Insights and opinions from Poland, Lithuania, Latvia, Estonia and Ukraine

🇵🇱 🇱🇹 🇱🇻 🇪🇪 🇺🇦

Interview: Dmitry Vartanian of SID Venture Partners

Dmitry Vartanian is Managing General Partner at SID Venture Partners. He is also co-founder & CFO of Sigma Software and a certified lawyer. At SID, he and his team back Ukrainian founders from pre-seed to Series A. Its deeptech credentials are evident from its DNA – it was formed in 2021 by three Ukrainian IT companies: Sigma Software, Ideasoft and Datrics. We had the pleasure of finding out more about SID from Dmitry, as well as the current picture for startups in Ukraine.

How did you end up in the startup world?

During my 20 years in the consulting industry at Sigma Software, we’ve developed many solutions for startups and even proceeded to invest in some of them with our own money. Eventually, that led us to the creation of the investment wing Sigma Software Labs, which also serves as a venture-building platform, backing ideas from the very beginning and empowering founders with extensive operational support.

But that was just the beginning. After numerous conversations with the founders of Datrics (YC alumni big-data startup) and Ideasoft (a leading blockchain development firm), we realized there’s more we can do for the startup scene in Ukraine. Combining our experience and network, we launched a venture capital firm, SID Venture Partners. Just in time for all the challenges, but with clear understanding that we can withstand them and bring positive changes for the ecosystem.

And what were you doing previous to SID Venture Partners?

Prior to launching SID Venture Partners, I co-founded Sigma Software Group — one of the largest service companies in Ukraine, and — a cybersecurity company whose products protect 8+ million websites worldwide.

But those are only two highlights: during my 17+ years as CFO and certified lawyer, I’ve managed 14 companies in 9 jurisdictions.

What is Sid looking for in startups in terms of geographies, verticals?

SID Venture Partners is looking for early-stage startups with Ukrainian founders from around the world. We’re an industry-agnostic fund investing in all kinds of software companies but have amassed profound expertise and a sizeable portfolio presence in fintech and blockchain verticals.

Our main criteria are simple yet proven — you need to scale fast, have a reasonable burn rate, and prove your idea with data and passion.  

And in founding teams?

SID Venture Partners is led by 13 partners who are current C-level executives and founders. This experience helps us to understand market challenges and conditions better, as well as assess teams fairly.

Besides the relevant experience and vast understanding of chosen market problems, we’re also looking for a positive attitude and ability to solve problems and cooperate.

Most importantly, we want to work with people that are inspiring and easy-going, as early-stage companies sometimes require a lot of attention and help from investors.

Why should startups choose SID Venture Partners?

SID Venture Partners is built around the smart-money principle — in addition to capital, we provide all kinds of assistance and help to our portfolio companies. Those are not empty words. We could help them design, recruit, build complicated systems, and land new clients.

Simply speaking, startups can count on the whole SID ecosystem rather than just a wire transfer to their account. SID is backed by several founding companies whose resources are at our startup’s disposal.

For example, Sigma Software has around 2000+ developers, designers, and other professionals in Ukraine, Europe, and US. IdeaSoft specializes in blockchain development, hosting world-class developers in that field. Datrics, a Y Combinator alumni startup, has expertise in machine learning and AI.

And then there’s NEAR Protocol, one of the most extensive blockchain ecosystems in the world with $250M+ in daily trading volume. 

How do you assess the startup ecosystem in Ukraine? Recently, news have come out highlighting both the resilience as well as the need for survival funding during the war – how do you assess the situation?

We could certainly back the claim that the Ukrainian tech ecosystem has shown incredible resilience and courage. We’ve made 10 investments since the start of the full-scale invasion, and we are not slowing down the pace.

One of our portfolio companies, a design platform Awesomic, was featured in the Y Combinator video named “Scaling a Startup from a Bunker”, which speaks for itself.

Ukrainian founders did everything possible to secure the safety of their teams without interrupting daily operations and service deliveries. Some even managed to pivot or expand. Our portfolio company Numo pivoted to ADHD treatment during the war, writing a completely new solution from scratch. 

Another example is Liki24, one of the biggest e-commerce Ukrainian stars, which now operates its pharma-delivery service in four European countries.

Of course, they’re not only victories. The war collided with bigger macro trends, making access to capital especially challenging for Ukrainian founders. Many of them are in dire need of financial support and access to new markets and clients.

If you could change one thing about the ecosystem for better, what would it be?

We’d like to increase the level of cooperation between ecosystem players. Sharing more data, industry-specific information, and best practices would undoubtedly have a positive impact on founders and other stakeholders.

Where do you see the ecosystem in the next 1 to 5 years, or after the war?

With more and more victories on the battlefront, investors are more likely to allocate their capital for Ukrainian talent — we’ve seen it from our personal experience and in the news. There’s a new ffVC fund with up to $50M, and Horizon Capital is on track to close its $250M PE vehicle. 

Those numbers might not be impressive for a bigger startup ecosystem, but they could bring significant changes to the Ukrainian ecosystem. With that amount of dry powder coming, founders will be able to build faster and add a few more unicorns in the coming years.

After the victory, Ukraine will be in focus due to reconstruction efforts and that’s a tremendous opportunity that will bring positive changes to each sector, including tech. 

How is Sid facing the challenges of the war, from addressing the personal safety of the team and founders, to coping with the financial implications?

SID was launched right before the full-scale invasion in December 2021 but showed organizational maturity when the war started. Most of our team is now located in Lisbon, Portugal, and works in remote-first mode.

We’ve also helped to ensure the safety of our portfolio companies’ team members, providing evacuation transport and other kind of support. Work has not stopped there, as we helped some of our portfolio companies to raise new rounds or find new revenue streams.

What are the most exciting new startups coming out of Ukraine or founded by Ukrainian founders?

Well, we are very excited about solutions that have already improved the lives of millions of Ukrainians and are now exported abroad. Ukraine is on track to be more integrated into the global economy than ever before, and digital solutions are a prominent part of it.

For example, our portfolio company, The Credit Thing, scales next-gen credit products for newcomers in the UK. It’s founded by the founders of monobank, the most successful neobanks in CEE, with more than 5 million clients in Ukraine alone. 

Then there’s Liki24, which operates pharma delivery and price comparison services in Ukraine. Following the invasion, the company decided to speed up its efforts to conquer European markers — in addition to Romania, Hungary, and Poland, it’s now beating expectations in Italy. 

Those examples show us a possible future of Ukraine and makes us excited for the next decade.

What startups from your portfolio are you most excited about?

We are sure all of our investments will make a big splash, but some take more time and effort to gain that speed and recognition. Therefore, right now, it would be suitable to highlight Awesomic and V-Art.

Awesomic matches design tasks with professional designers within 24 hours. It covers any type of request on a flat monthly subscription, and the team recently added Webflow to its arsenal. This means you can design, develop and launch your project within days, not months. Utilizing best fit-designers, Awesomic delivered more than 10 000+ projects.

V-Art is a platform for digital art assets, combining an NFT marketplace and IP rights managing solutions. Recently it made a big announcement, launching V-Art Protocol. It solves a big problem, providing hassle-free licensing of digital products across platforms, and satisfying the needs of creative digital asset creators, IP owners, buyers, and sellers.

And from your anti-portfolio you wish you had invested in?

The thing is, we launched in December 2021 and, in less than a year of operations, made 13 investments despite war and a bigger market downturn. To achieve this result, we’ve screened hundreds and pre-screened thousands of startups, scanning all parts of the tech ecosystem in Ukraine and beyond it.

Our investment thesis, for now, let us safely say that we’ve invested in each startup that checks all the boxes – so we do not have FOMO so far. 

What advice would you give to startup founders in what seems like more challenging times to lead a startup?

Margins, growth, and capital efficiency are once more the key virtues of a successful startup, say industry moguls, and we fully support this message.

The economic instability might last for a while, leading to scarce capital and moderate valuations. But it should not discourage startups from trying.

What’s next for SID Venture Partners and Dmitry?

We’re in for a long game. SID Venture Partners is designed to withstand turbulence and challenges, paving the way for new funds. Our portfolio is already performing beyond expectations. In the future, we’d like to support startups in later stages and launch new investment vehicles. 

What’s the best way for people to stay updated with your latest news?

The very best way would be to become an LP and receive all the information from our investor-only information channels. We are not only informing our investors about the fund’s performance but let them collaborate with portfolio companies directly. 

And for everyone else, follow our pages on LinkedIn, Facebook, and Twitter to stay updated.

%d bloggers like this: