The new bill «Diya.City Invest» applies only to new funds that are ready to invest in a narrow category of companies — residents of «Diya.City», so this is its weak point.
The new bill «Diya.City Invest» applies only to new funds that are ready to invest in a narrow category of companies — residents of «Diya.City», so this is its weak point.
This was stated in a comment to Forbes by several interlocutors on the investment market, who wished to speak anonymously due to the sensitivity of the issue.
According to one of them, «Diya City» has 2,000 residents, but only a quarter of them correspond to the global understanding of the concept of «startup.»
«If we consider only companies with their head office in Ukraine, there will be no more than 50 of them left,» he claims.
The source adds that global venture capital funds usually invest in legal entities registered in other jurisdictions. «And they are unlikely to plan to transfer jurisdiction to Ukraine in the near future,» he states.
Another interlocutor believes that this can only be useful for DefenceTech projects, of which «Diya.City» has about 300 as of June.
«It’s unclear why this is even needed,» he says. «Unless it’s for DefenceTech projects.»
For example, Nezlamni from the founders of Uklon invests in startups through a Corporate Investment Fund registered in Ukraine.
«Diya.City Invest is a good development of CIFs,» says Nezlamni co-founder Dmitry Dubrovsky. «Among the advantages is the ability to replace the bureaucratic AMC with a fund manager.»
However, a key problem remains unresolved: most Ukrainian startups have an operating company in Ukraine, but a holding company abroad. «It is unclear how, by investing in a Ukrainian „subsidiary“, I get a share in the real cap table,» says Dubrovsky.
The publication also cites situations where having a foreign legal entity for a Ukrainian startup is not a matter of choice, but a condition. For example, it is posed by Eric Schmidt’s D3 defense fund.
Forbes also reminds that over the three years of «Diya.City"'s existence, five residents have attracted investments in their Ukrainian legal entities. These are the GoIT programming school, the Preply tutoring marketplace, the Viseven marketing platform, the Oko Camera thermal imager developer, and the Tencore ground robot manufacturer.
According to Deputy Minister of Digital Transformation Oleksandr Bornyakov, simplified legislation «Diya.City Invest» for launching venture funds may be adopted by the end of the year.
We remind you that earlier Oleksandr Bornyakov spoke in detail about the «Diya.City Invest» project, which should stimulate the launch of venture funds in Ukraine.
