Max Filippov, managing partner of GR Capital, in his column for AIN.UA talks about three traditional sectors of the Ukrainian economy — cargo transportation, the insurance industry, and the agricultural sector, and gives examples of innovative solutions, the implementation of which will stimulate their development.
The IT market must be viewed in a human-driven dynamic. An innovative business, as such, is based on solving the applied problems of an ordinary person. For example, food delivery services have emerged as an aid to city dwellers who do not have time to cook lunch or dinner or attend public catering.
For some reason, Ukrainian macroeconomics is slowly moving towards innovation. Everyone is talking about IT people, but people from the government are still more interested in discussing traditional business from the industrial economy.
Based on my experience as a venture investor, I focus on three innovative industries in which Ukraine can still succeed, with minimal government attention. It will be better for everyone (including the Ukrainian macroeconomics) if innovations come to cargo transportation, the insurance industry, and the agricultural sector.
In Ukraine, things are going well with taxi services. Ukrainian Uklon appeared on our market earlier than American Uber and Estonian Bolt. This was also facilitated by the eternal problem with public transport in million-plus cities. Over time, small mobile vehicles were added — scooter and bicycle rental. However, life in the state revolves not only around the visible needs of the urban population.
Cargo transportation is an invisible and integral part of the functioning of the economy. The grain produced in the fields of the Kherson region must be taken to the elevator, and your mobile phone must be delivered from the customs office to the store's warehouse, etc. What is the problem to automate the organization of cargo transportation by collecting carriers, forwarders, brokers, consignors, and consignees in one system?
The largest company offering such a system in Germany is Sennder, and we are also investing in it. In fact, this is the “Uber” for cargo transportation. A similar system (application) is necessary for Ukraine. Ask any importer or exporter how satisfied they are with their ongoing phone calls with carriers. And clarify whether he will refuse to fully automate the logistics of his goods. The answer is so predictable that I will omit it from this text. By the way, Ukraine has its potential player in the digital logistics market — Sovtes.
The essence of digital logistics is in the organization of communication between the seller and the buyer of cargo transportation services. There must be a mission. The system will assist in realizing the trends towards lower carbon emissions and the gradual transition to electric transport. It will optimize routes, predict the number of harmful emissions, and create a unified transport map (a visual demonstration of prosperous and depressed regions). And, of course, it optimizes collaboration between customers and contractors.
The need for digital insurance in Ukraine has matured, because the Ukrainian consumer has rethought his relationship with a smartphone and a computer, and requires the digitalization of all traditional services and procedures. In addition, according to the industry publication Insurance Top, the insurance market of Ukraine in 2020 decreased by 16% to UAH 45 billion (50% accounted for premiums from the population).
But there are visible prospects for its growth. Thus, the life insurance segment showed an increase of almost 10% to UAH 5 billion. Market leaders showed an average business growth of 15%. Net premiums amounted to UAH 40 billion. Formed reserves increased to UAH 34 billion. The number of concluded insurance contracts increased by 50% to 120 million units.
Digitalization of insurance will give the market a new impetus for development. Because the distance between the insurer and the buyer of his services will be reduced. A visible incentive for growth is the creation of a marketplace for insurance companies and building understandable relationships with the client. Simple marketplaces already exist, and they do not help the market much, because they provide a minimum of added value. The reason is those non-standard products, that is, everything except OSAGO is very difficult to compare with each other in the marketplace format.
The problem is that old-school insurance has become overgrown with long contracts, incomprehensible cases of non-payment on the part of insurance, and various kinds of deception on the part of clients. Here it is necessary not only to reduce the distance, but to improve scoring, simplify insurance products, make them more flexible in terms of terms and coverage, all this is possible from scratch, and not based on the existing dinosaurs of the market.
The service of our portfolio company Wefox combines services for insurers, brokers, and clients. To obtain insurance, you do not need to come to the office, and the system assesses your risks to recommend the best insurance instruments. If you are visiting the highlands, the Wefox app will advise you to purchase a special trekking or skiing insurance package. The whole process takes place on your smartphone.
A similar product is needed in Ukraine, and Ukrainian developers, investment companies, and the insurance market as a whole should pay attention to the prospect of going digital.
The opening of the land market is a necessity for the 20th century, but thank you for now. The transformation of land into a commodity that can be truly bought and sold will lead to a rethinking of agribusiness in Ukraine. If earlier farmers considered income "per hectare", now they will have to count "per square centimeter". Because market rules will convince them of cost optimization and business technology.
Innovations will arise at a time when agribusiness realizes itself not only as a tenant of cheap land but also as a full-fledged market with a competitive environment, expressed not only in the redistribution of shares and the battle for EU quotas. Add to this the inevitable rise in the value of agricultural land.
The visible innovation in this area is vertical farms for export. They can be developed and tested in Ukraine and sold as a boxed solution to countries with a shortage of land suitable for farming. Thus, the market for Asia, rich in oil, but poor in food, will open for us — the UAE, Saudi Arabia, Oman, Kuwait, Qatar.
For small farmers, remote management and monitoring services will come in handy, which will include watering, dosing fertilizers, measuring soil quality, and so on.