“It is a sign for Ukrainian businesses and the country”, says the co-founder of Ukraine’s newest unicorn, commenting on its recent external funding, which propelled it to unicorn status.
Fintech-IT Group, the firm whose tech powers Ukraine’s biggest challenger bank, Monobank, recently became Ukraine’s latest $1bn-valued tech firm, after securing funding from regional fund, Ukraine-Moldova American Enterprise Fund (UMAEF), reported to be around $18m.
The funding lifted Fintech-IT Group to unicorn status, joining half a dozen fellow Ukrainian unicorns, which include writing assistant Grammarly, software company GitLab and workflow automation company AirSlate (though some of these now have overseas HQ).
Broader implications of outside investment
It also has wider ramifications for the startup and tech ecosystem in Ukraine, a country still at war with Russia, says Oleg Gorokhovskyi, Fintech-IT Group co-founder.
He says: “It’s a sign for everybody, a sign for Ukrainian businesses and the country, that even during this hard war, if you do the right things, if you help clients, you could be interesting for investors and raise money.
“It is a huge, important step for Ukrainian entrepreneurs and Ukrainian businesses overall.”
Jaroslawa Z Johnson, president and CEO of UMAEF, which was set up by the US Congress in 1994 and has long-term experience of investing in tech firms in Ukraine and Moldova, said Fintech-IT Group was a “local leader” and that its success was testament to the strength of the Ukrainian tech ecosystem.
Russia war blocking investment
Ukraine’s war with Russia has been a block on external investment coming into Ukraine, experts say.
Maria Kucheruk, co-founder, Ukrainian Association of Startups, said: “In general, attracting external investment into Ukrainian startups during the war remains extremely challenging. Only a few mature or already profitable companies manage to raise capital.
“For the majority of early-stage startups, investors remain cautious due to perceived risks and geopolitical uncertainty. This makes the need for international co-investment mechanisms and innovation support programs more critical than ever.”
Gorokhovskyi co-founded Fintech-IT Group, the umbrella company for several tech firms, including FintechBand, which supplies the core tech behind the Monobank app, with Mykhaylo Rogalskyi.
Rogalskyi said during the war, the “mood of entrepreneurs in Ukraine is that it’s not the time to raise funds”.
Furthermore, he said he was expecting complications with the UMAEF investment deal.
Rogalskyi said: “It is really hard to expect investors to queue for Ukrainian companies. It was a big surprise for me to go through the deal, and nothing scared the potential investor during the negotiation period.”
A previous attempt at a fundraiser in 2021, with a consortium involving Goldman Sachs, “blew up” during negotiations, says Rogalskyi.
What is Monobank?
Monobank, founded in 2017, is Ukraine’s biggest neobank, and Ukraine's second biggest retail bank overall with around 10m customers.
It is jointly owned by Universal Bank, which provides retail and commercial services, and Gorokhovskyi and Rogalskyi.
Monobank says customers can open accounts within minutes, manage payments, access loans, and enjoy cashback and loyalty rewards.
It also has a B2B offering supporting SMEs, and an e-commerce offering.
Monobank's customer base is skewed towards younger people, with 85 per cent of 15 to 35-year-olds in Ukrainian cities using the banking app.
Impact of war on Monobank
Like other Kiev-headquartered businesses, Monobank has been badly impacted by the war- be it blackouts, air raid sirens, and staff anxiety.
Rogalskyi says: “When you have a blackout in the cities, you have to buy generators and operate generators in the office.
“You have to buy Starlink and operate Starlink. If anyone is not sleeping because of air raid sirens during the night and rocket attacks, the next day is not super productive.”
Monobank staff are located in different locations within Ukraine for security reasons, and there is also the added threat of a cyberattack.
Rogalskyi says: “Every couple of weeks, we have attempts to attack our infrastructure from, let’s just say, unknown hackers."
International expansion on hold
International expansion is on the agenda for Monobank, but the war has put its plans on hold.
Possible markets include those where there are many Ukrainians, such as Poland, Romania, the Czech Republic, and the Baltic countries.
Rogalskyi says that the company would want to have a team in place in an overseas market, which, given restrictions on air travel out of Ukraine, coupled with a desire for the founders wanting to be in the challenger bank’s home market amid a war, has stymied these plans for the time being.
Rogalskyi says: "For now, it’s important to be here in Ukraine, with our team, with our customers."
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