American Unicorn Acquires Ukrainian Logaster
The US-based unicorn ZenBusiness, valued at $1.7 bln, acquired the Ukrainian online logo maker Logaster. The sum of the deal has not been revealed.
About the deal
In over a decade in the market, US-based ZenBusiness has helped around 17 mln users to launch and manage businesses, as well as build brands. Valued at $1.7 bln, ZenBusiness has raised a million dollars in investments and is showing a 200% annual growth.
The American company purchased 100% of the Ukraine-based Logaster. The buyer was attracted by Logaster’s good on-site SEO parameters, a big number of website visitors, and a strong pool of high-quality backlinks. The company’s proprietary technologies and IPs will also be incorporated into ZenBusiness services.
The parties didn’t disclose the purchase price. Judging by similar market deals, AIN.Capital believes that it can reach several million dollars. It was a regular cash deal without options, shares, or additional conditions. Three Logaster co-founders got sums of money based on their share in the company.
Looking for a buyer
To find a buyer and conclude a deal, Logaster hired an external consultant, performed an audit, and organized business processes (due diligence in venture financing).
Speaking to AIN.Capital, one of Logaster co-founders Aleksandr Oliinyk looks back on those days: “We started to clean up the company. We wanted everything to be spotless and transparent. Like, everything in its place, not a speck of dust in sight. It took us several months.”
To find a buyer, Logaster created a CRM system with a sales funnel. It also made a portrait of its “target audience”, i.e. the company that could be interested in its services. Logaster’s potential buyers were domain name registrars, website builders, hostings, etc. Finally, the logo-making service started to send out sales proposals. The goal was to reach out to 1,000 companies. (Out of that number, 600+ businesses were contacted.) The negotiations allowed Logaster to pinpoint the sale price and find the buyer.
Aleksandr Oliinyk adds: “If we had sold the company before the COVID-19 pandemic, we could’ve easily added another zero to the sum. The pandemic has dramatically cut investors’ budgets.”
This is how the Ukraine-based logo maker found its new owner, ZenBusiness. According to the Logaster team, the fact that Logaster is based in the country that is currently at war was never a problem during the negotiations.
What is Logaster?
In 2008, future co-founders of Logaster Eugene Kasinskyy and Aleksandr Oliinyk had a business selling equipment to Internet providers. Also, they designed WordPress sites. At some point, the two entrepreneurs started to look for a fast and easy way to create logos for their websites. This is how they came up with the idea to start Logaster.
Launched in 2012, Logaster began to generate profit after just a couple of years. Naturally, the business has had its ups and downs. At one point, the company was on the brink of closing down because of a Google ban. But on the whole, the logo maker was growing at a good pace.
- In 2021-2022, Logaster had 32.5 mln visitors and 1.35 mln registrations.
- Logaster helped create dozens of millions of logos.
- Logaster users came from Ukraine, the US, Brazil, China, Mexico, Japan, Germany, Spain, France, and other countries.
The company was profitable almost throughout its entire existence. However, due to the increase in CAC and software developer salaries in Ukraine, Logaster’s expenses started to grow quarterly. The company approached the point when growing profits were eaten up by growing expenses. The co-founders decided to sell the business.
“It was not an easy decision to make. We spent one-and-half years discussing and thinking it over. We had no investments or other businesses to finance us. The market was moving faster than us. We had been managing our expenses more wisely than our competitors, but, with the increase of CAC and developer salaries, it became impossible. This is when we started to look for a potential buyer,”says Oleksandr.
The deal was announced in September 2022. In the weeks leading up to the shutdown of the Logaster website, users were informed to save their files. The deal was closed in early 2023.
The buyer didn’t renew contracts with the Logaster team. (The only employee hired by ZenBusiness was CTO). However, 86% of the staff found new jobs within 45 days since Logaster changed owners. Only one person from the former Logaster team is currently unemployed because they decided to take a break from work.
“For us, it was very important to find new employment for our team. We recommended our employees to the business owners we knew. Some professionals were recommended personally. We were paying out salaries during the transition period. Plus, our employees each got a closing bonus,”Oleksandr continues.
According to Kasinskyy and Oliinyk, they invested part of the money in shares. As for the rest of the sum, they plan to start a business incubator, with several new projects under its umbrella. The two businessmen promised to reveal the details about their new projects later on.