. While the startup is growing and receiving medical certification, it is supported by the income of a ceramic factory in Odessa. Well then, let's see.

    3. Then came Univrsee, a developer of software for VR cinemas. The idea is this: we take a hundred people, put on helmets for them for virtual reality, after which they all do something together in this virtual reality. For example, by education - Univrsee talked about their project with Samsung, which trains sellers using programs from Univrsee.

    Univrsee sees STEAM as an example of a business model. Univrsee wants to occupy 10% of the market, which they rate as fast-growing - 3,000 VR movie theaters, $ 8 billion and $ 45 billion have appeared. In order not to be like other companies, Univrsee try to vary the way how to take money from a client, for example, per minute. I don’t understand how it looks from the point of view of VC, but probably for Universee it is more important to work with large content producers, and not with VC. At the end of the presentation, blockchain was mentioned.

    From the communication after the presentations, I realized that Univrsee is an example of a Ukrainian company that is evolving from outsourcing to a product company. At the same time, they experiment with AI and keep in touch with the community of developers in the form of support for hackathons. Integration with universities and the community is generally one of the strengths of Ukrainian companies.

    4. Next was the manufacturer of smart toys Cubomania. I willingly believe that if you take an interactive screen, sensors and write for this program, then all this can please the children and even generate some kind of income for the authors. Especially if the developer plays a lot with children and understands what they need (for example, so that you can attach lego cubes on top). But what does venture capitalists have to do with it?

    VC-funded startup is a specific business format. VC considers only candidates whose business can bring twenty dollars for each investment. This is called the upside potential. Of course, this does not mean that if VC invests a million dollars in 20 startups, then in three years it will receive $ 400 million. Most likely, one startup will bring him 20 million, twelve will fly into the pipe, the rest will return on average how much was invested. In total, we get 27 million - 40% ROI (return on investment) for three years. This is what VC lives on for.

    How can Cubomania generate 20X for VC? To do this, they need to either fill up the whole world with their cubes, or sell Lego, ahead of all other candidates. To do this, it’s not enough to win the Vernadsky’s competition, get support from the Ukrainian Ministry of Education or fall in love with the audience of Gromadsky TV - they simply don’t have so many children.

    From the point of view of VC, companies like Cubomania are (in the case of an investment) an unambiguous candidate for the so-called zombie startup. "Zombies" in the VC jargon are companies that can neither grow nor die. Imagine that Cubomania received three million dollars, designed several lines of toys, hired additional employees, paid for advertising, and has been living happily for the next 50 years. Salaries are paid, toys are in stores and they are bought, minobras take foreign delegations to the sponsored kindergarten, “we have no debts,” the founders of Gromadsky TV say joyfully. Everyone is happy. In addition to VC, in which these three million simply hung. VC cannot collect them from Cubomania (since it is not money on debt, but ownership of shares), investment bankers (who do IPOs) will not buy these shares either, but Lego also has its own toys.

    At the same time, Cubomania may have small private investors who form S-Corporation and receive dividends from it. This is a very respectable form of business, but not for VC.

    5. After Cubomania, PassivDom appeared in the arena, which prints on a 3D printer at home, along with solar panels, which, according to the present, provide the family living in the house with electricity even "in Alaska and northern Canada."

    Lord! Since I am a California homeowner, I regularly receive spam and calls with offers to put solar panels on my roof. I reject these suggestions because I read that solar panels are only economically viable in southern Arizona and go to zero in Los Angeles. Solar panels, even in San Francisco, are unprofitable, but they suggest me to believe in the complete self-sufficiency of electricity from solar panels on the roof in Alaska? Maybe even on a polar night? From the northern lights? Rather, I, as a Soviet man, believe in the blooming of apple trees on Mars. But first, I need (in the presentation) the numbers and results of independent experiments in peer-reviewed publications.

    The words "7D-printing", "-20 ° C outside and + 20 ° C inside", "on the mountains and in the oceans", "Eurocomission grant", "Airbnb unit" and (yes, yes) were also spoken in the presentation. ) "NASA Mars cooperation."

    6. The next company was Senstone. They collected on kickstarter $ 400 thousand dollars for a gadget in the form of a brooch that hangs on your collar and writes down what you say: self-reminders, insights, newly composed poems that come to us, representatives of the creative class, anywhere - in starbucks, in the subway, even in the shower. The founder of the company, a lawyer by profession, said that he often reflects on current affairs and takes notes. At some point, he decided that it was better not to write down thoughts, but to dictate on a brooch so as not to pull the phone out of his pocket.

    Then Stas Hirman, one of the judges of the event, got up and asked: “You want to say that your device is continuously recording what is happening around? But do you know, as a lawyer, that this violates several California laws at once? ”(In California, recording without the consent of people nearby is illegal, Penal Code 632 PC, a fine of up to $ 2500 or imprisonment of up to 1 year).

    The speaker said that they have a button to turn it on and off. And that they can filter out the voices of other people.

    Stas Hirman asked a second question - how do they filter noise, for example from the shower (in addition to the voices of other people). This interested me too, and I asked on which hardware. At MIPS, we are involved in processor extensions for implementing DSP sound processing algorithms, and I know that smart filters are a non-trivial task. The speaker said that they have a partnership with a certain Dutch company that writes programs for such filtering, but he does not know if a specialized hardware is used there.

    7. And finally, the founder of the Lvov-British startup Blocks, who makes smart watches with replaceable blocks with sensors, an open platform and software for data analytis, stepped on the scene. The idea is quite working, and I agree with the presenter that the main market for such devices is factories, hospitals and mines, with industrial IoT. The only point is that in the presentation they showed only WiFi and BlueTooth on the slides, while in the industrial environment other protocols are more often used - LoRa, 6LoWPAN. There is another investor and judge of the event, Vitaly Golomb told me that I just missed when the founder said that they can easily make a module with LoRa in two or three months. Well and good, but you need to say about it on the slides.



    In addition to startups, a representative of the Kiev-Mohyla Academy, who campaigns for donations to create a Digital University Project in Mohyla, spoke. I strongly wish success to the Mogilyanka in all their endeavors, but in their self-presentation for the California audience there are two problems that they most likely occasionally come across sideways.

    Firstly, for the third time I have met Mohyla people who say "we are 400 years old, we are the oldest university in Eastern Europe." Secondly, for the second time, I met a speaker who expressed the thesis: “Mogilyanka is the best IT university in Ukraine, based on the average salaries of graduates immediately after graduation”.

    In the CIS, this can be said, since there it is customary to expect any exaggeration and fantasy from the speakers. But in the states, in one case and another, the speaker can be accused of manipulation by omission, which casts a shadow not only on Mogilyanka, but also on all CIS universities. Especially if the Americans have heard enough about “Ukrainian Harvard” and begin to question other Ukrainian professors about it. Or Russian professors, some of whom have not heard of Mogilyanka at all. The fact is that:

    1. The Kiev-Mohyla Academy, which was founded in 1632, existed only until 1817, after which in 1992 a university with the same name was created. A gap in succession of 175 years is exactly that omission. For an American audience, it’s better to say “Kyiv-Mohyla Academy is a modern re-incarnation of a 17th Century Academy, the oldest in Eastern Europe”.

    2. The problem with the statement “Mogilyanka is the best IT university in Ukraine” lies in the fact that the range of studied disciplines in Mogilyanka is much narrower than at the Kiev Polytechnic and the Kiev National University. The rationale for salaries is not impressive. If you use it, then the leader in wages in the states will be, for example, the little-known Harvey Mudd College. It is much better to focus on particulars, such as in Mogilyanka the best in Ukraine courses in Business Computing or in Web Design (it is realistically possible to justify this kind of particular).



    At the end of the UVCA meeting, startup judges spoke and expressed their views on what they saw. On the one hand, investors expressed congratulations that Ukrainian startups in recent years have greatly improved presentation skills, and the satisfaction that startups are making every effort to develop. On the other hand, there were wishes that startups take their time, prepare better before a quick and intense battle in a very competitive environment, with subsequent development of the business, sale or IPO. Wishes not to make “me too” decisions, to increase the technical depth. Wishes for better protection against copying their ideas. The wish is better to concentrate ("if you are chasing one idea, you are likely to lose, but if you are chasing several, then you will lose for sure"). I do not want to retell everything, you can see everything yourself on the video.

    In the end, the most severe investor (2 IPOs, 15 sales) spoke, who said that in no presentation he saw how he could make money. There is no realistic estimate of market size, nor cost estimates. Theoretically, he could have been answered with a quote from the Soviet film about Cinderella, “I beg you, do not worry. I'm not a magician, I'm still just learning. But it seems to me that it can still end very well. ”One can object to this, that for 27 years we have not been Soviet people, but part of the global technological ecosystem, so training could be accelerated. Although over the past four years, the gradient is definitely positive.

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    Which companies and organizations did you like?

    • 4.5% UVCA - Association of Ukrainian Investors 7
    • 11% Kray Technologies - Drones 17
    • 22.7% Kwambio - Ceramics 35
    • 4.5% Univrsee - VR Cinema 7
    • 5.1% Cubomania - Smart Toys 8
    • 3.8% PassivDom - at home on a 3D printer, with solar panels 6
    • 4.5% Senstone - Creative Thoughts Recording Brooch 7
    • 9.7% Blocks - smartwatch with sensors for industrial applications 15
    • 2.5% Kiev-Mohyla Academy 4
    • 62.9% Stern investor at the end of 97

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