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TOP VC DEALS WITH
BELARUSIAN FOUNDERS IN 2021
2021 was a challenging year for both the Belarusian and global startup ecosystems. At the same time, Belarusian startups had to overcome more challenges than just the pandemic and economic crisis. Due to the unprecedented level of repression instigated by the dictatorship regime in Belarus, many startups were forced to relocate. However, thanks to the founders’ professionalism and the mutual solidarity of the Belarusian business community, startups with Belarus roots continued to grow. The significant challenges connected with relocation also helped startups to enter international markets and raise higher investments sooner.

In this report, Imaguru experts (the main startup hub from Belarus) have put together the most interesting facts regarding the growth and expansion of Belarusian startups in 2021, and have also identified the most successful deals of the year.

In September of 2021, Imaguru analyzed the results of the Belarusian startup ecosystem growth a year after the presidential elections of August 2020 and the political crisis that followed. Back then, our experts have come to the conclusion that the startup ecosystem can still be called Belarusian only based on the founders’ national origin because 58% of startups have already relocated out of Belarus. While working on the report, we have completed a survey across a multitude of Belarusian startups, asking about their business models as well as results and prospects amid the political and economical crisis in Belarus. The report is available here.
Main conclusions of the report
  • The political crisis in Belarus has negatively affected all of the Belarusian business as a whole and the majority of startups in particular. Minsk is no longer the Belarusian ecosystem center as now teams work remotely.
  • Among the most frequent consequences of the political crisis, startups note business relocation (52%), change in plans and additional expenses (45%), worsening access to external financing (32%), threats to business development (28.5%), and reduced team performance (27%).
  • 58% of Belarusian startup founders left Belarus, and only 4% said they see no reason to move since everything suits them.
  • A quarter of all founders who left do not plan to return to Belarus. For the rest, the main condition for a return is democratic change.
  • 70% of startups believe that the crisis will continue beyond 2023. Most Belarusian startups have companies abroad. Every third startup raised investments during the crisis period.
  • Only 3% of startups plan to raise money from Belarusian investors in 2022.
Tania Marinich, Imaguru Founder and CEO
According to the founder of the Belbiz group of companies and the Imaguru Startup Hub Tania Marinich, relocation of tech startups is the main trend in the industry right now.

“It's bad for the economy here and now. For the startups themselves, these are huge changes, a change in established habits of life and work, which inevitably leads to the loss of work efficiency. On the other hand, this is a school of business and life for our young tech entrepreneurs. I am sure that many of them will grow even faster and better than if they stayed in Belarus. Many of them will return when democratic changes take place. They will return with their experience, investments, international business partners. It will be a contribution to the new Belarusian economy. Yes, there are serious risks that not everyone will return. To minimize this risk, it is important to build an alternative infrastructure to support Belarusian startups abroad, continuing to build an online community and developing hubs like Imaguru in those countries where the majority of Belarusian tech specialists reside.”

Imaguru was also forced to relocate due to the repressions. Following the Belarusian entrepreneurs, Imaguru opened an office in Vilnius and now plans to expand to offices in Warsaw and Kyiv. Imaguru signed a partnership agreement with Google for Startups.

Specifics of VC deals with Belarusian founders in 2021
In late 2021 and early 2022, Imaguru asked startup founders about the venture deals that startups with Belarusian roots have completed in 2021. In this report, Imaguru experts will also summarize the main specifics and distinguishing features of them.

Within 2021, Belarusian startup founders have closed a number of successful rounds. The two biggest investment deals of the year were led by PandaDoc and Flo. PandaDoc was valued at $1 billion and became the first unicorn startup in the Belarusian startup ecosystem, and, as Crunchbase noted, the world’s first unicorn in exile. Notably, every third startup has raised investments this year.
Mikita Mikado, Cofounder at PandaDoc
How did the pandemic affect startup funding?
Pandemic and lockdowns have negatively impacted some startups while providing unexpected opportunities to others. For some startups, the remote factor has even simplified their entering into the international market.

Egor Dubrovsky, CEO, Filmustage:



«The past year was quite challenging for all startups. Lockdowns have affected everyone. At first, there was a negative impact but then many startups actually discovered new opportunities, including us. Thanks to lockdowns, our very conservative niche market, the cinema industry, started changing quite rapidly — much faster than it was originally anticipated. Historically, Hollywood has been pretty conservative. However, due to the pandemic, they had to start switching to digital format in order to adapt to new realities. At first, it was hard for us to work in the industry but it became easier afterwards.

Another challenge of the past year was relocation, since relocating the whole teams and families is quite a task both in time and money. At first, relocation was also very challenging for us. However, thanks to that we also saw new horizons. In Kyiv, where we have moved, Belarusian startups are actually quite popular. Investors know that our founders do care about the product, they’re fond of it».

Ihar Mahaniok, VC investor and business angel:


«The pandemic has changed our relationship with investing online. Within the last two years, it became an absolute norm. Now I can invest even without seeing the founder in person, after just talking to them in Zoom. Of course, it doesn’t change the fact that in-person meetings do help to know people, and if I am able to meet someone in person, I always do that».

Ihar Mahaniok, VC investor and business angel
Yury Melnichek, Co-founder, Bulba Ventures:

«Now the global economy is growing, and VCs have even more funds to invest. Therefore, now is actually the perfect time to found a startup. Plus, right now we’re seeing the rapid growth of AI and ML technologies, which will change our lives within the next 20 years significantly. This is why I encourage everyone to use and apply these technologies. This period is a perfect place to start».

Yury Melnichek, Co-founder, Bulba Ventures
Top deals of the year
Overall, Belarusian startups have raised around $190M within at least 30 deals, which is the record number of investments in our startup ecosystem. Note, we didn’t include Palto and Workfusion deals in this list (over $300M in total), since we do not consider them classical startups. Even though PandaDoc didn’t disclose their funding deal publicly, Imaguru experts made their determination based on the available information regarding Round C and the $1B valuation. The next Belarusian startup on the Top 10 list is Flo, which raised $50M.

2021 marked a record in the number of VC investment deals over $1M. Among them are PandaDoc (non-disclosed), Flo ($50M), Verify ($12M), Affise.com ($8M), Onesoil ($5M), Fibery ($3M), VOCHI, DEIP and Synder (all are over $2M), Narrative BI ($1,2M) as well as Vandrouka Games ($1M).

All of these deals were closed outside of Belarus with the help of international investors.
According to the Imaguru questionnaire in 2021, the majority of deals (87%) were done either by international investors or with the help of international investors. In 2020, only a third of all deals were funded by international investors (33.3%).
Largest Merger & Acquisition (M&A) Deals of 2021
2021 is also characterized by the record number of M&A deals among Belarusian startups. At the beginning of the year, mobile games developer Easybrain Limited was acquired by the Swedish company Embracer Group for $640M. Later in the year, we learned about international companies acquiring more companies with Belarusian roots, including TargetProcess, Exadel, RocketData.

At the end of 2021, Pinterest’s acquisition of VOCHI became another success story.

Yet another Belarusian startup, Synder, got into the world’s famous accelerator Y Combinator (USA) and has successfully closed the $2M investment round.

Portfolio startups of the Belarusian international accelerator TechMinsk also raised funds in 2021. Overall, TechMinsk startups raised around $1M after the accelerator’s investments, and their valuation has doubled. In 2021, TechMinsk hosted another annual online acceleration program in partnership with Baltic Sandbox, and also a special fundraising program with FinBAN in September of 2021.
Where are the Top 10 Funded Startups located?
In the diagram below, we noted the headquarters of each startup. Notably, most of these startups have several international locations as well. Additionally, due to the ongoing political crisis in Belarus, the majority of Belarusian startups do not maintain an office in Belarus any longer.

Veryfi ($12M) USA

Affise.com ($8M) Lithuania, Belarus and other countries.

Onesoil ($5M) Switzerland, Poland

Fibery ($3M) Cyprus

VOCHI ($2,4M) Cyprus

DEIP ($2,4M) Estonia, Poland

Synder ($2M) USA

Vandrouka Games ($1M) Belarus

Narrative BI ($1,2M) USA

The reasons for record fundraising in the Belarusian startup ecosystem
  1. Due to relocation, Belarusian startups have entered the international market.
One of the reasons for good results in fundraising in 2021 is maturity for startups in general. According to the Imaguru report published in September 2021, the number of Belarusian startups has increased along with their maturity level. Additionally, more startups became profitable in 2021. One of the main reasons for such rapid growth is relocation and, therefore, entering a whole new international market.

According to Imaguru’s 2020 report, only 14.3% of Belarusian startups raised over $1M investments back then. It confirms the fact that the crisis makes Belarusian startups search for new sources of capital, opening the market of international investors.

European angel investors and funds also discover Belarusian startups that are looking for funding and growth opportunities on the global markets, along with professional mentorship support and bigger rounds.

  1. Development of VC market locally and globally

Another reason for higher investment volume is the growth of the VC market in the region and worldwide. Despite the deliberate steps to shut down business in Belarus, the Belarusian ecosystem continues to develop as part of the European and global ecosystem. In 2021, the volume of investments in startups also increased in Europe. At this stage, it also exceeds the volume of rounds raised by Belarusian startups. For example, Lithuanian startups raised more than 400 million euros, while startups from Latvia raised 247 million euros.

Specifics of startup fundraising with Belarusian founders
At an early stage, the main investors come from the startup network. Mature startups are more efficient at fundraising.
Most of all, accelerators help in the fundraising process. Startup with Belarusian roots Veryfi graduated from Y Combinator. Network connections from these accelerators helped the startup to attract investors, get advice on valuation and the investment process.

One of the founders of Narrative BI, Michael Rumiantsau, graduated from the 500 Startups program with Friendly Data startup. Michael admitted that previous experience and connections helped fundraising for Narrative BI. Most Narrative BI investors have invested in Friendly Data before.
During the pandemic, investors in Europe are more open to making investment decisions remotely, while in-person contact is still important for investors in the US.
For startup Affise, the pandemic affected the timing of the round closing as well as the geography of their investors. The founders made a decision to postpone the round, as it was at the pandemic peak in the US and worldwide. As a result, the startup has revised its metrics and raised funds in Europe instead.

It is still important for US investors to meet startups in person when making decisions, while in Europe the decision-making process for startup investing is mostly taking place remotely.

The best fundraising factor is startup profitability.
“Are you guys still profitable? You should be ashamed,” this is how Veryfi investors reacted to the startup’s metrics. However, the best time to fundraise from a founder's perspective is when the startup is profitable. Profitability puts the startup in a more lucrative position, enabling it to negotiate its terms to investors more effectively.

At the same time, Ihar Mahaniok, an investor with Belarusian roots, notes that in the US market, startups are more comfortable with the dilution of shares and have no concerns when they attract funding if they need it to achieve their goals. In the US, investors believe that it is better to have a smaller piece of a larger pie than a large piece of a smaller pie.

Many Belarusian startups attracted bridge rounds to maintain and accelerate growth
After analyzing the deals for 2021, Imaguru experts noted that many Belarusian startups have decided to raise bridge rounds in order to reach new development milestones before attracting the next round. In some cases, bridge rounds were also spent on the startup relocation process and became a necessary measure.

Startup studios are an attractive opportunity for founders from Belarus

A startup studio became a significant player in the venture ecosystem. In a startup studio, investors become mentors of a startup, and also actively participate in the decision-making process. For the global ecosystem, as well as for the Belarusian one, this format is becoming more and more attractive. In the Belarusian ecosystem Palta and Bulba Ventures are recognized as successful and experienced startup studios.

Recently the co-founders of Bulba Ventures announced the termination of the studio operations and that they will invest separately in the future. Let's take a look at Bulba’s cases below.

Some of the cases include VOCHI and Onesoil. VOCHI has grown consistently and rapidly within the past two years, and 2021 marked the start of a new milestone in their growth as part of Pinterest.

With Onesoil, one of the distinguishing features was the hiring of a new CEO, as well as the other key management positions within the company. However, it also led to the departure of one of the founders, Sasha Yakovlev.4

According to Yuri Melnichek, co-founder of Bulba Ventures, which has recently become a startup studio, investors help make the right decisions on key steps of the startup development process.

According to Andrei Avsievich, co-founder of Bulba Ventures, in order to receive investments from a startup studio, it’s not necessary to have a company and traction, it is enough to be a founder capable of scaling. Ideas can either belong to the founder or come from a startup studio.

The startup studio format is now becoming more and more attractive for founders from Belarus. Most of our startups have technical expertise, but not all of them have business management competencies.

What to expect this year?
We believe that 2022 will be even more successful in fundraising for Belarusian startups. According to the Imaguru research data, the current funding needs of Belarusian startups can be estimated at at least $300 million. Given the unstable political and economic situation in Belarus, it is expected that Belarusian startups will execute more and more transactions outside the country.

Despite the unprecedented challenges, repressions and forced relocation that Belarusian startups had to go through in 2021, we can now confidently say that the Belarusian startup ecosystem, like a phoenix, has risen from the ashes. In fact, Belarusian startups have achieved the impossible — they’ve managed to not only save themselves but also to become even stronger and grow even faster than before the crisis.

The support and solidarity on which the Belarusian startup ecosystem is built played a big role in it. Now the startup ecosystem is successfully starting to build up and develop abroad. Therefore, supporting Belarusian startups where they’re located is now even more important than ever. Imaguru Startup Hub will continue our work on building and supporting the Belarusian startup ecosystem in 2022.

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