“We believe that the fund should provide, in addition to investments, a certain value and be a part of companies’ growth.” Interview with 1991 Ventures co-founders

The co-founders of the 1991 Ventures fund, headquartered in London and Kyiv, known for running incubation and accelerator programs inside Ukraine, recently, have launched a $18.8 million fund. Its main goal is to support over 40 companies from Ukraine and CEE.

AIN had the opportunity to interview Denis and Viktor Gurskyi, brothers and co-founders of 1991 Ventures, discussing the fund’s activities in 2023 and plans for 2024, as well as talking about the CEE and Ukrainian markets.

Tell us about 1991 Ventures. What specific sectors or industries do you focus on and why?

We’re a sector-agnostic fund, incorporating priority and interesting areas into the fund’s strategy. 1991 Ventures has a significant historically accumulated experience.

Historically, 1991 began as an open data project. So, we deeply understand Government API and government services, as well as civiс tech. Among 1991 graduates, many companies have built their entire business on open data. Among them are Opendatabot, YouControl, Штрафи.ua. And as open data very quickly becomes big data, we also understand the specifics of working with big data projects with databases and arrays, and how various services are built on that. 

Then we worked a lot with fintechs: with MasterCard, Visa, the National Bank of Ukraine. 1991 supported various projects like platforms in areas of digital health, transportation mobility, clean energy. Accordingly, all these sectors can now be linked to AI+. However, we believe that AI is a superstructure over all industries, rather than a separate industry, as it permeates all industries.

We also understand the specifics of working with B2B, B2G sectors.

We believe that this question is not about which industry the startup comes from, but what added value the fund can offer. Today there are no problems with fundraising capital for any company with an interesting model.

You also emphasize supporting companies and startups that adhere to ESG standards and sustainable development goals. What is the mission and core values of 1991 Ventures?

We believe that the fund should provide, in addition to investments, a certain value. That’s why we don’t want to work with companies that the fund will only invest in and then watch how they are doing. We want to be a part of companies’ growth.

For example, we use our global network of contacts at the corporate, government, and international levels to match companies for further mentoring, partnership etc. If a startup deals with disinformation, we’ll gladly introduce them, for example, to NATO. If it’s a company offering corporate software, we’ll introduce them to Meta, Microsoft, or Google.

Tell us more about the fund’s creation process.

I think it’s better to call the fund not newly created but gained. Because its formation took a long time, which is quite rare for a fund mandated to work with founders from Ukraine. 1991 is an FCA regulated fund, structured in Ukraine. I remember when we were at the Web Summit in November 2022, and then, we already knew we had commitments to the fund. Then the structuring process took almost a whole year.

In the summer of 2023 during Ukrainian Recovery Conference and London Tech Week, we obtained the license. By that time, we had already set up all the documents, and the fund came into force in 2024.

And now, at the beginning of this year, we were able to announce it without any legal issues for us.

You did not announce any investments yet, but said about plans to invest in early stage companies. Tell us how you deal with the difficulties that arise at such stages?

Yes, there are no investments yet. Why not? Because the whole process is still being structured. It’s quite a large and complex historical process. It’s a full-time job for more than a year.

During the work on the fund, many people already knew about it, and we had many private meetings where we talked about future prospects and potential portfolio companies. This helped us build a network of co-investors, those who can invest after us, and those who invest at later stages. This also allows us to understand what form of fundraising to choose.

We believe that this is an important strategy to make such connections. For example, the UK-Ukraine Tech Bridge, an initiative of the British and Ukrainian governments, where an agreement was signed, and our team helped in its investment accelerator. As part of this initiative, 20 companies from Ukraine were selected to be mentored by British investors and will be showcased at London Tech Week.

In addition, it is worth noting that we collaborate not only with funds but also with various ecosystem organizations from Ukraine, such as the Ukrainian Startup Fund.

As for our stage-focus early stages, our fund focuses on investments in the amount of €200,000-400,000. For the European market, these are small amounts, but if we talk about CEE, this is not an idea-stage startup, but already a startup with a valuation, probably of at least €3-5 million. And this means that this startup already has some validation from clients and organizations and has received grants.

What difficulties did you face during the establishment and operation of the foundation, in particular, in overcoming the cultural differences (and geographical chasms) between Ukraine and Britain? Have you experienced these differences?

It seems to me that the Ukrainian startup ecosystem is slightly corrupted by the American approach to venture capital and startups. In fact, Silicon Valley is corrupted because there is a certain misinterpretation of some principles. For example, the idea of thinking big doesn’t negate the need to be present, polite, modest, open, in terms of transparency. For local British investors we work with, the main thing is the issue of trust and the realism of various projections regarding the assessment of their company in the market. Perhaps this is a somewhat pragmatic approach, but it has more business grounds and requires honesty, or as they say, being a good citizen.

I also want to mention something potentially unpleasant for Ukrainian companies and founders: the fact that the whole world is currently supporting Ukraine does not negate the requirements for Ukrainian startups remain the same as for startups from any other country. Sometimes this line between what is possible and what is not blurs. When a foreign investor meets a Ukrainian startup, they simultaneously have a choice from many startups working in the same industry and not related to Ukraine or Eastern European countries. One must consider the competition that exists beyond the Ukrainian information field, especially when it comes to Britain.

You have been working as an accelerator since 2016. In your opinion, how has the market changed and is it now more difficult for startups to attract funds right now? Have the selection criteria changed for them?

Denis commented:

I don’t think the selection criteria have changed significantly. Of course, there are questions related to compliance, team, but it seems to me that, on the contrary, due to extremely unpleasant reasons related to Russian aggression, attention to the Ukrainian IT and startup industries has grown significantly. And when we talk about the early stages, it seems to me that at these stages, the focus is on the human potential and capabilities, and the talents of Ukrainian companies, which are outstanding compared to other startup teams.

The ingenuity of Ukrainian founders is impressive. Their emotional resilience and flexibility don’t come from the DNA of the company, they come from the person. And these characteristics give Ukrainian founders an advantage on the international stage. And I hope that because of this, Ukrainian companies will become successful because they currently have more representation abroad and exist in many different countries. For example, one founder abroad, and the team in Ukraine, or vice versa, founders in Ukraine, and the team in Poland. All these pirouettes and combinations will ultimately have a great, cumulative effect for the entire industry.

I hope that in a few years, there will be more such small funds for London, but very important for Ukrainian founders, like ours, appearing on an independent basis, as a result of successful exits of Ukrainian founders, or as an allocation of very large funds that want to pay special attention to founders from Ukraine.

Viktor added:

I want to note that in Ukraine, the full-scale invasion is perceived as an invasion directly into Ukraine, but in Europe, in Britain, it is seen as a war in Europe. And this, of course, affects the investment climate.

In 2022-2023, we saw a decline in the number of deals. Therefore, on the one hand, it’s difficult for us to launch a new fund in a crisis, but on the other hand, we understand – this is a very good moment because it has become harder to obtain investments for Ukrainian and Eastern European startups. We believe that 1991 will be a small stepping stone that will help alleviate this and impact the unfavorable conditions in the market.

Tell us about your team.

Before the full-scale war, we had offices in London, Kyiv, and Mariupol. Unfortunately, it has been lost.

In London, the team is small. Viktor and I are GPs of the fund, and we also had one person who left GP and became our advisor. We also have a group of advisors who represent a whole group of five organizations that help the fund in various aspects. We work with them on a regular basis. Global company Morgan Lewis helps us with legal issues,

Denis said.

In Ukraine, we are used to turning to lawyers when urgent issues need to be addressed. The support of a legal company in Britain is somewhat different because they are a permanent advisor on many issues, and they are liable for their work. 

We also have a separate group of advisors who work with us on fund management. The team in Ukraine is working to ensure the stability of the accelerator’s development and to contribute to the development of the ecosystem through events, programs, and so on.

1991 has carried out many programs, accelerators, and other projects in Ukraine, but legally not related to the fund because it is an unregulated activity, even abroad. Therefore, legally these are different things, but still, it’s one group of companies linked together by various elements, such as the brand.

Do you plan to expand, increase the team in Ukraine?

Yes, we plan to, but we cannot share this information at the moment. The only thing I can say is that the Ukrainian community is not limited to Ukraine; there are many powerful centers with Ukrainian founders around the world that have emerged. And we were interested in collaborating with these hubs, which would bring great value to the entire ecosystem.

Tell us more about your partnership with the British funds Venrex and Samos Investments. How quickly did you manage to raise capital from them?

We started working together about a year and a half before the first document was signed. However, informally, we quickly solidified our intent. They formally act as LP’s in the fund. It is worth noting that their role is not limited to financial investments since they are very powerful financial institutions with extensive expertise in the market.

Vendrex is a financial fund, a veteran of British venture capital, and an early investor in Seedcamp. Therefore, they understand well how startup platforms and accelerators transform into funds. And so, they often have something to say and advise.

Samos also once invested in Seedcamp and is an investor in Entrepreneur First. This is a quite powerful program that focuses more on founders rather than business ideas. Therefore, they have a slightly different worldview, but nevertheless, it is very useful.

There is a lot to say about Samos because it is an investment fund that has many different directions, including a separate structure represented by a private equity fund. They provide a lot of advice, expertise, and various connections.

Can you share some of your plans for the future?

One thing I’d like to mention is that the fund typically constructs its plans very simply. They mainly concern portfolio growth and work with the current portfolio. Therefore, these plans are usually not very interesting because the world learns about them when something happens with portfolio companies: they raise funds, or exit, or undergo M&A.

But we would like Ukraine to be sufficiently represented at London Tech Week this year so that the companies that fall under the UK-Ukraine Tech Bridge initiative represent the country. We want to attract the investment potential of the British venture capital community specifically for this initiative because the British government has a lot of contacts in the venture market.

Additionally, 1991 Ventures is an accredited member of the British Private Equity and Venture Capital Association. Through the BVCA, we also plan to develop certain initiatives related to Ukraine and Eastern Europe. Because our goal is to make it easier for Ukrainian companies to navigate in Britain and to establish this connection.