CANYON TECH VENTURES UKRAINE TECHNOLOGY FUND Canyon Ventures: Canyon Tech Venture Investor...
-
Upload
april-harris -
Category
Documents
-
view
227 -
download
0
Transcript of CANYON TECH VENTURES UKRAINE TECHNOLOGY FUND Canyon Ventures: Canyon Tech Venture Investor...
UKRAINE TECHNOLOGY FUND
CANYON TECH
VENTURESCanyon Ventures: Canyon Tech VentureInvestor PresentationJanuary 2015
UKRAINE TECHNOLOGY FUND
2
INVESTMENT THESIS
• Canyon Ventures (CV) plans to launch Canyon Tech Ventures (CTV) a Ukraine-focused technology fund which seeks superior risk adjusted return through direct investment in fast growing export-oriented companies in Ukraine’s IT sector during their Series A (Growth stage) and Series B (Expansion stage) funding rounds.
• Despite the overall crisis in the Ukrainian economy, the IT sector has continued to post double digit growth, capitalizing on the superior education system which graduates over 15,000 IT professionals annually. The existing Ukrainian IT sector employs over 50,000 professionals and is valued at over $5bln annually.
• Technology companies based in Ukraine have been able to leverage the internet and technology to create business models which allow them to sell to an international market.
• Recent geo-political instability has reduced the amount of investment and growth capital available to Ukrainian IT firms, despite the continued revenue growth from international consumers.
UKRAINE TECHNOLOGY FUND
3
UKRAINIAN I.T. SECTOR CONTINUING STRONG GROWTHI.T. MARKET FUNDAMENTALS
• Over 1500 I.T. companies
• Over 50 000 I.T. professionals
• Over USD 5B in combined revenues for outsource, e-commerce and product companies
• 25% CAGR over 2009 – 2013
• #1 in Central and Eastern Europe by number of developers and service volume
• Top 5 strongest software developers (Topcoder 1)
• Top 13 offshore outsource destination 2014 (AT. Kearney Global Services Location Index 2)
• Top 10 emerging market outsource destination 2014(Gartner 3) and top 30 in the world
• Top 10 most certified IT specialist in the world (Global IT IQ Report by BrainBench 4)
• Top 20 in IT Outsourcing and High-Tech services (Global Services 100 List, 2010)Technology remains a priority sector for the Ukrainian economy, defined by large population of low cost,
highly educated and experienced IT professionals
UKRAINE TECHNOLOGY FUND
4
UKRAINE KEY INFOCOUNTRY SNAPSHOT
Country size 603 700 sq. m.
Capital Kiev
Population 42,8 M
Labor Force 22 M
Literacy 99%
Annual number of graduates 600 000
Annual number of IT specialists graduates 16 000
Number of internet users 18,8 M
GDP per capita (WB, current $, 2013) 3900 USD
Unemployment 2014F, yoy 9%
CPI 2014F, yoy 22%
Nominal exchange rate, eop, USD 16,5 UAH
• # 1 European country by area size
• # 5 in Europe and #29 in the world by
population
• # 4 in the world by the number of people
with higher education
• #9 in Europe by number of internet users
UKRAINE TECHNOLOGY FUND
5
COMPELLING INVESTMENT FACTORSROOM TO GROW
In 1990, Ukraine’s economy was roughly the same as that of Poland, a country with a similar economy and social/political legacy. Since then, however, Poland has outperformed:
Most of the gulf can be attributed to the 1990s, a decade during which Ukraine’s economy shrank nine years out of ten.
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 20130
100
200
300
400
500
600
700
UA GDP PL GDP
UKRAINE TECHNOLOGY FUND
6
Ukraine Russia Poland Romania Turkey Kazakhstan Kenya Nigeria Argentina Greece Spain Columbia
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
But Ukraine CAN GROW. From 2000 – 2008, it was among the world’s fastest growing economy
GDP, 1990 - 2000 CAGR GDP 2000 - 2008 CAGR GDP, 1990 - 2013 CARG
COMPELLING INVESTMENT FACTORSROOM TO GROW
Source: World Bank and ESAM estimates
UKRAINE TECHNOLOGY FUND
7
REFORM PATH ADOPTED FOR 2015Anti-corruptionCreating National Agency and National Bureau to monitor and fight corruption
DeregulationReduction of state controlling structures from 56 to 28. Number of taxes cut down from 22 to 9.
DecentralizationTransfer authority from central to regional state agencies
Tax reductionSocial tax to cut down from 40% to 15%
EU integrationDevelopment and integration of 1500 national standards compatible with EU norms
National securityNATO cooperation and ultimate integration program
JusticeJudges validation, court and judicial system renovation. Law enforcement agencies, police force reforms.
UKRAINE TECHNOLOGY FUND
8
INTERNATIONAL SUPPORT
USA SUPPORT
• Ukraine Freedom Support Act is signed by US President on Dec 18, 2014
• $ 320M of funds committed in 2014
• $ 1B sovereign loan guarantee issued in May 2014
• $ 20M to support reforms in law enforcement and justice sectors is pending approval
• $ 45M to support defense and interoperability with U.S. Forces is requested additionally
INTERNATIONAL MONETARY FUND
• $ 17.3B stand by loan over 2 years program. $ 4.56B is disbursed in 2014
EUROPEAN UNION
• € 5B from the European Bank for Reconstruction and Development (EBRD);
• € 3B from the European Investment Bank (EIB);
• € 1.6B in macro financial assistance loans;
• € 1.6B technical assistance grants
In 2014 Ukraine received $ 9B of foreign financial support
UKRAINE TECHNOLOGY FUND
9
TOTAL INVESTMENT VOLUME
2010 2011 2012 2013 2014F0
10
20
30
40
50
60
70
80
90
20 22
44
80
40
2010 2011 2012 2013 2014F0
10
20
30
40
50
60
13
24
5157
47
2010 2011 2012 2013 2014F0
0.5
1
1.5
2
2.5
3
3.5
4
0.420.73
0.280.28 0.21
2.8
1.9
2.9
3.8
2.9
Seed Round A
TOTAL INVESTMENT VOLUME, MLN USD TOTAL NUMBER OF DEALS AVERAGE INVESTMENT, MLN USD
I.T. market in Ukraine is in early growth stage
Economy decline has very moderate impact on investment activity due to western focus most of the companies maintain
UKRAINE TECHNOLOGY FUND
10
NUMBER OF DEALS
2010 2011 2012 2013 2014F0
10
20
30
40
50
60
13
24
51
57
47
2010 2011 2012 2013 2014F0
10
20
30
40
50
60
70
80
90
20 22
44
80
40
Majority of deals, 95%, were allocated to early development stagesOnly few deals done for Round B
Rapidly growing companies need later stage capital to retain growth
Growth of incubators:****
SEED STAGE NUMBER OF DEALS ROUND A NUMBER OF DEALS
UKRAINE TECHNOLOGY FUND
11
CASE STUDY: POLISH MARKET
Poland Ukraine
Population 38 M 42 M
Labor force 18,53 M 22 M
GDP per capita (WB, current $, 2013) 13,648 3,900
Number of internet users 25,6 M 18,8 M
Number of IT companies over 11,000 over 1,500
IT firms revenues over USD 10 B over USD 5 B
Number of specialist in IT 75,000 50,000
Annual number of IT specialists graduates 20,000 16,000
VC/PE attractiveness index 2013 rank by IESE 28 69
MCI management
Founded 1999
Funds under management 5
AUM over 400 M
Geography CEE, CIS, DATCH
Industry IT Technology
Investment stage All stages
Total investments made 50
Total exits made 30
Current portfolio 33 companies
Total values of exits in 2014 over USD 27 M
Net IRR from 1991 23,8%
Country-to-country highlights MCI – oldest tech funds manager
Poland I.T. industry is a benchmark for Ukraine developmentPoland PE/VC activity outperforms Ukraine
UKRAINE TECHNOLOGY FUND
12
MCI FUNDS PERFORMANCE
MCI TechVentures Fund portfolio
Number of investees 8
Total value USD 98.8 M
Net IRR for last 12 months 17.40%
Net IRR for last 3 years 45%
MCI EuroVentures Fund portfolio
Number of investees 5
Total value USD 185,7 M
Net IRR for last 12 months 29,30%
Net IRR for last 3 years 67%
1999 2000 2001 2002 2004 2005 2006 2007 2008 20100.00%
50.00%
100.00%
150.00%
200.00%
250.00%
After entering EU
MCI INVESTEES IRR ON EXITS
MCI FUNDS INDICATORS
EU association and further membership fuels I.T .market performanceMSI funds, the oldest on the market, reflect market trend
UKRAINE TECHNOLOGY FUND
13
INVESTMENT PIPELINE
14
UKRAINE TECHNOLOGY FUND
Depositphotos is a microstock company; among the top five globally and the fastest growing company in its niche. Founded by Dmitry Sergeev in November 2009, the company has offices in US, Europe and Ukraine that provide customers with support in 15 languages. We expect Despositphotos to go public within the next 3-5 years www.depositphotos.com
Grammarly is a SaaS technology for spelling and grammar checking, with revenue of $10 million in 2012. Grammarly, improves communication among the world’s two billion-plus English writers. More than three million registered users worldwide trust Grammarly’s products, which are also licensed by more than 100 leading universities and corporations. www.grammarly.com
InvisibleCRM named “cool vendor” by Gartner Inc., provides tools engineered to increase user adoption and ROI of enterprise application by seamlessly integrating them into the way of business people work every day. Founded in 2006, the company today has more than 1000 customers and more than a million paid users across the globe. www.invisiblecrm.com
Jooble is a vertical job search engine that gives access to millions of jobs worldwide through a singles intuitive interface. The service operates in 59 countries, encompassing Europe, North America, Latin America and Asia. One of the world’s largest job search engines, Jooble now boast an audience in excess of one million job seekers per day. www.jooble.org
MacPaw, a Mac software company located in Kyiv, develops innovative software and information technology solutions for increasing the quality of Mac use. The company’s CleanMymac is one of the best-selling Mac-cleaning software available.
15
UKRAINE TECHNOLOGY FUND
Paymentwall with a partly Ukrainian founding team and a major R&D center still in Ukraine, is a global payment services provider for digital content, virtual goods and web services. It features over a hundred payment options that allow companies to monetize their users around the world – especially in the field of games, e-commerce and other verticals. Headquartered in San Francisco, the company is another candidate to go public in the next 3-5 years www.paymentwall.comReaddle creates innovative business and productivity applications for iPhone and iPad. Founded in 2007 in Odessa, the company has more than 30,000,000 downloads. Millions of clients use such Readdle apps as Scanner Pro, Documents, PDF Expert, Calendars 5 and Printer Pro on a daily basis. www.readdle.com
StarWind Software is a leading provider of software-defined storage for Microsoft Hyper-V and Windows Server 2012. Founded by Ukrainian entrepreneurs, the company now has offices in the United States and Ukraine; today its customers number more than 30,000 worldwide; Including SMBs, governmental and educational institutions and Fortune 1000 companies. www.starwindsoftware.com
Together Networks is a leading social and online dating business in Europe. With over 110 million users worldwide, it operates across four continents. The service operates with casual dating websites main part of which previously belonged to Cupid PLC, a public company founded by Bill Dobbie and Max Polyakov in 2005 and acquired by Grendall Investments in 2013. Its workforce now includes hundreds of employees based in Dnepropetrovsk, Zaporizhzhya and Kyiv. www.togethernetworks.com
ZeoBIT specializes in computer security software and internet security. Founded by Slava Kolomiychuk in 2006, today ZeoBIT is world known for the bundled utility software called MacKeeper, the multifunctional software that combines 16 individual applications for Macintosh computers. ZeoBIT has a management headquarters in the US and partnership offices in Europe and Asia. www.ZeoBIT.com
16
JED SUNDENSENIOR PARTNER
Founder and CEO of KP Media which was first Ukrainian technology company to
complete an IPO.
Oversaw launch of Bigmir.net, leading Ukrainian portal, and
Korrespondent.net, leading Ukrainian news site, top 500 global sites.
Successful investor into Ukrainian and foreign internet startups.
MANAGEMENT TEAM
CANYON TECH VENTURES
17
ANGUS ROVENSENIOR ANALYST
Senior tech equity research analyst for
$600M growth-oriented TMT group at BAM (AUM
$6bn)
Oversaw investments into leading tech companies in finance, ecommerce and enterprise software
Senior tech equity research analyst for
$600M growth-oriented TMT group at BAM (AUM
$6bn)
Co-founder of US-based e-commerce
startup.
CANYON TECH VENTURES
MANAGEMENT TEAM
18
DMITRIY MESCHERYAKOVCHIEF FINANCIAL OFFICER
10 years experience in Private Equity and Investment Banking
in Ukraine.
Extensive experience in technology, real estate, finance and pharmaceuticals.
Raised over $200 M in equity and debt financing.
CANYON TECH VENTURES
MANAGEMENT TEAM
19
INVESTMENT COMMITTEE
TODD KIMMEL
MANAGING PARTNERMONTAGE VENTURES
EDWARD SHENDEROVICH
MANAGING DIRECTOR KITE VENTURES
ARTHUR MCCALLUM
DIRECTORKAZIMIR PARTNERS UKRAINE
Oversees Silicon Valley-based VC Fund focused on Seed and
Series A investments into technology and internet
companies concentrated in financial, healthcare and e-
commerce.
Kite Ventures is a global venture investment company
specializing in internet and technology investments. Kite
Ventures was founded in 2009 and has invested over $250M across 20 portfolio
companies
Oversaw Kazimir Ukraine Convergence Fund, AUM of
USD 140 M and has extensive experience in PE and Fund
Management in CIS countries.
CANYON TECH VENTURES
UKRAINE TECHNOLOGY FUND
20
SUMMARY, TERMS & CONDITIONS
Entity OG Solutions, (British Virgin Islands)
General Partner Canyon Ventures (“CV”)
Tenor 7 Years, extendable maximum of 2 years1 Year at a time at the discretion of the General Partner
Target Size $50 Million
Subscriptions Minimum $ 500,000.00
Management Fee 2.0% per annum
Expenses Fund will bear all organizational, operating, due diligence and transactional expenses, up to 25 basis points of invested capital.
Performance fee 20% per annum, subject to high water mark
Custodian ING Bank
Legal Counsel Walker (Cayman Islands)
Administrator Apex
Auditor Deloitte
21
CV HOLDING STRUCTURE
OG Solutions
(BVI)
Canyon Ventures
Canyon Tech
Venture (Investment Fund)
CANYON TECH VENTURES