Adventures Lab is a young Ukrainian investment fund that entered the market in December 2019. Despite such a short time, the company has already established itself as an experienced and strong player that focuses mainly on early-stage and growth-stage projects. Ruslan Tymofieiev (Ruslan Timofeev), the fund’s founder, spoke about what helped Adventures Lab take off so quickly.
Investments love trends
To date, the fund has invested over $15 million in various IT projects. On average, $100,000–$500,000 for each. In the first year of its existence, the fund invested in six large projects. The most successful of the projects turned out to be the app Reface, as well as StreamHERO and EduDo.
EduDo, a Belarusian startup, is an educational platform that allows users to upload short tutorial videos. The main feature of the project is an opportunity to learn about a particular topic explained in a 3-minute video. It is similar to TikTok but with a focus on education. Adventures Lab’s contribution allowed the startup to expand its service functionality and tools for generating content.
One of the largest investments of the fund is the app for swapping faces in photos and videos Reface. Adventures Lab was able to predict its success at an early stage before the app gained popularity around the world.
The streaming service for working with advertising StreamHERO got $550,000 from Adventures Lab. Ruslan Tymofieiev explains that the stake was made on the actively developing esports industry which is steadily gaining popularity. The service integrates ads into gamers’ streams.
Tymofieiev explains that choosing a startup to invest in is a process that requires knowledge, a market sense, and a lot of time for analyzing and forecasting. However, even these factors do not provide a 100% guarantee of success. Even in Silicon Valley, the expert emphasizes, annoying failures happen. However, this should not and does not stop true unicorn seekers like Adventures Lab.
In the right place at the right time
The selecting process, says Ruslan Tymofieiev, begins with market research. They search for projects that are potentially useful to a consumer. Then, they examine the reliability and profitability of a startup, its business strategy, whether they determine their target audience right, what are the founders’ managerial skills, and then check other financial, organizational, and technical aspects.
At the same time, Adventures Lab mainly focuses on the early stages of investment: pre-seed and seed.
“Pre-seed” means investments at the earliest stages when a startup has just an idea or a demo version of a product. Such a startup gets in average $100,000 to $200,000. The next round is “Seed”. It refers to startups that have their product on market, yet it still requires funds for scaling, Ruslan Tymofieiev explains. The businessman adds that for the fund, the main difference between these rounds is the greater risk in Pre-seed, offset by a greater payback.
From 2010 to 2013, Tymofieiev says, Ukraine was a real klondike for startups. There was an improbable quantity of new projects, and that attracted both local and foreign investors. Then, the deposits dropped sharply, lots of market players withdrew their assets from Ukraine, and many startups moved to Cyprus, Poland, the USA, and other countries that were more attractive for doing IT business.
Recently, the ecosystem of the Ukrainian startup market has begun to revive, says the founder of Adventures Lab. There are more and more new prospects for young IT entrepreneurs in the country.
The expert believes that there is quite a specific reason why the local Ukrainian venture capital market cannot be compared with the American one and will not be able to reach it for quite a long time. According to Ruslan Tymofieiev, local investors are afraid to invest in risky projects. On the one hand, it is logical and safe, on the other, there is a glass ceiling that will prevent, for example, a new Uber from appearing in Ukraine.
Ruslan Tymofieiev believes that in general the vector of development of the Ukrainian IT ecosystem is competent, and its main resource is people. And Adventures Lab is looking for just such entrepreneurs for investments: young, auspicious, enthusiastic, and ambitious entrepreneurs with a desire to create cool projects.