Why Ukraine, IT Nation, Is Becoming A Really Smart Bet
The war between Moscow and Ukraine grinds away in the east, but the rest of the gigantic country is on the move. The people of Ukraine supported the Revolution of Dignity in 2014 that overthrew a corrupt leader and in the past two years have turned their energy toward reforms in Parliament as well as toward building their economy through innovation and entrepreneurship, notably in technology.
And on June 20, the Canadian government is hosting a major conference in Toronto that will showcase Ukrainian products and businesses in order to connect them with high-level Canadian corporations and businessmen. The conference is timely because we are on the eve of completion of the Canada and Ukraine Free Trade Agreement, approved last summer in principle.
The resilience of Ukrainians is awe-inspiring, given the dislocation of 1.5 million from the wartorn east, and ongoing violence by Russian military. Undaunted, the country moves quickly into the emerging economies of the future, thanks to its highly motivated and educated young people.
Three recent and significant deals have turned the tech world’s attention toward Ukraine. In September, Snapchat paid US$150 million to buy a two-year-old Ukrainian startup in Odesa called Looksery and, just before that, Google paid US$45 million for facial recognition company Viewdle. Then in November, financier George Soros acquired a stake in Ciklum Holding Limited in Kyiv, an IT outsourcing company with 2,500 software engineers, architects and technologists.
“It’s a very dynamic company in an industry that represents the future of Ukraine,” said Soros at the time.
There are roughly 2,000 sizeable startups, built on successes by Ukrainian tech giants such as Grammarly, an online writing enhancement software or Paymentwall, an online platform selling digital goods and services. They, plus 100 multinationals, have large-scale research and development operations in Ukraine including Siemens, Samsung, Oracle, Cisco, SoftServe, Procter & Gamble and Bioclinica.
“We want to turn the country from the world’s bread basket to the world’s brain basket,” said Yevgen Sysoyev, managing partner of AVentures Capital in Kyiv. The goal is to double by 2020 – to 200,000 – the number of IT professionals with proficiency in English. This strategy is underway through collaboration with governments, companies and universities. Ukraine already is the biggest pool of IT talent and export success in Central and Eastern Europe.
Another successful entrepreneur is Andrew Pavliv, a friend I met in Silicon Valley three years ago at a tech gathering, whose company N-iX employs hundreds of world-class software developments. They work on projects around the world through their head office in Lviv and branch operations in Stockholm and Sofia.
“We are very proud of our company and projects and young Ukrainians are realizing that technology and entrepreneurship are the fields to enter for a bright future,” he said. “We want to grow our country.”
Another supporter is Canadian-Ukrainian investor Lenna Koszarny, CEO of private equity firm Horizon Capital in Kyiv with US$600 million under management. “The headlines look bad, but this is an exciting time for entrepreneurs. We are bullish about Ukraine,” she said.
She will be one of many interesting panelists at the conference along with cabinet ministers from Ukraine, business leaders, entrepreneurs and bankers.
She is a ranking member of Canada’s Ukrainian diaspora, the world’s largest, which numbers several million. They have made huge contributions to Canada over several generations. For instance, the current Minister of International Trade, Chrystia Freeland, is Ukrainian-Canadian as are other luminaries in all walks of life such as the late Governor General of Canada Ray Hnatyshyn, sports celebrity Wayne Gretzky, many former premiers and MPs and notable business tycoons.
These connections are why Canada was the first nation to recognize Ukraine’s independence in 1991 and has been a steadfast ally as Ukraine’s 45 million people have gradually freed themselves from Kremlin control with the help of the European Union.
Ukraine is twice the size of Germany with the world’s third most educated population, and while damaged by the Kremlin’s occupation of 9 percent of its land mass, the country is poised to become an economic powerhouse. Since the Revolution, Ukraine’s finances, taxes and economic condition have improved under the steady hand of the IMF. Estimates are that this year its economy will grow by 2.4% and increase steadily.
Ukraine has the largest black soil bank in the world with 33,384,700 hectares of arable land and is the second largest exporter of grains globally. In a decade, yields have jumped 70% and the recent removal of tariffs by the European Union is sparking agribusiness development.
Also present at the Forum will be Andriy Kobolyev, a youthful CEO of Ukraine’s Naftogaz Ukrainy who has spearheaded dramatic reforms. Naftogaz is the eighth largest corporation in Eastern and Central Europe.
The conference, sponsored by the governments in partnership with the Canada-Ukraine Chamber of Commerce and Conference Board of Canada, will feature success stories and products in a cool and interesting trade show venue. Panel discussions by officials and economic players will discuss opportunities and include breakout sessions in four sectors: energy, agriculture, technology and infrastructure.
This conference, Ukrainian enterprise successes and the impending trade deal mark a New Ukraine, out from under the heel of the Kremlin and ready to take its rightful place as a a worldbeating European nation.
First published National Post June 17, 2016