Lenna Koszarny

Horizon Capital

Executive: Lenna Koszarny, Founding Partner and CEO
Investor Name: Horizon Capital
Investor Type: Private Equity Fund Manager
AUM: USD850m
Year Founded: 2006
HQ: Kyiv, Ukraine
Geo Focus: Emerging Europe
Target Sectors: Tech; e-commerce; innovative industries


How has the private capital landscape changed in Emerging Europe, and in Ukraine in particular, since Horizon Capital began investing in the region in 2006?

Since the launch of Horizon Capital, technology has become the ultimate equalizer – eliminating borders and enabling founders from any nation to seize opportunities to compete in global markets. With education rooted in math and sciences, and a proficiency in cybernetics, programming, and problem-solving, Ukraine’s tech talents have put the country firmly on the map, growing the IT industry from USD110m in 2003 to circa USD5b in 2019, a CAGR of 27%. Ukraine rocketed from 75th place in 2007 when the Global Innovation Index was launched, to 45th in 2020, surpassing tech giant India at #48.

With tech leveling the playing field, we are buoyed to see CEE & CIS making headlines with the recent success of private equity-backed IPOs. The listing of Polish e-commerce retailer Allegro on the Warsaw Stock Exchange, backed by Cinven, Permira, and Mid Europa Partners, was a bright light in the fall of 2020, raising USD2.3b in Europe’s largest tech IPO of the year. Further east, Kaspi.kz, Kazakhstan’s fintech and e-commerce giant, raised nearly USD1b in a listing on the London Stock Exchange, followed by Russian online retailer Ozon’s USD1.3b IPO, the biggest emerging market listing in the US last year, both backed by Baring Vostok. These groundbreaking IPOs fuel our cautious optimism that Ukraine’s rising tech stars, backed by Horizon Capital, may deliver comparable successes in tomorrow’s headlines.

How has your mandate evolved as a result of the growing tech opportunity in the region?

Our firm was launched in 2006 as a spin-out from US government fund Western NIS Enterprise Fund, with the deal team initially focused on traditional industries, primarily financial services and consumer products, serving the country’s growing middle class. Fast-forward to today, over 50% of investments made from Emerging Europe Growth Fund III, our latest 2017 vintage fund, are in the tech space, with our firm investing over USD200m in this sector to date. This evolution was made possible by the talent, expertise, and skills of the entrepreneurs whom we back, including: Vladyslav and Irina Chechotkin, founders of Rozetka, the leading Ukraine-based e-commerce platform delivering over 30% revenue CAGR in USD since making this investment in 2015; and Roman Prokofiev and Eugene Sobakariov, the founders of Jooble, a global job aggregator site.

We also backed Vladimir Mnogolitniy and Vasyl Ulyanov, founders of Genesis, a Kyiv-based venture builder uniting multiple internet businesses across e-commerce, digital media, and mobile application verticals. Genesis’ spin-out JiJi, a Nigeria-based digital classifieds marketplace, recently acquired OLX’s businesses in Kenya, Ghana, Uganda, and Tanzania, to reach 300 million people in five markets.

The evolution of our investment strategy was driven by a shift in our team over the years. Originally, investment decisions were primarily made by expats. Today, deals are led by partners from our region, with international education and strong operational experience. The team has leveraged their expertise and networks over this decade to pivot our strategy to backing fast-growing tech companies. This shift has truly been a game-changer for Horizon Capital – resulting in over 25% net IRR in USD terms on all deals sourced from 2012. Horizon Capital is backed by over 40 global institutional investors, including DFIs, university endowments, public and private pension funds, family offices, foundations, and HNWI. The four funds under Horizon’s management have invested over USD750m in 150 companies employing 57,000+ people, attracting over USD2b in capital to Ukraine and the near region.

Horizon recently led WNISEF’s exit from its investment in Moldova-based Glass Container Companies Prim via a sale to Vetropack Group. Please tell us about this divestment and how you grew the company’s market share and value during the holding period.

Horizon Capital concluded the exit of WNISEF’s Moldova-based Glass Container Companies (GCC) to Switzerland-based Vetropack Group in December 2020. Horizon Capital Partner Vasile Tofan and GCC CEO Oleg Baban and his team turned the company around when GCC faced a steep decline in demand in 2014 after Russia introduced embargoes on wines from Moldova, Georgia, and Ukraine, causing a sudden drop in demand. Value creation efforts became a full turnaround plan, including:

  • Pivoting GCC westward into new markets, resulting in EU share of sales growing to 50% from 35%;
  • Restructuring debt, including finding a buyer for the largest lender’s outstanding loan;
  • Optimizing expenditures and improving operations through better planning, cost discipline, and rigorous tender procedures, thus improving margins significantly;
  • Securing furnace reconstruction financing, setting GCC on a path to increasing capacity by up to 60% to 150k tonnes/year.

These efforts enabled a competitive exit process, culminating in a profitable sale for WNISEF and raising total exits by our deal partners to 16 since the 2012 team and strategy reboot. These include two IPOs, five sales to strategics, five to financial/trade buyers – proving high liquidity and returns may be generated in these markets.

Liki24 and MAKEUP Group are among some of your most recent investments. Please describe how these investments fit into your investment strategy – how do you source your investments and what qualities do you look for when identifying scalable companies in this region?

Both Liki24 and MAKEUP Group are specialized e-commerce platforms launched originally in Ukraine, then expanding to international markets. Both companies are beneficiaries of increased online shopping, in response to COVID-19 lockdowns. MAKEUP Group is an online beauty products retailer present in 14 countries, delivering triple digit YoY growth due to high, above-peer user engagement and satisfaction, and well positioned to become the leading European cosmetics e-commerce player. Medicine delivery platform Liki24, launched in late 2017 in Ukraine, has already connected 5,000+ pharmacies and completed over 700,000 orders, further entering Poland during 2020 in line with its bold expansion plans.

We draw on our wide network of personal and professional contacts to source proprietary deals, seeking strong local champions led by visionary entrepreneurs with a robust, scalable platform. We also look for: a large addressable market, a business model with high barriers to entry, strong unit economics, operational excellence, and optionality to pursue multiple exit routes.

You recently increased your share in Datagroup, a Ukraine-based fiber infrastructure and digital services provider, to 96%. Please describe the specific market opportunity for digital infrastructure investments in Ukraine in the context of increasing digitalization and the COVID-19 pandemic.

Ukraine recently launched a Ministry of Digital Transformation, which immediately began implementing a bold “Ukraine in a smartphone” agenda. Datagroup’s market leadership and technical excellence, alongside this digitalization push, will enable the Company to capitalize on global fixed-to-mobile convergence trends. Horizon Capital-appointed CEO Mikhail Shelemba led a full business turnaround, reducing net debt to EBITDA by 9 times to 0.3x, delivering over 20% EBITDA CAGR in USD since 2016, and setting the stage for Horizon Capital’s EEGF II fund to increase its stake in the company to over 96%.

In a transaction led by our team, Datagroup recently announced its acquisition of Volia, a Ukraine-based retail and pay TV provider, pending regulatory approval. This deal represents the first major consolidation in a heavily fragmented market, thus creating a national fixed telecom champion. Scaling Datagroup will enable the company to meet the demands of increasing digitalization, including modernizing and expanding last-mile and national fiber infrastructure. The acquisition will increase Datagroup’s capacity to deliver high quality, essential services that have become even more critical as a result of the COVID-19 pandemic.