On March 21 in Warsaw, the Ukrainian Venture Capital and Private Equity Association (UVCA) officially presented the Ukrainian Fund of Funds (FoF) and its Manager Ertan Can. The long-awaited initiative is now ready to fundraise capital from interested parties, who are looking to invest in Ukrainian VC and PE projects. The expected initial FoF size is $300 mln.

Fund of Funds is a worldwide-proven investment vehicle that allows investors to deploy capital into local funds through an intermediary, receiving commercial benefits (FoF is not a donor-like program or charity).

As per the Head of the UVCA Supervisory Board Andriy Kolodyuk, the Ukrainian Fund of Funds has a history to tell about. It was first designed back in 2016 but took years to harness difficulties and reach a point of readiness. “After a long time, the moment has come”, added he.

Rationale

The Ukrainian VC and PE ecosystems are saturated enough to provide a Fund of Funds and its investors enough worthwhile projects to put money into.

Currently, there are at minimum 16 Ukrainian funds that are actively raising money and are primary targets of FoF: AVentures Capital, ICU Ventures, Freedom One VC, Digital Future, Flashpoint, One Way Ventures, FfVC, Ukrainian Phoenix, ZAZ Ventures, Network VC, 3X Capital, Flyer One Ventures, SID Venture Partners, 1991 Ventures, Rada Capital, Green Flag Ventures. Combined, they represent around $800 mln of demand to put to use.

Moreover, there are around 50 foreign funds that are either based and focused or interested in the CEE market and could use the advantages FoF provides.

For its participants, Fund of Funds offers rigorous due diligence, a robust picture of the highest-performing funds to invest in, and a clear way to do so.

FoF investors themselves will determine the fund management on a transparent and competitive basis. An investment committee will consist of prominent LPs that will provide experience and added value to GPs. On top, a FoF can provide a broader allocation and diversification across the Ukrainian ecosystem and diaspora of founders and VC funds.

The present-day FoF structure is fully independent, without government involvement. In the future, however, a state may invest in FoF on par with the rest of the participants.

How Fund of Funds shape the industry? Market-building and multiplying

At this point, Ukrainian funds have the necessary skills, experience, human resources, and proven track record of successful investing in quality deals. However, they can not unlock its full potential because of a lack of funding.

For example, there are no institutional investors like EBRD, IFC, or any others in the current venture funds that are raising capital. The purpose of a FoF is to become the first institutional anchor investor with 30%+ of the first LP commitment so that GPs have higher chances of raising the remaining 70%.

The initial FoF will kick-start what will be a continuous program to strengthen the PE, VC, and tech ecosystem in Ukraine. The initial funding is going to become a catalyst to attract other institutional and private investors in the Ukrainian sector.

Meet the first-ever Ukrainian Fund of Funds Manager

Ertan Can is a venture capital fund of funds pioneer in Europe, and Founder and Managing Partner of Multiple Capital. He has a combined 20 years of experience in asset management, fund of funds, VC, and information technology operating roles. Ertan is also an influential investor, speaker, and lecturer with a degree in International Finance and Law in Frankfurt and London and an MBA from ESCP in Paris. In 2018, he launched Multiple Capital, Europe’s first tech-focused fund of micro VC funds.

Multiple Capital is one of the first technology-focused private fund of funds in Europe with an eye on emerging managers. The team of Multiple Capital screens hundreds of funds to identify the rising stars in their tech subsets, and to date the team has invested in 48 funds including several emerging VC managers in the CEE region.

Looking for contacts?

For any questions but media inquiries regarding Ukrainian Fund of Funds, please write to our Chairman Andriy Kolodyuk at andrey.kolodyuk@uvca.eu

For media requests, feel free to drop a message to p.relations@uvca.eu