Asia Tech Podcast recorded an interesting conversation with Andrew Zinchuk, a managing partner at ZAS Ventures. ZAS Ventures is a venture capital firm in San Francisco & Kyiv, that boosts outstanding entrepreneurs from Central & Eastern Europe building SaaS & cloud startups.
Some of the topics discussed by Andrew:
- How Andrew’s entrepreneur journey after his idea was “stolen”
- Ukrainians are amongst the top 10 unicorn founders in the US
- Andrew layers of reasonings behind running his own company
- How Eastern European startups conduct things differently compared to US startups
- The two problems being faced by fully remote startups
Some other titles we considered for this episode:
- You’re Sinking, You’re Sinking, You Have Something on Your Neck That’s Breaking You Down
- You Keep Going
- Do Something Amazing With That Money
This episode was produced by Stephanie Ng.
If you are interested in learning more about how Andrew invests, click here.
Read the best-effort transcript below (This technology is still not as good as they say it is…):
Michael Waitze 0:03
Hi, this is Michael Waitze and welcome back to the Asia Tech Podcast. Today we are joined by Andrew Zinchuk. Andrew, tell me if I get any of these pronunciations wrong, a managing partner in ZAS ventures, I really appreciate you coming on the show and just your flexibility and all the scheduling and stuff like that I really cannot thank you enough for doing this. And just to give people a sense of like, to whom we’re speaking and why we’re having this conversation, maybe you can give us a little bit of your background for some context, and that I want to talk about like the sum total of things that you’re working on in the environment in which you’re doing that. So can you give us a little bit of your background, please.
Andrew Zinchuk 0:36
So I’m a tech entrepreneur, entrepreneur in general. Since my childhood, I had experience with investment banking, a little bit, I lived in New York and moved back to Ukraine after Revolution of Dignity in 2014. And basically since that time, I was working from K but the working on a global projects I was part of, was actually the first person hired by Israeli Israeli family office, and we scaled to 200 people in six countries and built like the CRM and also ecosystem of startups, servicing companies. And afterwards, I had experienced running the largest blockchain marketing company in the world who were recognised as number one and 2018. Was that bold Ico box? Go ahead. Ico box. Cool. Yeah, it was like pre COVID stuff. I had 150 people worldwide. We even asked him to staff in like 33 theories, including Tachyon. So so it was pretty crazy working in kind of on three continents, like Europe, for us, and then also Asia. And we were trying to expand to Asia and by late 2018, but then as we know, all of the crypto winter started, so that we can say size of the operations. Yeah, it was like another big blow and not the words how was running a startup incubation programme, pretty impressive idea. The age was Spanish chain of incubators scaling across Eastern Europe. And that was a partner for managing director for Ukraine. So we opened operations here, and for two years, I was running the incubation programme. So it’s pretty cool. Because we’re looking for people with no idea and no team but willing to do the startup. And it was profiles, business marketing and tech, getting them together, using like startup lean methodology to help them validate, find the problem, validate the problem, like build this validate the solution. And then once they had some minimal traction MVP, so we will invest a little bit in them. And it was pretty cool. I had like 1500 people applying directly worked for at least six months was like 100 360 people. So it was nice stuff. And basically down the road, they started also advising a lot of startups and player at seedstars. Also here in Ukraine, I’m part of Ukrainian Venture Capital Association since 2017. So as for quite some time are witnessing like firsthand our like, gross of people system. And eventually, like I started this s ventures and have to take leverage my experience of network needs to Europe, all you know, 33 just 33 or
Michael Waitze 3:21
you’ve been alive for like 400 Depends how you look. Yeah. Can I ask you this?
Andrew Zinchuk 3:24
I started 14 working so and usually I was doing like two jobs. I’m like, can you as a joke? And like if you have two or three jobs, you’re Jamaican. So I’m like Jamaican as well.
Michael Waitze 3:37
That’s so good. But it feels to me like you’re more like 50 years old and not 32 or 33 years old. You were born and raised in Ukraine. Yeah,
Andrew Zinchuk 3:46
yeah. I was born and raised in west of Ukraine, and did my studies first bachelor and master of arts in western Ukraine. But then I did some studies in Canada in British Columbia Institute of Technology. And then I was one of the youngest MBA guys went to the US to do my MBA. I was 2223 years old. And I won this huge scholarship. It was called the ASCII fellowship programme. So there were 6000 applicants, yeah, was 2012. There are only 3000 applicants, only six seats are the scholars and only one for MBA. So basically, and that was the last year of the programme. So I was the kind of the the only again, the youngest guy who went for MBA on a scholarship. So it was also pretty, pretty cool.
Michael Waitze 4:33
I want to talk about the current situation in Ukraine in a bit but before we get there, how would you categorise or summarise kind of the startup ecosystem where you live and in some of the surrounding countries as well. In other words, you’ve been involved in everything tech entrepreneur investment banking, you lived in New York, you worked for an Israeli family office, you’ve done all this stuff you’ve chosen to live you said you went back home. Did you go home to build ecosystem support? For the ecosystem, do you know what I mean? Like, how would you qualify or quantify when I went
Andrew Zinchuk 5:05
back home from New York and missed orange metal or Revolution of Dignity, and 2013 2014, and I was in New York and I had some, I was still running my office in New York. And we had offices like gave in New York. And when the revolution started, I was like, willing to go home, but I couldn’t. So I was actively involved in like organising all the rallies, and we protested and all of the major squares in New York. So I was like, very active on that scene. We also organised the first tweeters for our boom story, I was doing a lot there. But then I had the sense of, like, I haven’t done enough, and I was not there, like, actually on my dime, and felt like I have to go home. And I came back. And basically, we, I was for two years, I was actually volunteering and the most part like building a startup and volunteering. So we co founded was called the easy business, the first project. So like, idea was worth, actually, I was supposed to join the Ministry of Economy. And what happened like couple like a week prior to that I was supposed to join, like after interviews and everything, the minister lives the position. And here we are, like a gang of like, 710 people with, you know, like top schools, Western educated. And then Harvard, Oxford, London School of Economics. Like it, you name it, just super smart kids and like, what do we do now? Yeah, what to do now. And so we decided that the idea was actually to help the economy to do like deregulation. And basically, we formed the NGO called Easy business. And we weren’t covering all of the industries. So I was in charge of the regulation for food production and agriculture. And then, after some time I left and co founded was called ag reforms UAE. So we almost specifically for custom, the regulation and changing the legislation for agriculture sector. And that’s kind of what I was involved with two years. And after, like, burn all of my savings, so like 60, below status, they look, they have to start doing business. And I joined as corporate enterpreneur, one of the largest corporations here in Ukraine, the owners of the company asked me to watch the prod project, which was just an idea. And it was cross border, ecommerce delivery system. Okay. So they said, like, hey, we want to do like cross border delivery, why don’t you join us, and actually one of the founders of the company, he was actually supporting our jobs. That’s how it can get acquainted. Besides, I had like my own project, which was, my idea was kind of stolen by the largest bank here. I was fun, because he was, was started doing my startup after like, I saw the opportunity here. And it was actually like, it wasn’t to understand the perspective was 2000. What 1415 I was doing I started out on, so you can go to gas station and pump your car without leaving your car. So and I presented to this, we have a group of companies here, they have like, we’re having the biggest bank, but they also had the largest chain of gas stations. And they were like, super out. They had like 1500, at that point of time, gas stations across the Ukraine, and they had always their own oil refinery. But in terms of the service, they were all kind of a little bit outdated. When I was checking the competitive landscape, I was thinking he was home to to go the best. And it happened friend of mine that I’ve met. Actually, I was like doing the internship back in the day in Boston, and I met him in Harvard. So his relative was actually one of the partners of this main guy, he told me, and he’ll actually right in this oil business, and he told me, Oh, are going to introduce you and you know, like, everything will be smooth. And like when we started talking, I started telling them more and more. So they were like asking me even to hold me to their headquarters and kind of disclose all of the technical aspects. And then and then I started smelling it’s not good. So I have to disclose on the technical stuff, but they never ended up investing in the project in one hand side, but then I couple months, because they have a lot of IT capacity, money and basically all of the things needed. So the I like opening the bank banking app and seeing like, Hey, there’s this new feature that you can charge you, like pay for your fuel, I was like, but they weren’t. They weren’t like shits, they never took off. And now you can do it from like this point of convenience. And you can do it every time.
Michael Waitze 9:43
I want to ask you this, though. It’s such a general question, but I really am curious about the depth here. So many people want to operate their startup in stealth, right? They don’t want to tell anybody about this. They think if they keep it secret, that it’s going to be okay. And the flip side of that coin is I just want to do everything in public. Like, what did you learn? Through that process of just giving away all this technical information? Would it stop you from sharing again? Or do you feel like, at some point, you just have to be able to out execute people? And is this something you talk to your investi companies about to
Andrew Zinchuk 10:17
you have to share? I’m actually broke very profound in terms of being open. Same here. And of course, you don’t have to give away all of the IP and like, technical things, you know, that make it happen. But was this startup idea is worthless, to be honest. But what’s key here is execution. Right? So idea is a coefficient to your execution, if you have a great execution and then bad idea, it’s still gonna make some money, right? But if it’s an excellent idea, you’re gonna make billions and just what bridges the gap here. So in my case, I mean, it was a good learning curve. To me, I have no regrets. But that was kind of my first attempt to kind of to do some business in Ukrainian market. And then like this, I did this corporate project one and I did another corporate project, then I was like, joining this family office, and that was witnessed in our ecosystem. And it’s growing pretty steadily. Since that time, so what I’m talking in perspective in the so we were growing from 20 30%, and then from 21, from 20 to 21. Rule 40%. Year over the year, so basically, only the worst set us back. So Ukrainian startups, they raised in 2021, they were almost $800 million. So it was exactly I believe it’s like $780 million, and which is amazing number yes, huge, right? Ukrainians, we are among top 10 usually of unicorn founders in the US, like Ukrainian nation or so. Give me an example. Really amazing. The most famous would be Grammarly. Wow. Right. And so now, I don’t know what the valuation is. But it’s like around $13 billion, then like and we’ve done when talking about like because Grammarly is not even a brilliant business anymore, right. They’d still like us registered to all of the companies we’re doing you like we registered them right in us and started like trying to take advantage of that market and conquer that. But I’m talking about like Ukrainian founders. And we have like a GitLab. Probably all like everyone who is techie. They know the GitLab. And there’s two pregnant founders and 199. Ukrainian. There is like a blood sample from revolute. He’s also have the cranium, we have like people AI, which is very cool. They are very cool startup, they enable sales. So they also become a unicorn in 2020 21. There is the Genesis it’s a group of fighty product companies like Amazon, run by Jamie, Jamie Siminoff. He’s also a friend. And we like Ukrainian unicorns. So we have like 10. Now, our valued over $80 billion. So this is huge, considering that our ecosystem is still very young, very vibrant. And I witness how it was growing, literally from now incubation programmes, our acceleration programmes, the first attempts kind of established, those entities were like back 2010 14. But they were not successful for many reasons. And now we have get it like we see all of the components of the ecosystem coming together. We have a lot of foreign incubation acceleration programmes opening here, like the one I was managing them, you know, and others are hunting Ukrainian startups. So there is a lot of education. Also, what is important that brings the success here. It’s our tech people. So Ukraine has about 250,000 software engineers and after. That’s the IT industry that’s kind of preparing all of these people. So after working for it, outsource it product companies with the Western clientele. So they start getting sense of how to do the business on one hand side, but also the getting a sense of the problems, which are the Western markets are facing in the company, their clients, and then they find this kind of niche and go and trying to go and turn it into the product. So and that’s what I witnessed firsthand while I was managing startup incubation programme, right, because I had like 1500 people applying and some of most of them had some ideas that they want to do and then we just start filtering out and then just validating the best one. So and then they that’s how it happens. And now with even with recession coming I think it’s going to even better for the ecosystem is
Michael Waitze 14:50
is there an educational basis for this? And let me just let me give you an example of what I mean. You mentioned working for an Israeli family office and Israel, depending on how much you know about their startup ecosystem, you should know a lot. Right? The technical education in Israel, obviously, because of the way the Armed Forces works is super strong, right? So everybody goes into the army, everybody gets some kind of really strong technical education. And they come out and start solving these deep tech problems, which then they can export to the rest of the world, right? The Israeli market itself is not that big six, 7 million people pick a number Silicon Valley, Boston, same thing, deep educational, institutional background, right. So whether it’s Stanford or Berkeley, or MIT, or tufts, or any of these other universities in these clusters, is it the same thing in Ukraine that creates this? It centre in the centre of excellence for building these types of companies? In some
Andrew Zinchuk 15:43
sense? Yes. It’s like Yes. And no, as compared to Israeli, it’s not the military that was driven this request, right. In Ukraine, we had very good School of Math and very, okay, that’s what I want to know. They’re sort of like technical aspects. But they were kind of more theoretical. But what help here is actually the growth of it. Outsourcing outstaffing companies, because the government was not regulating the industry, you have to just understand the Ukraine a little bit and like, plus solid region. So, you know, with all of the like, 90s was all of the failure of economy of the collapse of Soviet Union, there was like all the mobsters, like all of the people who were former KGB, so like, read the director, so managing, like, plants, state, all of the businesses that were like privatisation of everything, and all tech people, like, no one cared about them, because they were considered as weirdos when the keyboard, you know, doing something no one could understand. And that kind of created this kind of loop where the people were working, doing businesses, and at one point of times actually becomes so big and no one realised. And then the word like hiring and developing all of this workforce, and then we’re getting all the time better and better. So Ukraine is number three outsource country in the world. So really, quality of the people is very,
Michael Waitze 17:04
yeah, what are the two above it? Is it India and what the Philippines what is it?
Andrew Zinchuk 17:08
I don’t know what? Okay, that’s okay. First one is, but like Ukraine is not number three, wow. Okay. And basically, we’re competing against India and most of these cases, but it’s, it’s a little bit different. Now, we’re shifting a lot towards kind of the product. And like this, the more complicated stuff, and you know, like the EPM is one of the biggest companies, we have sought serve, there’s probably about 10, super huge companies that are world renowned. At first. So in general, we have 250,000 people working again, now it’s one of the third largest part of the GDP of Ukraine, which comes from the IT industry. And like, until recently, the government was not even touching base. And we still have different taxation where you lower for it, people in IT companies from the entire other parts of the economy, but after you know, people spend some time getting bored on it by inch. Basically, they want to do something and those who have ambitions, right, they want to do something else. And that’s how they come to the
Michael Waitze 18:13
world. Talk to me a little bit about Z, AAS, and what the thesis is behind starting your own investment company. I mean, it it feels to me like the path you’ve taken to get here, building your own companies doing some investment banking, living all over the world, right running the incubation programmes. It’s begging you like this path is just begging you to be an investor at some level. No, I mean, is that why you started this? And if it is, what’s the thesis behind it? Why are you better at this than other people? And what are you trying to accomplish with it?
Andrew Zinchuk 18:41
It’s, there’s a couple layers? To your question. First of all, I decided to move because I was switching sides from the table from my investment side in the LA family office. And then being most of my background, I would say, in terms of the startup ecosystem, I’m operator, right? Because I if it’s either you run a startup incubation acceleration programme or enterpreneurs, to kick work qualify this operator. So most of my experience come from this part. And I’m done and basically from zero from idea to some, some level and then have also like, good managerial experience managing large, large teams and multi million projects. So I know what it takes. Then, another part of my experience that moved me towards kind of doing the fun was actually accelerated incubation programme. Because I was I went to the earliest stage. I mean, it was it’s a lot of hustle. It’s like baby garden, right? You have to change the diapers to enterpreneurs I mean, technically, right? Because every time everything goes wrong, but the part and what is like my I would say secret sauce is if you work on early stage, it’s all about people. It’s not about like metrics, of course. I mean, it’s a lot of people can read metrics and see if it’s there or not right, but In this short period of time, I’ve seen all of the kinds of possible ways that companies would fail. And we try to try to avoid all of the failures, right? Because when you’re trying to put three or five people that never knew each other before, into a team and make a team out of them, and we saw, like, you know, the team of four people with the best education programmes, like, you know, going back Oxford executive and like, you name it, right, that they fail and never accomplish a thing, because there was like, ego fight, even though you would see like, Oh, this guy is good. on finance, this one is operational excellence was one of the biggest investment banking, banks here in Ukraine, like with over 1 billion under management, and then like, you know, that the team was like, excellent people, and it just taken off, then you see, and like very senior people, I mean, like, you know, like 4045. And in terms of the experience, right, but then you see, like, those recent graduates was like, was eyes shining, and also like, working crazy hours, you know, staying in office, just to work extra long. And like, being there as so this experience of like working with the team getting like those intrinsic core of the team, it’s actually something that is making a success or like, make it or break it in the early stage. And that’s why like, and then, because of the also being in the early stage of building my network across acceleration programmes, early stage VCs, angel investors, like, everyone who was above the food chain. Yeah, so called in our start up jungle. So I was like, Okay, I don’t want to focus my time anymore on the earliest stage, like building big teams, because it’s a lot of problem and a lot of like, and there’s even though like, success rate was pretty good. In my incubation programme we had out of in every batch we were we would form like, four teams, like support strong teams. And out of them, one team would succeed. So they still go in, they still raising money they still developing. So I think it’s for this stage, it was pretty great success. But it was like too much hassle for me. I said, like, Okay, I want to do something next, but it gave me this kind of edge. So basically, for this, I have two funds that I’m raising right now. Okay, so the first fund is seed fund on Eastern European startups targeting the US market was this one, we just a little bit on pause on waiting until the war is going to be over. So we can continue to fund fundraising because I am stuck in Ukraine, I cannot travel might go for a week. But it’s also a big problem to get the permission to get out of the countries that really like it takes like, yeah, because we are under the martial law and takes, you know, up to a month to get the permission and you have to you cannot do it in a start up or you have to like something comes up, you have to fly, right? Oh, yeah, you cannot wait for one month and see, like they don’t happen to me. Actually, recently, I was invited my partners in Romania. They are the largest acceleration programme. And I mentor the startups. And there is like, a no role of the team. So amazing guy, somebody like they’re number one in Romanian market. And they invited me for their demo day. And there was also a big conference and some GP LP went to pitch the fund. And I was trying to get this permission, and I still didn’t get the final answer. So they were kind enough. So they allowed me the only one person to pitch online. So they did the whole infrastructure just to meet the pitch. And then what I’m saying so like this one, this one is on pause, but Eastern Europe and the opportunity was the Eastern Europe is actually the valuations. They are way lower than in West Western Western Europe or even in the in the States. And what is very interesting is actually that Eastern European startups seed stage, if we talk, they produce five times more revenue per invested dollar than a US b2b startups. Yeah. And this is like McKinsey research. So this is a very good opportunity. And the Eastern Europe has very cool startups in general.
Michael Waitze 24:09
So I want to talk about this for a sec in a second as well, right. But this idea that they make five times as much money for every dollar of invested capital, it almost makes you feel like they’re five times undervalued. I mean, if you think about the way simple mathematics and simple algebra works, right, the idea is, if a normal US company would get a million dollars of investment, and the Ukrainian company is getting $200,000 of investment, they’re both at the same stage, they’re both building the same thing, in a way. And if the revenues are exactly the same, then by definition, they’re going to be five times more capital efficient. I’m sure there are other reasons too. I’m simplifying just to make the point to people. I’m curious, though. What is your connectivity like in the United States where you’re trying to build companies from Ukraine seed stage invest in them in Eastern Europe, but with a target of the United States? Like logistically that’s just got to Be hard in regular times. I’m just curious like what your connectivity is like and how that impacts the stuff you’re trying to build. And then import export to the US if that makes sense. All of
Andrew Zinchuk 25:11
the companies that started from like what we work on each stage, they have already been here yet I have one very cool startup. He’s Ukrainian founder. And then he moved to Finland, and he was equity fragrance government. So they technically even register as a Finnish company, but they target it’s a b2b marketing company. But they have all of the revenue coming in from the US market. And eventually they will change the domicile to the US market and one of the founders will also the founding team will actually change the country, the move moved to yet it’s and it’s a natural kind of way of things to happen. And it’s fine with us, we have very good connections there, this local us ecosystem because we see so we can co invest and I can look at our deal flow, or invest after us. And basically, I gathered very strong team of partners that can help in marketing side I have Dave, who was my he used to work for me as my CMO. But he’s a marketing wizard. He was the guy behind the success of Harry Potter franchise. But the the first Yeah, the first two were losing money. And then he seemed to calm and they did it from like losing money to the most operative phrase movie franchise in the world. And now from for the last like four years, your works as a fractional cmo for six companies helping them to get to Series A. So they have Lolly who is ticket printer from Romania was three exits, while he moved to California, that he was actually the guy behind the Intel and Google team launching the androids first version, he has like, and he’s still coding. So we even had our own, he was started building a game for his son. And it didn’t turn into entire kind of the, it was a casual game. Thanks. We’ll call it thanks for fun, but when we took it, we didn’t even raise money for the game. And you can play it find it on Discord called thanks, have fun. It’s really cool one. So now he’s have multiple games. And he had previous experience with play Tikka. And they have a couple of I have my partner here, the only one guy in Ukraine out of them. So we were we met actually this logistics company that was launching the project. So he’s Chief Digital Transformation officer. And then he was working with me as head of incubation programme at incubator. And now I have he also now is partner with one of the large and CDPO also at largest development company and give, but also works as a venture partner with me on this one. So I have like various established team and have some capital people who are also joining and helping different sorts, and also build a network of about 50. People with big tech companies experienced founders like series A and above who have like hands on experience and willing to give back. But to step back, and this is all about like seed and alert, right? It’s about seed companies helping to move to the US. But if we talk specifically about Ukrainian startups, situation about valuations is even more crazier. Yeah. So in general, if we talked about one of the reasons why they’re so a cost of doing business, and you know, we just get used to to be efficient and every dollar and not wasting on you know, like, crypto times in the limbo and all of the crazy stuff. But we’ve talked to Ukraine and what actually brought me to now refocus my attention only in Ukrainian founders was the beginning of the war, like about, you know, there’s different numbers, but about 10 million Ukrainians left Ukraine 10 million now there’s,
Michael Waitze 29:04
yeah, 10 million, but it’s a country of only 45 million people approximately, yeah, yeah.
Andrew Zinchuk 29:09
Yeah. Even before like, the time we got out of the Soviet Union, there were 52 million Ukrainians officially, what year was electrical, this, you know, commercial? 1999 9090 9091. So there was like 52. And then a lot of Ukrainians there’s like big the aspirin. Actually, the biggest Ukrainian diaspora is in Canada that we have in us we have in Australia. Of course, there’s like utility Portugal, England, the Cuba, Poland, you name it. So and now with the word we have a mother 10 million pregnant, sleeping, and a lot of them I actually started up founders. So and then the last year we are sitting talking from the December student point of view, but since you know the worst started January 24. And I volunteering but then one kind of Iran just Where things going so I started talking back to the startups. So I did like, over 250 interviews of the startups, okay. So like pitching, pitching events, like you name it, or at some point of time I get, I was able to sort the things, the startups actually, were able to regain the traction or get the new traction in Western markets. And Ukrainians are now everywhere. So I was like, Okay, we have to do something about this, because the ecosystem got the big punch. Because of the war. No one is investing in Ukrainian startups and the teams those are spoken at work quite successful. There’s a team’s fully remote, not in Ukraine, there are teams that have mixed team in like, Europe, or us and Ukraine, you name it, right? They are facing two problems. First of all, the attraction is not strong enough to raise around like a proper round. Right. And the second of all, if they have part of the team in Ukraine, right, most of the VCs would consider is like, super risk and compliance. But me basically, I’m sitting here in trenches here in the bunker, and I see how everything works. And I mean, we are able to work now everyone is buying, like, electrical generators, to keep keep the stuff going right. And buying starlings. I believe the crane will do number one Starlink users in the world. But yeah, let’s say we were a child. And those startups actually they need some kind of support. So I was thinking like, Hey, this is a good opportunity, because why don’t we provide them a bridge financing. And then another big check is like up to 100k, like angel investment in tranches break API’s. So we can be assured that, you know, if the team is in Ukraine, of course, there is expertise, but there is a way to mitigate the risk if we set the KPIs and unlock the financing in tranches. So that’s why we minimise our risks as an investment side. And then it will help them and help them to actually using my experience my partner’s experience as founders, operators and investors to help them kind of get this traction better, and prepare them for next round, and help them to raise the proper round. So let’s say if we’re talking about valuations, raising numbers, man, Ukraine on BC, we have from $600 to 1.5 million. That’s like pretty big range, but it’s freaking low. It’s kind of and with the words even lower, right. So I was talking about, we were mining. So let’s say we’re not going to be skimming off, of course, the founders in and doing the harmful things, but let’s say to keep it from the same way. Yeah, and it’s a bad thing. It’s a bad investment in the virtue of the because the founder is not motivated, you’re losing. Because you’re gonna just you’re not going to run his business. Right? So and that’s the Another problem was the ecosystem and traditional investors hear the thing with different categories, but we’re going to make the jump to the topic a little bit later. So why don’t we help them right to get the better traction. And once they have the numbers, right, and we prepare them for the beauty show help them to raise the proper round. So let’s say we invest on the safe was cap, you know, 1 million, even say, let’s call it 2 million, 2 million bucks. So you see right in the US proceed average is 6 million. So within one a year, in one year, we can have put books gross of 333 x yep, I mean, where you can couldn’t get better. So that’s kind of the whole idea. So I want now to do I call it brave Ukraine fund. And the thesis is very simple. It’s to fund Ukrainian funded startups with the traction in Western markets, either its EU or us, and help them to raise like the next round. And that’s our value.
Michael Waitze 34:00
What’s the response you’re getting from investors now on that from LPS now on that, right? Obviously, you you pitched remotely before you said, you can’t travel to the normal LP events. But I feel and again, I don’t know this right. And maybe we should back up a little bit. If Ukraine became independent from the Soviet Union in 1990 1981, I was there. I remember the Berlin Wall falling like I’m 57 years old, right? So whatever that was 30 years ago. I’m 27. Right? So I remember it very clearly. But your parents must be just a little bit older than I am, right? Because my daughter is younger than you, but I started late. So if your parents are in their 60s, I’m curious what that generational change looks like to you because your parents grew up, I’m guessing as citizens of the Soviet Union, and then in 1990, everything kind of felt like it was getting way better for everybody, even inside of Russia to be fair, but now I feel like it’s come back full circle. What is the mindset? Like, not just the war part, which is scary as shit, and we can talk about that too in a second, but like, what’s the mindset like of like? Do we really have to go through this garbage again kind of thing? You don’t I mean,
Andrew Zinchuk 35:13
it’s, this is actually a very interesting moment, mindset of people of those who my parents age, and then those who are teenagers now, it’s like aliens comparing to dinosaurs or
Michael Waitze 35:25
like, really, totally aged people. Tell me what
Andrew Zinchuk 35:29
I mean. Now, people care like teenagers, they care about, like value investing, and they buy stuff with what they believe. So they were like, eco friendly, and they will also like self aware, and they, you know, it’s crazy. We have the, it’s called the project and it’s called Urban 250. And we’re about one 500. So it’s a Reuben 250 started in a city called Immanuel Franchitti in western Ukraine. So 250 People gave $1,000, and they started social responsible cafe, or restaurant. So 50% of the revenue they gave away to the social projects, and they both what to do with the manual labour either to do some renovation or Kindle or Kindle playground, or you name it. And then the same project was launched in Kyiv. Only was 500 people in less than one $1,000. And that’s, that’s amazing. And there is a lot of like, a lot of creativity is going on people doing a lot of brands, and people started buying a lot of Ukrainian, even I switched I like all of these fancy, you know, Italian bands, and now I’m just buying Ukraine and the receivers like the shirt on me from my hometown. The President is wearing the same one. I said, like, Okay, we have to kind of support each other this point of time. Ukrainian Ukrainians are very creative. And on a general landscape with the word, you know, there is this phrase that that for one person is a tragedy, but there’s 1000s, it’s the districts. So it’s hard to say, but this war is actually helping us a lot. Because was every revolution kind of we were getting more kind of and was more than younger people climbing and understanding, like don’t have any experience, alright, the Soviet Union and don’t have those pro Russian kind of feelings. And having travelled to the west. So they were like, we’re picking up a lot of this kind of movement towards the west. The word for us started eight years ago. It’s not like it started, you know, February, January, January 24. But it’s for eight years, and was Russia taking like Donbass and region and Crimea. It helps us a lot, because they took 6 million of people who, in general, were pro Russians. And it’s like taking it now. It’s like, You’re choking, you’re sinking, it had something on the back, but it’s dragging you down. So for us, in terms of politics, we get weird. I mean, it’s bad of the territory in the middle of all of the people who believe in the country, but in strategic way, we were relieved and we could vote for everything like pro pro Western pro European to kind of change more in terms of like economy, and of course, and then the social contract is also changing, because now after the war, and even with the war, no one is will be tolerating, like corruption. And then, you know, the contract between the government and society the will change, and will be like super different if I would just was reading actual occasionally today, article on the stats for what people stand for. So before 2014, there was like 50% of people were Ukraine, were still kind of very friendly to Russia, they liked the Russia by no one cared that much we’re like, right. Even though Russians were like trying to kill us for centuries, they during the Holodomor, starvation, they killed 10 million of Ukrainians and my grandma, my grandma still have the experience of that time. And in 10 million they they starve to death, why they were exporting the crops and taking everything at the time Ukraine joined Russian Empires, there was 80 to one 90 million people, right. And after the Soviet time you left with 52, whereas the freaking 3 million of Ukrainians got Where did they go and they were destroying us as as a nation. So this war was inevitable, to be honest, but the thing that they started with the east of Ukraine actually help us now. Only 3% are in favour of Russia. And it’s going to be like a fifth column for Ukraine. But you know, they ever whoever and who was pro Russian, they either left to Russia, or they went to fight for Russia against Ukrainians and they were killed, A will be killed. Who those who were helping Russians as a Russian activists now they either again left or are caught by our Ministry of Internal Affairs. All right, and special services, right? So we kind of cleaning out our house from all of this Russian nasty shit and everything that was involved. So I’m super happy, it’s painful. I have friends fighting, I have one of my businesses fully dedicating to the war. It’s like working pro bono. We are fixing cars for like SUVs for the military that are fighting on their front lines. And it’s like the words, like from the day one and I just sponsor pay the salaries for the people, but we do it. We fixed like dozen cars per week. And it’s just kind of given to this effort.
Michael Waitze 40:36
How has the mindset changed since the date in January when this part of the war started? Which I mean, the whole thing scary, right? But there are different levels of fear as well. Right? And you say you’re, I don’t want to use the word happy. But you’re, you said it was inevitable. And you also believe that there was a cleansing of cleaning out going on of like, well, if you believe this thing, and if they what they didn’t use with Crimea and stuff, that’s okay, because those people were pro Russian. But those people are now becoming smaller and smaller, it’s now a very small percentage of them. So it’s giving what’s the right word, it’s giving credibility to this sort of pro Ukrainian thing inside of its own country. But at the beginning, it’s got to be super scary when like tanks roll into the country. And as you said, missile attacks and stuff like that. Does it feel better today as we come close to the end of 2022, that we may come out of this and there was a lot of damage, a lot of killing. And I love this phrase you have like when one person dies, it’s a tragedy when 1000 people tied statistics, the more like I think about it, the just the scariest, but it’s the mindset better today than it was back in February.
Andrew Zinchuk 41:40
Of course. I mean, it’s, I it makes me be besides all of the trudged the G on a personal level on this, like kind of up to look on the horizon of 1050 years 100 years for Ukraine, it’s a unique chance first of all, finally, to get rid of Russian kind of grips and Russian mindset in the country. And what’s going on here now we had the biggest fifth column here in Ukraine which was Russian Orthodox Church and our special forces there was a minute of Ministry of Interior first they doing raids on those churches and they finding like for actual propaganda they find in guns they finding weird people, probably some of the special forces and they cleaned out this so basically all of the people who are going to Russian churches now they actually switch into Ukrainian church right so we fix in our like religion, no one will be brainwashing people and they’re really just matter. We doing all of the the community station so we changed the name of the streets with taking all of the way all of the monuments in Odessa as a finally up to third attempt, I believe they changed and took away the monument of Yekaterina second their empire, the imperative of the right after the third attempt, but they did. And before I mean, I was in Odessa so many times in the ways they were saying, Hey, we are not Ukraine, we were just Well, that’s the use of so they have a special sense of humour. And they were not given like they felt that like super special as the city with the country. But now they’re like all Ukrainian and like all of their habits like everything, like people who are speaking from their entire life. So in Ukraine, it’s super interesting situation when I’m dating the girl, and she’s speaking Russian to me, and I speak to her Ukrainian and no one was giving a damn about like, you know, it was okay, no one was giving much attention. Yet now everyone shifting Ukraine to Ukrainian language. And my girlfriend recently said she’s like, Oh, why should I speak Russian? It’s irrelevant anymore. Like the country is like is going to be worse than North Korea. Like why should I speak this language? Right? Right. So even though she was like, from the day one she was speaking Russian. So everyone is changing on everything. Probably Ukrainian now like on television. Before it was a big problem was also with books. And television, everything was in Russia, if you would go to a bookstore ever like 90% was a rush for that production. I mean, right rush, rush, rush. And the same was the music was you name it, but we put special laws that there was like mandatory to have some quote that Ukrainian and now it’s everything is Ukrainian, you cannot hear like in the public transport or in the restaurant or like nightclub. There’s all of this, Ukrainians getting like So finally, what I’m trying to conclude is that in 99, and 1990s was independence we get the country but we did get the solid defied nation and what puts us apart from the Poland right because they have and the country and the nation Yep. Now we have in the nation and nation is awoken a lot of people As the bombs and they see what the horrors did in Bucha, in their being in all of the other parts where Russians occupy the territory of Ukraine, we find that this mass graves, all of this story of raping a woman, elderly child, all of the crazy stuff, people are waking up, and they finally understand who is who is Russia, and was that we have to fight, even there with Russians, there is in third like kind of report so that the Russian separated Ukrainians into poor parts, those who will collaborate those who who basically, they can be collaborating with them, those who can be kind of frightened to shut the mouse’s. And the first was to eliminate, and they were going to eliminate every participant of orange and the Revolution of Dignity. So it’s a millions of Ukrainians. And they will do it will do it the same way that they did in belleair Was that we use facial recognition, the latest technologies to run through the recordings of those times, and find those people and imagine how many people they would kill, like, so it’s for us, it’s a fight for the freedom for the life. It’s not like it’s a different story.
Michael Waitze 46:15
So as we come into 2023, and after this horrific experience in 2022, what’s your prognosis? I mean, look, I read the news, but I don’t believe most of it, you’re there. Can you talk about two things for me? If you still have time, and that is the first of all, like, How is your day to day life changed? I really just, it sounds like a simple question. But I don’t think it’s that simple. And then the second thing is, what’s your view? Are you still going to be living in a bunker in six months? Or do you feel like this thing is running its course. And then as you come out as like a new nation, as a new country, again, just based on some of the things that you’ve said, then now that you have the nation, that now it’s going to be empowered to do things that are even bigger and better. And from an investment standpoint, just to get it back to the to the VC, the early stage, the Ukrainian companies and Eastern European companies that are building stuff for the US? Do you feel like all that stuff comes back? Even better than it was before?
Andrew Zinchuk 47:16
Yes, yes, yes.
Michael Waitze 47:18
Okay, well, then I guess I can let you go. No, seriously, tell me how does your day to day change? And then how does it feed into this other stuff we just talked about on a
Andrew Zinchuk 47:25
personal level? First of all, I don’t know if you caught it on the beginning of the conversation, but I told you that the feeling of the personal security is out. Right, because it was all of the missile strikes was the drones, you understand that every time it can hit anywhere, because they’re not fighting against the army, they fighting against the nation. And it was, in the beginning, it was kind of scary, and we’re afraid but then you have to accept it because you cannot run to the bomb shelters like, three, four times a day and two times a night. Because otherwise you cannot operate and you’ve just understood kind of okay, what are my odds are gonna hit me here. Okay, it’s not that big, right? And you kind of keep going even on Independence Day, when we were under strike alarm for entire day, I didn’t want to the bomb shelter. And I’d seen everyone to do this. But my personal decision, I said, like, Okay, I keep going. This is this is not safe. But I keep going. I just want to live my life. I appreciate the moment. And I’m aware of what can happen, but I’m not going to let them fear let them kind of stop my life. Again. Second of all, it helps me to read more, because always all of the blackouts like, like when the blackout starts so the cellular system is also going down. So we don’t have the LTE usually. And it was even the 3g, it also works like really surely. So you sometimes you’re not even able to send the message. So I actually realised that I have a Kindle. So I started reading more. Because the regular books. That’s kind of witches. Yeah.
Michael Waitze 49:07
So I can ask you this. So when I was in Tokyo for this earthquake in 2011, God, it feels like so long ago. And in some ways it feels like yesterday. But right after the earthquake, right after 234 hours afterwards, right? Like, I couldn’t even call my family. And part of the reason why was because the government kind of just took over the cellular airwaves, right, they just said nobody else can use because we need it for an emergency. So we’re gonna block it like there are other ways to communicate, obviously, texting and you know, I can send emails and stuff like that, but you couldn’t make a phone call because nobody could nobody could use this system. Is it like that there? And what is it like when you get together with your friends and family? You don’t I mean, because if everybody’s scared, like you said, you just made this decision. Like I’m just gonna live my life. I’m gonna go for it. I know it’s dangerous. But what is it like when you get together with your friends and family and some people are just like scared? shitless constantly, which makes sense, right? How does that work?
Andrew Zinchuk 50:03
I think most of the people came to the same decision I did, but took every person different point of time. I was at this level that early, you know, March mid March just said like, okay, so
Michael Waitze 50:18
what I’m doing this, I
Andrew Zinchuk 50:19
said, I mean, I was doing this for like, I moved when the key was under attack. So I recreated to the west of Ukraine to my home city to be with the parents. And then was all over and we were having several hits on the city. Look, it’s called loads, because we have the one of the biggest military ever air bases, and it was scary. So then, every time was this strike. So we were like running to the bomb shelter. Now we have the app, which can tell you what does fly and if it’s a drone, if you so also our air defence get used to it. And people also kind of, I believe most of them, I came to the sensitive have to come live and start being afraid. But different people different time to kind of realise this. So now it was very funny, when we have a blackout. And sometimes we’re like, before the recent hits, we were having the blackouts, like scheduled. So you know, like four hours and I gonna have it here, you open the app or you Google like the schedule and you and my day was like, Okay, I was changed, like from heart between home office and one of my favourite restaurants like, that wouldn’t be like three locations per day, that would change for hours, I would. And that would be my like, regular working now was the recent hits they have, there’s still a big lack of energy in the system. So we have scheduled hours, we have unscheduled we have the like a grey zone where the electricity might be on that might be as right now. But fortunately, LP is working. So we able to I was gonna ask you, what are you on down? We were actually not. Yeah, I’m on LTE. But which is pretty surprising. But it’s super cool that it’s working. Right. And then there’s like the hours that you don’t have the electricity. Also, I live in a top floor. So I have to work a lot of stairs. So which also is good for my health. But also I had to put because not all of my apartment is I mean, this is like you doing like per day, like up to 120 154. So that’s a lot like,
Michael Waitze 52:26
serious Stairmaster stuff.
Andrew Zinchuk 52:29
But yeah, but now I go, like, I, I’m not even losing the breath when I’m kind of getting to my floor. But also what’s different when the electricity is out. And you like, I’m Ellen, My apartment is like trick based. So I bought, like, camping, kind of the guests, the university and stuff. So yeah, so like Korea, so it’s pretty cheap, but at least I can hit the water, get the coffee, you know, do some cereals in the morning or something. So that’s only like kind of basic level, in terms of the kind of the fund itself and the startup ecosystem, I think there’s going to be a huge boom. Because after the war for several reasons, first of all, the IT market change was the COVID and was the word before it was in blue market. And people were changing jobs like we you know, getting like just jumping jobs getting like every time $1,000 Plus, so on so forth. Now, because of the company’s lost a lot of clients and the global recession, like blah, blah, blah, it’s an employer market, and a lot of people will be out of the jobs or already out of the jobs. And they still have to sign can do something, they have savings and they will be the the best way to do is they what they know, right, and they didn’t know how to code. So they will be building some stuff. That’s one of the driver of this second driver, which will be is actually a lot of fans will stop. So Russia lost the market, no one’s gonna even you know, there is a say I wouldn’t touch her with a stick. So no one will touch your rifle with a stick. So all of them are money that were going supposed to go to Russia. Now they will be redirected across the eastern Ukraine or Eastern Europe, and Ukraine will be one of the key markets here. There is already like two funds, big funds that already claimed that they’re raising money for the Ukrainian startup market. They will do a lot of like infrastructure projects. And of course, like the closer it will get to the end of the war, the more investors will appear because you understand that you have depreciation assets and what before if you would compare like Ukraine, even to Poland, for the same dollar in the Poland, you would have the same stuff in Ukraine the same acid for 80 cents or 770 cents with For the work now it’s going to be what? 2030? Right? So it doesn’t matter if it’s, we use speaking like, you know, hypothetical figures, but the sense of there, right? So a lot of investors will be coming here. And by all of the infrastructure businesses getting invested in businesses, like private equity deals, or, you know, like infrastructural projects, I was talking to several people who raised him like crazy, you know, a billion dollar fund 700 million fund to infrastructure to do critical stuff, you name it,
Michael Waitze 55:33
build roads, build hospitals, all that kind of stuff. Yeah, all sorts, there will be
Andrew Zinchuk 55:37
all the need for rebuilding everything from like all of the bridges, roads, hospitals, you name it, and building like houses, because a lot of houses will be destroyed. And the sale was going to happen to actually to be seen investments in the ecosystem. So there were like, there’s a lag in investment because of this year. And then the closer it’s going to get, the more it’s going to be crowded. So a lot of money will be here. But the time is actually now. Because the things are pretty stable. Of course, they mean, it’s not over yet, but believe my gut feeling is and what I get from the intel that everything should be over by, like, middle of summer or September. So then we’ll be like, official, everything is done this year. Yeah, yeah, it might happen faster. You never know. But the what in my schedule, so and the time is actually now. So it’s time to invest now in the startups to get in the best deals. And well, that’s what I’m trying to do with the fund. And if you want to, also kind of, and that’s actually amazing opportunity to do three things at the time. Right? Of course, we have to be pragmatic and businesses about money and of course, so it’s like make money be help Ukraine, and three, it’s to get to tell Russia to go. So it’s like, what can you do better was your like Angel check. You can, you know, invest in one startup or you can invest in the Fund and get your investment to diversified along with like, 30 startups that I’m planning to invest, and get to things as a bonus, and feel yourself, check that you are also doing something amazing with your money and not just you know, money about money,
Michael Waitze 57:21
and your let’s end with that message. That’s really great. I cannot thank you enough for doing this. Andrew Zinchuk, a managing partner at ZAS ventures. Thank you so much. Thank you so much for doing this today. I really appreciate it.
Andrew Zinchuk 57:34
Yeah, thanks for having me. And also I’m going to share the link for my fund so you can reach out to me and also if you want to help to fix the cars, SUVs for our soldiers that are fighting on the front end also don’t leave the link for donations. Because this is super important. And you know the faster we get rid of Russian Nazis, the better will be for entire world. And the last but not the least my macro prognosis is that incredible weapon. Russia will fall apart and the world will become a better place
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