where are the internet opportunities in ukraine?
TRANSCRIPT
Where are the Opportunities in Ukraine’s Internet Market?
By Ken Leaver
Dnepropetrovsk Startup Event
September 2013
What spheres are interesting in Ukraine?
eCommerce Mobile apps
EducationSAAS
DatingMarketplaces
Enterprise
Big Data
So many options… how to choose?
First examine some of the global trends
1. Mobile taking off
In 2013, mobile devices will pass PCs to be most common Web access tools. By 2015, over 80% of handsets in mature markets will be smart phones.
Source: Forbes.com, “Top 10 Strategic Technology Trends for 2013”
2. Social networks becoming a standard way of communicating
Everyone is on social networks. Now businesses are figuring out how to make money off them.
A few more…
Greater personalization of Internet products and services than ever before.
Source: Forbes.com, “Top 10 Strategic Technology Trends for 2013”
Cloud will be center of our digital lives. Synch across devices. Services become more important.
4. Personal Cloud3. Big data opening new opportunities
Some of the trends in Ukraine
1. People getting more accustomed to purchasing and paying online
Less fear associated with buying online. Paying by cards and electronic wallets becoming less of a barrier.
2. Large online shops are scaling and getting into more categories
Successful first movers like Rozetka are following the Amazon “own everything” approach
So if you’re going to start a new Internet business in Ukraine, what do you do?
What industry to target?
Go for a local or a global model?
How to target that industry?These are the 3 questions I will cover today!
Global or Local Model? Look at the landscape first.
Global OpportunitiesLocal Opportunities(Just Ukraine or CIS)
• Strong technical talent that is less expensive than the west
• BUT mainly 1st generation entrepreneurs (US = 3rd / 4th gen)
• Language / cultural / immigration barrier = difficult to distribute in US & Europe
• Successes will be highly engineered products (think Viewdle)
• Market still far from saturated in most areas
• Western Internet co’s not very present yet in Ukraine and unlikely to be in near future
• Market is still small, but this also makes it cheaper to start
• Marketing (eg. Adword) is 5-10x cheaper than in the US
Local or Global Model? Also look at yourself.
Have you done an Internet project before?
Is your product/idea in an area where there is a lot of western competitors?
Do you have a team that can compete against experienced US/European teams? Go Local
Go Local
Go Local
Yes No
Yes No
No Yes
Consider Global
E-Commerce: Overview
The big opportunities are already occupied by big players
Requires relatively large funding
Import problems in Ukraine make certain models very difficult
The Opportunity:
1. Domestic goods (no import)2. Niche goods of high quality3. Direct to customer shipment from
abroad
Selling products from China is already too crowded
1st Industry
eCommerce models to consider
Fab BlueNile
• Groupon-style emails• Focus on style & taste• Difficult-to-find products from small
companies
• Huge assortment• Strong service• Big investment in brand
1st Industry
Marketplaces: Overview
Definition = lots of buyers and sellers
One player typically wins and others lose. That single player tends to just grow and grow with time.
Some models being done by international players already (eg. AirBnB)
The Opportunity:
Niche opportunities (eg. arts & crafts)Services (eg. TaskRabbit)
2nd Industry
Marketplace models to consider
Houzz Etsy
• Home remodeling is very fragmented (lots of small companies)
• Typical marketing channels not very effective
• Reviews are very important to purchase decision
• Also very fragmented merchants• The story of the maker/seller often
an important component of purchase decision
2nd Industry
Travel: Overview
International players currently dominate (eg. Booking.com, OneTwoTrip)
Difficult for a Ukrainian startup to compete with these international titans on the standard models
Need to focus on models where having a local presence is a key success factor
The Opportunity:
1. Online travel agency model2. Last minute hotel bookings that
require signing local hotels3. High End travel
3rd Industry
Travel Models to Consider
Hotel Urbano
Hotel Tonight
• Online travel agency = combination of physical presence + huge email base for lead generation
3rd Industry
• Sell hotel rooms the night before for deep discount = difficult for Booking & Expedia due to existing business
Mobile Apps: Overview
1m+ apps on the appstore = Tons of competition. Tough to be found.
High drop off rates after install.
Need clear, proven way of monetizing.
The Opportunity:
1. Focus only on models that have proven themselves in the west
2. Easier compared to other models to tap entire Russian-speaking region
High user acquisition costs / virality is often a myth.
Ukraine = low smart phone penetration
4th Industry
Mobile App Models to Consider
UberYelp
4th Industry
• Yelp model still up for grabs in Ukraine as no clear leader
• A clear long-term successful model
• Clear efficiency & customer experience improvement over current taxi system
• Uber, Lyft, Hailo and others scaling globally quickly, but will be a few years before they arrive in Ukraine
SAAS: Overview
International players quite experienced at this point but focused on own markets
Easier to focus on the regional / local market
If focused on global market than choose a niche you understand very well (ie. have worked in it)
The Opportunity:
1. Focus on proven areas where int’l products are too expensive or poorly localized
2. Focus on Russian-speaking region
Need to find the pain points of large, local Internet companies
5th Industry
SAAS Models to Consider
CureBit Bizible
5th Industry
• Allows you to know the source of all your customers (PPC, Organic, Email) and their behavior in your site
• Ukrainian eCom companies all working to improve the efficiency of their marketing spend
• A clear benefit to eCom companies as they get 5-10% sales lift with no investment
Education: Overview
Most agree the current education model is not effective. Especially in CIS.
Many professionals need to update their skills on nights/weekends.
The Opportunity:
1. Focus on localizing proven global models
2. Content generation is expensive. Need to license.
Most global models not paying much attention to Russian-speaking market so far
6th Industry
Education Models to Consider
Lynda.com
6th Industry
Eduson.tv
• Creating high quality content in-house and selling it many times
• Completely flexible to student as to when to study and what to study
• Paying for short courses from well known professors / experts
• Licensing of content• Pay “a la carte” for specific classes
Financial: Overview
Financial services improving at an very rapid pace globally
Key players are still banks but online players making key inroads
The Opportunity:
1. Peer-to-Peer lending2. Online investments3. Online banking pureplay
Ukraine is still about 5+ years behind the West…
7th Industry
Financial Models to Consider
Wealthfront.com Tinkoff
7th Industry
• Ukrainians still mainly investing in real estate
• Investing in stocks still perceived as extremely risky, but much more liquid
• Wealthfront provides a safe and easy model that requires no financial expertise
• Pure play online banks are already a fairly proven model
• Still no “Ukrainian Tinkoff”
Eastlabs Unique Value Proposition
InvestmentEastlabs is the only full-scope startup accelerator in the region with the ability to offer seed investment and beyond.
EcosystemEastlabs offers a collaborative office space in central Kiev, where driven, talented startup team members can interact with other like-minded startupers.
Comprehensive MentorshipEastlabs combines full-time, dedicated mentorship with expertise from an extensive pool of entrepreneurs, investors, and specialists.
Eastone ResourcesEastlabs is backed by one of the strongest holdings in Eastern Europe, and has close ties with the Viktor Pinchuk Foundation charity organization.
Online Application to Eastlabs
Day 1 Day 7 Day 30 Day 45 Day 60
Prepare PitchPresentation
Review byInvestment Committee
Term SheetSigning
Acceptance toEastlabs Eastlabs
Incubation Program
Day 15
Interview with Eastlabs Partners
Selection Process
Incubation Program
Startup Basics
Week 1 Week 2 Week 4 Week 5 Week 6
Value PropositionBusiness Model
PrototypingFinancial Modeling
User ExperienceTesting
LegalExecutive Summary
Grow Audience
Week 3
Business ModelGrowth Model
Week 7 Week 8
PivotVC Mechanics
Week 9 Week 10 Week 12 Week 13 Week 14
PitchingE-security
Lessons from FailureNegotiations
Financial ModelingPitching
Getting InvestmentsPitching
Grow Audience
ReceiveAdditional Investment
Week 11
PitchingPositioning
Week 15 Week 16
Success Metrics
Marketing
Marketing w/o MoneyPartnerships
Growth ManagementPitching
Life after Eastlabs
Define Build Validate
Sell
Test
Eastlabs Results
LAUNCHED 2012
INVESTED IN 12 COMPANIES
CASH TO COMPANIES $500,000 1st COHORT 75% of the companies raised funds
MENTORS 80