Launch of the Invest Club. How did it go?
IT ClusterOn April 20, the first meeting of the Investment Club in 2023 took place. The project was launched at the beginning of 2022, but the full-scale invasion made adjustments to the event schedule.
Invest Club is a project that Kharkiv IT Cluster implements together with Abdurakhman Shaykhalov, an investor, founder, and owner of the Step by Step group of companies.
In the future, it is planned that meetings within the investor community will be held once a month on a regular basis.
The event invited experts with many years of practical experience in investing and entrepreneurship in various business areas.
👤 Abdurakhman Shaykhalov is an entrepreneur, investor with 25 years of experience, founder and owner of the Step by Step group of companies, co-owner of Evolution Business park. He has implemented more than 30 business projects in various fields. He is an expert in investing and managing commercial real estate.
👤 Lyubomir Ostapiv is a financier, author of a large number of educational projects on investments, founder of the social project Family Budget with an audience of 50+ thousand per month. Partner of iPlan.ua. Author of the books «Love and Budget», «Baby and Budget», «War and Budget».
👤 Dmitriy Vartanyan — General Managing Partner at SID Venture Partners, opinion leader at WebSummit, Collision, Infoshare. Co-founder of Sigma Software Group. Entrepreneur with 20 years of experience, holds the position of CFO in the technology industry, manages 15 companies in 10 jurisdictions.
👤 Vitaliy Gorovyi is an IT entrepreneur. Founder of the holding company InSoft.Partners. Specialist in strategic investments in existing businesses. Expert in smart investments. Currently, the InSoft.Partners portfolio includes Inoxoft, Linkup Studio, Indeema Software, Artjoker, and Forbytes.
👤 Pavlo Obod is an IT entrepreneur, investor, and networker. Founder of the IT company Sloboda Studio and the consulting and educational business Growth Factory. Co-owner of the stepINVEST group of companies. He has successful experience in investing in loans, businesses, commercial real estate, the stock market, and cryptocurrencies.
The event was moderated by Abdurakhman Shaykhalov and Olga Shapoval, Executive Director of Kharkiv IT Cluster.
📌 Investment experience of speakers
Each participant of the roundtable has different investment experience in different areas and instruments.
👤 Pavlo Obod has experience in investing in different areas and with different checks. This helps him to diversify risks well during the war. He regularly researches different projects by investing small amounts.
🔹 There are cases even with loans against receipts. This method of investment was not effective — 90% of transactions were unsuccessful. But there are cases of loans with mortgage collateral that were effective.
Another case of Pavlo’s is investing in US stock exchanges, despite all the market turbulence, the amount for a year and a half (since 2022) has not changed significantly.
🔹 As a resident of Germany, Pavlo invested in a Lithuanian project aimed at attracting investors’ funds for the restoration and renovation of commercial real estate in Europe. Due to the fact that 9/10 of the objects of this project went bankrupt, Pavlo lost most of his money.
🔹 There were also investments in commercial real estate together with stepINVEST, but the project in Kharkiv is not developing at the moment due to the presence of high risks.
👤 As for Dmytro Vartanian, he and his fund invest in a wide range of companies and individuals, support internal startups and developers of their own company.
«There are thousands of venture capital funds in Europe now, but there were almost none in Ukraine. Now we pitch our fund to investors, then find startups and invest in them,» says Dmytro.
In December 2021, Dmytro’s venture fund invested about $500 thousand in companies with Ukrainian funders. There was an idea to invest directly in Ukrainian companies, but due to currency regulations, it is difficult to implement.
«We are looking for companies with Ukrainian founders that make a global product so that it can be sold in the United States and European countries,» Dmytro Vartanian quoted.
Dmytro’s fund has made 16 investments: 3 of them were made before the war, and all the rest were made immediately after February 24, 2022. All 16 startups continue to operate today, and investors continue to support the fund even during the full-scale invasion.
👤 Vitaliy Gorovyi invests in various formats: as an individual and a legal entity.
Vitaliy has been actively investing since 2003, he has experience in the stock market, personal investments in various projects, M&A, but now his approach has changed a bit.
«We are not a fund, we are not investors, we are a group of entrepreneurs who use the M&A approach, buying/selling equity,» Vitaliy says.
Currently, Vitaliy and his partners focus on buying non-controlling stakes, most often in businesses with more than 100 employees and annual revenue of 4-12 million.
«Once we have acquired a stake, we enter the business and help it develop on a daily basis. We have a very niche expertise — we work only in the B2B service business, most often outsourcing,» Vitaliy says about his own activities.
👤 Lyubomir Ostapiv notes that he started investing in the global stock market in 2017, when it became legal.
Since 2022, it has become more difficult to invest from Ukraine, you have to make many different movements and transfers, but it is legal and continues to work.
«People are afraid to invest, mostly because most Ukrainians are not in the mood to invest now. Today, people are afraid to invest in stocks, even if they have a long-term plan. People don’t want to invest for the long term,» shares his analysis Lyubomir Ostapiv.
📌 Investments after February 24 and today
All the participants of the Roundtable noted that they had invested in Ukraine’s security, made donations and participated in various projects, including IT4Life and Save Trempel. However, the event was dedicated to business investment, so below is a brief overview of the participants’ investments.
👤 Pavlo Obod noted that since February 24, 2022, he has been investing in residential real estate in Montenegro together with Abdurahman Shaykhalov.
«I continue to invest only with people I trust,» commented Pavlo.
👤 Vitaliy Gorovyi continues to invest despite the full-scale invasion.
The first deal was made on March 1, 2022, to the sound of explosions and sirens, the second on March 2, followed by deals in May and June.
Vitaliy and his partners’ investment model remained unchanged during the war — a stake in the service business.
👤 Dmitriy Vartanian’s comment on investments in 2022:
«Nothing has fundamentally changed for us — we continue to look for companies with a focus on global markets at early stages. At the end of the year, the volume of investments in WEB 3.0 companies decreased due to the fall in cryptocurrency prices. Venture capital investment also fell on average, but not significantly and not everywhere»
👤 Abdurakhman Shaykhalov shared his own statistics and observations on the real estate market in Kharkiv.
As for residential real estate, he said:
🔹 at the beginning of the full-scale invasion (March-April), prices were 30-40% of the pre-war price (January-February 2022);
🔹 in May, this figure was 50-60%;
🔹 now the price of some residential properties has reached 70%.
As for commercial real estate, it fell by 50-70%, and the office segment of A and B class suffered the most, because their main users were IT companies, most of which left the city.
«As of today, only 10% of the office space in this segment is leased. The price reaches a maximum of 50% of the pre-war price, but there are cases when they pay at warehouse rates (they just store furniture there) or only utility and operating costs,» Abdurakhman says about the situation.
Premises for cafes and small shops are doing relatively well and are in demand compared to other segments. The average rental rate reaches 40-70% in UAH of the pre-war rate.
📌 How to catch the right moment for investment and eliminate risks?
«If the industry starts to decline, we need to adapt to global changes or change the format. The point of investment is to diversify your niche. Another way to eliminate risks and minimize them is not to work with an untested project, but to work only in a niche that you personally understand or trust the person with whom you are investing,» Pavlo Obod answers the question.
Vitaliy Gorovyi has his own opinion on the risks:
«You don’t need diversification if you understand the business. There are cycles when a niche is “covered”, for example, from October 2022 to March 2023, 25% of IT specialists were laid off, but looking at the situation from the business side, the profit is still maintained – this is the main thing. As for the threat of market destruction, this is a risk, this threat is always present. Those who can adapt survive.»
The moderator of the meeting also noted that there is no one who can accurately predict a possible crisis in terms of the depth of the market decline, duration and exit, but there are a number of factors that specifically demonstrate when the market is growing and a positive trend is taking place.
«How to avoid risks when investing? Don’t invest….» — a quote from Abdurakhman Shaykhalov.
There are risks in any direction, they are of several types:
🔹risks that we cannot influence, some force majeure risks, for example, war;
🔹risks for example: natural disasters, but only if insurance for such a case is provided in the country.
📌 What can the state do to attract more foreign and domestic investment to Ukraine?
The participants of the Invest Club roundtable collectively identified several key areas:
🔹 Risk insurance
🔹 Currency regulation
Judicial reform
🔹 Introduction of individual investment accounts
«One thing that will be done soon is the law on long money or individual investment accounts. Ukrainians will be able to invest in such an account for 10 years tax-free. The law already exists, it has been written, I think it will be adopted in 2023 and Ukrainians will be able to buy shares and keep them in their portfolios,» — a quote from Lyubomyr Ostapov.
🔹 Simplification of taxes to bring back our own (Ukrainian) investors
🔹 Protection of investors’ rights
🔹 Active support for the export of Ukrainian products
All this will restore the trust of citizens, entrepreneurs, investors, and businesses.
📌 Investing in the future: for or against?
Lyubomir Ostapiv
«I plan to continue investing in the stock market. In the Ukrainian market, the main investment now is an investment in land. Nowadays, people are talking about a new crisis more and more often, but I do not see any signs of a systemic, huge crisis, which was in 2008.»
👤 Dmitry Vartanian:
«We, as a venture fund, will continue to invest, as this is our idea. We are obliged to look for the right startups that we can help and in which we understand as IT professionals and businessmen»
👤 Pavlo Obod:
«I plan to invest and diversify further. I continue to consider investment options that are understandable to me and from people I understand»
👤 Vitaliy Gorovyi:
«We are always open to new investments if we find something worthy of attention»
👤 Abdurakhman Shaykhalov noted that one of the best investments he sees today is to invest in the commercial real estate market in Kharkiv, because it has fallen significantly and is at its lowest level. But one should not forget about the high level of military risks in the city today.
«I am confident that possible active hostilities will not break the residents of Kharkiv, not to mention new force majeure. Recently, people who generate money have been returning to the city. For example, the number of IT workers has increased from 7500 people (April-May 2022) to 12500 people,» Abdurahman shares his thoughts.
As for the rental of real estate, the interest is now many times greater than in January-February 2023.
📌 Future plans for the development of the Invest Club
Olga Shapoval, Executive Director of Kharkiv IT Cluster, noted that meetings on Military-tech are planned in the future.
A separate event will be created, and all participants’ questions about investments in production for the Armed Forces will be considered next time.
«We received a large number of questions about startups, so we decided to organize a separate meeting in the near future to answer all the questions of the attendees,» Olga Shapoval said.
Abdurakhman Shaykhalov noted that the Investment Club is already planning meetings with CEOs of companies that invest in Ukrainian companies. The meeting will be useful for those interested in investing in the real (analog) business sector.
Within the framework of Invest Club, it is planned to implement at least 4-5 different formats, which will be chosen by the direct participants of the events – the members of Kharkiv IT Cluster.
In the near future we will consider the topics:
🔹 «Investments in the Armed Forces and Defense»
🔹 «Investments in real business in Kharkiv Kharkiv»
We thank all participants and speakers for their active participation in the project!
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