Ukrainian Technology for the World Stage

Why there are so few global companies based on ideas from the

Ukraine ?

Agenda

• Why so few Ukrainian/Russian companies on the world stage ?

• The issues• Funding Sources• Creating a credible company• Marketing, Finance & Sales• The VISION

A great resource

“Ukraine also has a budding technology sector, and -- after the U.S., India, and Russia -- the fourth largest number of computer programmers in the world. It was a main center of the Soviet programming industry. The first computer built in continental Europe was made in Ukraine in 1951. Even today, scientific institutes each year churn out some 50,000 science or technology graduates.”

Business Week

The Issues

• InfrastructureThere is not a ‘support framework’ in place to allow entrepreneurs to start; development, legal and other resources are lacking

• Finance There are few sources of finance for new businesses and those that do exist are hard to find

• CommercialBusiness models are frequently inefficient and poorly developed, making it hard to create a compelling case

• Education Entrepreneurs are not educated in the basics of starting and running a business

• RegulatoryThe regulatory framework, whilst in theory supportive, is onerous and complex

Funding Sources

• Corporate Programmes• Venture Capital (still there)• Venture Finance• Angels• Banks (tricky now)

… and they all have short attention spans …

Creating a Credible Company

• Registration– Where ?– Proper shareholder structure– Articles of Association

• Budget– Simple but addressing all the main areas

• Directors– Industry figures

• APPROACH AND PRESENTATION– Business Plan– Executive Summary– Attitude …

Creating a Credible Company

Quarter Year 1 Year 21 2 3 4 5 6 7 8

Net Revenue 1,097 10,313 23,411 54,345 89,165 121,432 314,748 954,305 2,202,463 3,592,948Cost of Sales 12,506 13,408 17,969 28,499 72,382 46,719 72,448 90,038 104,945 314,150Gross Profit -11,410 -3,095 5,442 25,845 16,783 74,714 242,300 864,267 2,097,518 3,278,798

OPEXSalaries 288,463 383,786 389,786 400,677 1,462,712 553,072 813,382 1,114,429 1,391,403 3,872,286Travel & Expenses 15,668 17,409 17,509 17,534 68,120 26,055 40,630 57,036 70,193 193,915Consulting/Professional Fees 172,497 55,988 22,700 22,700 273,886 94,708 166,715 238,723 238,723 738,869Marketing 3,799 31,810 95,321 169,070 300,000 223,306 273,907 299,862 323,619 1,120,693Office & Admin 16,274 23,249 23,249 23,528 86,299 29,042 45,204 67,935 87,516 229,697

Total OPEX 496,702 512,242 548,565 633,509 2,191,018 926,183 1,339,839 1,777,985 2,111,454 6,155,461

EBITDA -508,112 -515,337 -543,122 -607,664 -2,174,235 -851,470 -1,097,539 -913,718 -13,936 -2,876,662

Bad Debt 22 206 468 1,087 1,783 2,429 6,295 19,086 44,049 71,859

CapEx 29,127 0 0 0 29,127 83,221 83,221 416,104 0 582,545

Depreciation & Amortisation 2,427 2,427 2,427 4,739 12,021 11,674 27,856 50,973 50,973 141,475

EBIT -510,561 -517,971 -546,018 -613,489 -2,188,039 -865,572 -1,131,690 -983,776 -108,958 -3,089,996

Milestone Description Month Cashflow1 100k Members 6 -1,070,3892 500k Members 12 -2,244,4163 First Country Launch 13 -2,607,1584 Operational Profitability 26 -7,329,303

Marketing, Finance & Sales

• Marketing– Credible … addressable market

• Competition• Accessibility• Believability

– CPA (Cost per Acquisition) … realistic– Retention … realistic– Branding/PR– Virality

MarketingTotal

Market

Addressable Market

Percentage Achievable

Users

Percentage Retained

What will it cost per retained customer ?

Marketing, Finance & Sales

• Finance– Don’t do too much– Simple and credible– Driverised preferable to plain numbers– Realistic key metrics

• CPA (Cost per Acquisition)• ARPU (Average Revenue per User)• CoS (Tech & Infrastructure Cost per User)

FinanceModel Key Inputs

ONLY EVER CHANGE INPUTS IN RED PRESS <CTRL>+m TO RETURN HERE AT ANY TIME

Model Display Currency USD CapexExchange Rate Date 12/12/08

TechnologyAmortisation Period 3 YearsBad Debt 1% Headcount

Start Year 2009 MarketingStart Month 1

Overhead

Customer MetricsOffice & Admin

Revenue Recognition Cost of Sales 5%

Cashflow Model

Set Customer Metrics

Set Revenue Metrics

Switch to AutoCalcSwitchoff AutoCalc Recalculate Model

Change CostofSales

Manage Capex Items

Manage Headcount

Manage Marketing

Exchange Rates

Manage Overheads

Manage Cashflow Mode

Manage Technology

Manage Office & Admin

CHARTING

Clearly state your key assumptions … don’t hide them

Marketing, Finance & Sales

• Sales– ARPU (Average Revenue per User)– Sales per Sales Head– Average Deal Size– Again, driverised preferable to blank numbers

THE VISION

• PRACTICE• PRACTICE• PRACTICE

• … PRACTICE SOME MORE !

THE VISION

• Elevator pitch– Concept

• Six minute pitch– Concept, Market, People

• Potential Investor pitch– Concept, Market, People, Operational Plan, Budgets, Returns

Brevity is BEST

Demofall 2007

Большое спасибо!

Matt ColebourneCEO, Startup Lab

matt@startup-lab.com