IT IN UA: local investment market
Written by: Stepan Chernovetskyi
The promises to totally digitalize our future today and create ‘states in smartphones’ are as regular as weather forecasts. We are scrolling down the technology newsfeed with the enthusiasm of a person who gets disappointed year after year that his or her phone cannot make a cup of coffee. Again.
I have no choice: the enthusiasm about the technology market is a professional deformation for an investor in tech companies. Luckily, I am not alone. According to the estimates of the American analysts from International Data Corporation, last year’s global IT market reached 4 trillion US dollars. The cloud computations, mobile technologies, big data and social analytics are the fastest growing. In the same estimates, the global expenses for the tech industry will exceed 4.5 trillion US dollars in 2022. As my daughter says, that is a lot of money.
I agree with the analysts and with my daughter: it is a huge market to accommodate everyone. The Ukrainian IT industry got its clear spot on the global map. We never come to think about it but this is Ukrainian specialists who are in charge of the vehicle information systems by Ford and Deutsche Bank’s risk management system.
Last year, we ranked second in Europe by the scope of the IT service export. It is 4.5 billion US dollars for 184 thousand developers. 184 thousand people earned 4.5 billion - just think about that. The export is supposed to grow twice and reach 8.4 billion by 2025.
At the same time, our start-up market is still relatively small: the amount invested in 2018 was 290 million US dollars. As a comparison, the Grammarly project involving Ukrainian team raised 90 million US dollars in the US only during the last round, and the company’s value exceeds a billion.
Why should we not narrow down to outsourcing? Why should we invest into our own products? Because Silicon Valley’s domination in technologies is becoming a thing of the past. Blockchain is revolutionizing decentralised data storage and transfer while decentralisation of technology hubs will help diversify the IT and make it more sustainable and interesting.
The difference between this forecast and the dreams about New Vasiuky is that I invest into what I believe in. When I say we must select advanced projects here and invest into them, I mean quite specific projects in the polytechnic universities of Odesa, Kharkiv and Lviv.
We have studied the Ukrainian educational market and reached the conclusion that the education must be expensive and valuable. The universities must become innovation laboratories rather than diploma printers. The educational reforms have recently been going the right way: stricter standards and anti-corruption in the system, giving universities more autonomy and an opportunity to cooperate with the business. The business will meet them halfway.
This is exactly how CIG R&D LAB works: we come to the university and say, “Who has a business idea and is ready to sleep less at weekends for the whole year?” From among the bravest ones we select the ones who gets financing and expert support. The team that advanced its project the most to launch ifs, gets a rose in the form of grant for further development of the project.
What has already been done? The team from Odesa, who have won at CIG R&D LAB program, are developing a virtual assistant called Jarvis and a smart column similar to Google Home. Two start-ups have won in Kharkiv: the project for reconstruction of the municipal heating systems and the luminous flagstone. Our technology urban specialists have already found their first clients: the university and the Kharkiv City Council are ready to order this product.
To be honest, I would like to unite the best Ukrainian universities within our or similar programs. Consistent funding and consolidation of results is a step to develop the global infrastructure of the Ukrainian IT market.
To put it simply, you can make a Tesla in a garage, but it will not go far without roads and charges. Let’s invest into roads.