“Investments Need to Be Planned”

To better understand the prospects of working with investments in Ukraine, we turned to “Ukrainian Business Expertise” in Kyiv for consultation. This consulting company specializes in business valuation, corporate finance and law, as well as business strategy development. Director and Partner of “Ukrainian Business Expertise” Yuriy DZYUBENKO shared his vision of the specifics of attracting foreign capital.

R: How to determine that moment in a company’s life cycle when you can already start attracting foreign investments?

Yuriy Dzyubenko: For any company, this is a very important question, an event that needs to be prepared for. Therefore, ideally, the moment of attracting foreign investments is initially planned in the development strategy. In other words, the moment needs to be not “determined” but planned. Well-organized companies see their goal – the “investor” – long before negotiations begin and build their development in such a way as to become the most interesting object for investment.

The most difficult task is attracting a foreign investor at the initial stage – in “startup projects” (an exception might only be for IT projects). Domestic entrepreneurs often mistakenly believe that a good idea is enough…. Although in some cases, attraction at the earliest stage of development is possible (usually these are projects directly related to the investor’s own activities, for example, launching a new brand (product) in Ukraine, acquiring sites for construction, etc.).

Financial foreign investors, including venture funds, also prefer to finance organizationally established businesses (minimum 1.5-2 years) with high growth potential, with the aim of subsequently attracting a strategic investor. Therefore, at relatively early stages of a company’s life cycle (2-4 years), it makes sense to look toward specifically financial investors.

Strategic (profile) investors, as a rule, are interested in already relatively large and established projects in Ukraine that nevertheless maintain high potential for further growth.

: For which countries can Ukraine currently be of interest as an investment object?

Y.D.: Large capital has already largely lost national traits, so for large projects it would be more correct to speak not about countries but about international organizations, such as the EBRD, which is the largest institutional investor in Ukraine, and about transnational corporations.

As for countries, first of all, Ukraine traditionally represents interest for the nearest neighbors – Russia and the European Union.

I think that agricultural projects in the coming years will interest countries of the Mediterranean region and the Middle East, which are the largest consumers of Ukrainian agricultural products. Several years ago, many projects were announced for creating logistics complexes for light industry goods in partnership with Chinese companies that viewed Ukraine as a platform for trade with the European Union (but it seems that this role in the European Union went to Poland).

: What are the advantages of attracting foreign investments, besides getting additional capital? And are there any “contraindications”?

Y.D.: The advantages are obvious: as a rule, a foreign investor brings both new business opportunities (access to new markets, know-how, technologies, brand) and a new culture of doing business, with the second being no less valuable. Remember also that not only are you being chosen, but you are also choosing.

There is only one contraindication: don’t start down the path of attracting a foreign investor without preliminary professional preparation.

: Are there any common traits among enterprise managers who successfully work with foreign capital?

Y.D.: Education, experience and personal style are different for everyone, but there are common traits. These are flexibility of thinking, ability to absorb new knowledge, accept other business standards. And of course, persistence in implementing changes.