CIG President Stepan Chernovetskyi, “I do not finance the projects abusing human weaknesses”


Several months ago, the co-investors of BUSINESS 100 platform were joined by Stepan Chernovetskyi, the owner and the president of Chernovetskyi Investment Group. Our investment group is focused on the investment into the technological projects and assesses its investment potential to be more than 100 million US dollars, which makes it one of the largest companies of the kind in Eastern Europe.

- Let’s start with the decision on BUSINESS 100 platform. What has encouraged you to join the co-founders?

- The decision was easy to take: I share the philosophy of BUSINESS 100. It is a good indicator of healthy development of the Ukrainian market, where the businessmen successful in implementation of major projects join their efforts to protect the transparent business and good-faith rules of the game. Now the important thing is to demonstrate the common results.

- How has Chernovetskyi Investment Group been established? Is there a certain business mission/philosophy?

- CIG was a sort of passion project in 2012, and today we are investing into the IT-companies with the high potential in e-commerce, infrastructure and agri-business. In Ukraine, it is difficult to focus on technological projects in one area only: there will be insufficient space for investment. That is why we are investing into the IT industry in principle, from education to the finished product.

The main requirement is for the partners to share our philosophy: improving the living standards by means of technologies. My principle is not to finance the projects abusing human weaknesses and inconsistent with the social responsibility policy.

- Which IT projects is CIG most interested in, and which ones do you treat as its major success?

- We select our projects very carefully so we are proud of all our partners. When one becomes a leader on its market, there are even more reasons to take pride. For instance, has turned into the food delivery leader in Ukraine, has joined Menu group, and Busfor has become a part of Bla Bla Car. We invested into the specific ideas in time, which is the best success factor.

Now we are focused on cloud computing, e-payment systems and CRM systems. I could tell you more about the SaaS business model, B2B and B2C applications and Big Data, but I will just say that we are looking for interesting software and online service projects.

- You once said in an interview that the potential of the Ukrainian technological sector was underestimated. Has it changed?

- Yes. Today’s Ukraine is open to the technologies that did not exist yesterday. You can introduce new things instead of changing old ones. For instance, the NFC technologies for contactless payments in Ukraine have gained popularity very quickly. In 2017, we were the 15th country in the world where Android Pay was launched. In 2018, we were the 28th country to launch Apply Pay officially. A cashier in a Kyiv supermarket will hardly be surprised if you want to pay with a watch.

In general, the Ukrainian business is developing unevenly, but quite dynamically, which makes it considerably different from the European one working under the open market conditions for decades. A pool of experience in creating, developing, succeeding in and failing long-term projects has been gained. The companies’ reputation, which is a brand identity of the Western business, has been developed as well.

Of course, Ukraine is at war, and the investment environment cannot help responding, but the development vector gives hope. Despite being slow, the reforms are going in the right direction. The pension reform, the health care reform, operation of the independent NABU, purification of the bank system, open public procurement owing to Prozorro, waste management report – we are definitely above the level of “fingers on one hand”.

- Which Ukrainian or foreign IT projects have recently astonished you?

- The boy inside me is still amazed by the fact that almost everything in my smart phone, from software to mobile applications, was a successful start-up one day. The investor inside me assesses stability of development and persistence in achievement of indicators of new quality in the first place. IT is the business that is supposed to bring money to shareholders.

As for interesting foreign projects, the last one to attract my attention was CONTRAST SECURITY, which works to automate software analysis. Its capital is 122 million US dollars, and its annual proceeds are 25 million dollars. It is an interesting case which, in my opinion, was lacking.

As for the Ukrainian projects, I usually pay attention to the current TOP-100 rating of the IT employers. The leaders of the Ukrainian IT industry always include very interesting companies.

- From your point of view, what prevents Ukrainian IT entrepreneurs from creating unicorn companies?

- It is difficult to divide a chicken and an egg between the underdeveloped business environment and companies with inefficient internal management. It is widely discussed that Ukraine has all the elements for potential success, but we forget to mention how to combine them into the efficient system. It is hard to introduce best practices at the level of individual projects, but there are no chances of success on the international markets otherwise.

- A start-up nation: can this term be applicable to Ukraine in future? When? What does it take?

- We must remember that there are lots of candidates for the title of a start-up nation. Ukraine is not the only one to be given the opportunity by globalisation, and nobody is going to wait for us to seize it.

That is why we are implementing this idea at the practical level: we go to the best Ukrainian technological universities and offer assistance to the students having cool ideas and intending to implement them here. CIG R&D LAB is launching the third season in Kharkiv, Odesa and Lviv. I was pleasantly surprised by the range of themes of the student projects, from improvement of city energy efficiency to tourism mobile applications.

In addition, there is a new retraining tendency: those who do not have a degree in IT study programming. In this case, the important role is played not only by universities, but also specialised schools and back offices of large IT companies. There are more than a hundred of them in Ukraine. Boeing, Siemens, Microsoft are investing into continuous education because the knowledge that is even two years obsolete cannot compete.

- From your point of view, what other Ukrainian industries with the high potential should international investors focus on in the nearest future?

- The evident forecast is the agrarian sector. The global market will be undergoing major changes, and Ukraine might turn into the agricultural platform of the 21st century, a technological and sustainable one.

Andrii Morozovskyi