Business Incubator Group Ukraine (BIG-U) and Smartlands
With this article, I intend to provide background on the recent collaboration agreement between Smartlands and Business Incubator Group Ukraine, usually referred to by its initials BIG-U and how this will ultimately lead to increased demand for the Smartlands Token (SLT).
BIG-U was founded in 2018 under the leadership of ESCP partner Alex Bart with a vision to create business incubation infrastructure in Ukraine to assist SMEs in the early stages of their development. Over the past four years, the organization has grown substantially.
As mentioned in earlier articles, Ukrainian students graduate from their university education with little or no student debt as the state funds almost all of their university courses. In the absence of such debts, the newly minted graduates are in an excellent position to start their own businesses, putting their technical expertise to use straight into the business world.
This is where BIG-U is able to add invaluable support to take these new companies to the next stage through its network of successful business executives who volunteer their time and input on a pro-bono basis to educate the new entrepreneurs on a one-to-one basis in the realities of 21st-century business practices.
The process starts with an entrepreneur completing an application form on the BIG-U website; BIG-U then runs a comprehensive screening process on the business’s viability. On passing this, representatives from BIG-U meet with the business owner in order to prepare a road map and list of necessary consultations. Typical areas needing input include, but are not limited to, marketing, exporting, taxes, financing, sales, cash flow management, and accounting. The consultation process takes place over a 6-month term, at the end of which BIG-U meets with the business owner to estimate the influence on the business of the BIG-U program and to discuss the next steps.
Besides the more personalized consultations, BIG-U also holds several “Expert’s Day” meetings in all the major cities of Ukraine, which are run along conference lines at which the BIG-U expert panel and SME business entrepreneurs can meet and discuss their requirements as well as register for BIG-U.
The short video below shows one of the main opening events for BIG-U, featuring some of the client companies.
While the video below shows one of the BIG-U Investment Day events underway.
Since its inception, BIG-U has prepared 75 small and medium companies for investment; it is from this group that the initial ICOs will be selected.
In addition, more than 100 SMEs have received pro-bono consultations from 40 specialized experts.
In pre-virus days BIG-U arranged 17 presentation events where client companies were able to present themselves to potential investors and held a further 13 events in major Ukrainian cities during which 280 business meetings we had; these events will continue once the virus abates.
BIG-U is proud to have the ongoing support of both national and international associations, including the US — Ukraine Foundation, The Financial Services Volunteer Corps, Windows on America, The SME Development Office, and The Ministry of Economic Development, Trade and Agriculture of Ukraine, crowdfunding platform RazomGo together with Bank Vostok and Concord Bank.
The supervisory board of BIG-U consists of the following:
- Oleksandr Slavskiy — Director Odesa Regional Development
- Vadim Morokhovskyi — Chairman of the Board of Directors, Bank Vostok
- Anatoly Guley, CEO of the Ukrainian Interbank Currency Exchange
- Alex David Bart, Managing Partner at Empire State Capital Partners
- Eddie Sia — head of overseas programs at Financial Services Volunteer Corps
Once entrepreneurs and the companies have advanced through the BIG-U program, they are generally in a much stronger position as they put into place what they have learned from the consultations and look to generate opportunities from the new contacts they have made.
In some cases, simple bank debt financing will be made available from the BIG-U member banks. For example, Empire State Capital Partners was pleased to assist Bank Vostok to borrow US$16mn from the US Government under its OPIC program, which Bank Vostok is then able to lend out to Ukrainian SMEs who meet its lending criteria.
In other cases, equity financing in the form of venture capital will be more appropriate. As many of the BIG-U client entrepreneurs are in the FMCG space, they are able to generate cashflow quite quickly on receiving orders, unlike say tech companies who often need to spend several years developing their product at the expense of shareholders; consequently, FMCG companies are ideally placed to raise capital by offering an ICO on the Smartlands platform.
It is envisaged, therefore the Smartlands platform will expand its scope from just high yield quality real estate into a number of different areas creating a separate trading platform to reflect each category as follows:
- High yield quality real estate (equity)
- New development real estate projects (equity)
- SME platform (equity)
- Tech platform (equity)
- Debt trading platform (Debt)
To date, the best opportunities to invest in promising companies at the early stage of their development have been denied to the average investor as specialist Venture Capital funds have taken the investments for their own benefit. With Smartlands, we will be democratizing the process and making these investment opportunities available to everyone with companies that have been through the BIG-U program and are thus in a strong position to create substantial returns for their early-stage investors.
A pipeline of potential ICOs in these new categories has been developed over the past month, and we would envisage being able to offer them to investors when the platform goes live.
As with the Smartlands Real Estate Platform, all ICOs will attract fees to Smartlands in both the primary and secondary markets, and these fees will be paid in SLT. By expanding the scope of the Smartlands platform to include these additional categories of ICOs, we dramatically increase the fee-generating capabilities of the platform and thus the demand for the SLT token.
Finally, we would like to express our appreciation to BIG-U’s director, Eugene Barsukov, who has recognized that Smartlands DeFi is the way ahead for many of BIG-U’s client companies. Mr. Barsukov, who helped initiate and is the current Director of BIG.U (Business Incubator Group Ukraine), signed the memorandum with Smartlands in order to help utilize the power and potential of DeFi (Decentralized Finance) to help make fundraising easier, cheaper, and faster for entrepreneurs and SMEs in Ukraine. This is in line with key UN Sustainable Development Goals such as Economic Empowerment and overcoming Poverty. Mr. Barsukov is a native of Odesa, Ukraine, has worked in the Merchant Marine, and is a self-made serial entrepreneur who wishes to spread Entrepreneurship throughout Ukraine.
Readers who require more background input on how the Smartlands team is developing value on the Stellar network may find the following articles of interest.
Kyiv, March 2021
About the Author, Martin serves as the Non-Executive Chairman of the Smartlands Group and is the Managing Partner of Ukrainian investment bank Empire State Capital Partners.