Sergey Kartashov: On precipice of great change on Ukrainian IT market

Every year, the Ukrainian IT market attracts more and more investments: $345 in 2018, $544 million in 2019, and $571 million in 2020 during the pandemic conditions. Sergey Kartashov, the Senior Partner at technology company Roosh, explains what affects the investment climate in Ukraine.

According to Sergey Kartashov, the Ukrainian IT market is ready for experimenting. Recently, the world met such prominent IT projects as Reface, Preply, and Grammarly. Yet, there are still many new startups launching every day, so investors have all the chances to find a new treasure for their portfolio. The new projects keep on experimenting and testing brand new ideas, and that, according to the expert, is a good sign for venture capital funds.

One of these experimental projects is Pawa, a venture studio that implements ideas associated with machine learning, and AI Hause, a platform for AI and ML developers. Both projects became part of the technology company Roosh.

The changes on the IT market also affect the educational system. The market requires more and more specialists, and that personnel gap rose up to 30 percent in 2020. As a result, IT businessmen and large Ukrainian IT companies have organized private educational institutions to prepare the specialists they require. 

Such institutions differ from state universities and academies in several aspects. Instead of providing students with a solid theoretical base first, private initiatives focus on the practical part from the very beginning of the educational process. They also pay a lot of attention to related disciplines that can ease future specialists run their own businesses. This way, students at private universities learn how to manage a team, manage finances, how to raise investments, etc.

However, despite the undisputable success of IT projects from Ukraine, investors are barely investing in Ukrainian startups. As Sergey Kartashov explains, there are a few reasons for this situation.

First, it can be due to the lack of managerial skills in a startup team. The idea can be great, yet the founders may not know how to monetize their project and push their team to scale the business. Such a startup might never attract investments.

Second, investors tend to invest only in those startups that have the most chances to make a hit on the market and often neglect potential stars if they do not look attractive enough. According to the expert, there is no margin for error for startuppers in Ukraine: either you succeed from the start, or you fail. It is not common for Ukrainian investors to finance many projects, as it happens in the US.

And third, the investment climate in Ukraine may scare international investors. According to the Senior Partner at Roosh, they have difficulties with understanding the local legislation and are disappointed with the tax system. 

However, the last aspect has a chance to be changed soon. The Ukrainian authorities are working on launching Diia City, a special tax and legal regime that can ease working conditions for IT companies.