Forbes Ukraine: Why Ukrainian Startups Move to California

Original article at Forbes Ukraine. The founder of Augmented Pixels talks about the reasons his startup moved to Silicon Valley.

In late March, Odesa startup Augmented Pixels raised $1 million from investors in California — The Hive and Steltec Capital. The same day, founder and CEO Vitaly Goncharuk announced the company’s relocation from Odesa, Ukraine to Silicon Valley.

Our startup Augmented Pixels develops technologies in the field of virtual and augmented reality and robotics, as well as specific sales platforms. We have gained a portfolio of exclusively Western clients — we essentially do not look for customers from the CIS. This is one reason we changed location: to be closer to our current and potential customers.

The startup was founded in 2011. We are originally from Odesa, and there was no sense in moving within Ukraine — in terms of international IT business development, Kyiv is approximately at the same level as Odesa; unfortunately, a very low one.

In 2014, destabilization began and fighting started in the East of Ukraine. It affected our startup: many foreign companies paused orders for infrastructure projects, and companies with Ukrainian residence found it difficult to attract money — foreign investors are very cautious with local projects. All of this strengthened our thoughts about changing the country.

In 2014 we moved to California to participate in the Plug & Play accelerator, and then decided to stay. To enter new markets, we decided to attract investments exclusively from American investors, in which our first investors AVentures helped a lot. Being in California increased the ranking of Augmented Pixels, and a difficult search for investors turned into choosing the best of the proposals. As a result, we received investments from The Hive and Steltec Capital and became a fully American company. We do not hide the Ukrainian roots of the company — on the contrary, it endears people.

Perhaps the most positive feeling about California is that almost everyone around thinks not about “taking everything and dividing the budget”, but about “how to create something and change the world”. Thoughts are directed to the future, not the past. And no one cares where you are from, your skin color, sexual orientation, or what language you think in.

Also worth noting is the American style of doing business: if you make the best product and work honestly, people are willing to sign deals literally during the second meeting. US infrastructure for IT business is optimized at its best; Silicon Valley is a great place — guaranteed business security and access to the whole community of thousands of companies in the same field.

We realized it is worth the increase in living expenses, rent and taxes (life in California is very expensive). Of course, nothing should be idealized — the United States has criminal areas, corruption problems and complicated legislation. In 2014 my car was robbed twice in the US, which never happened to me in Ukraine. But the pros greatly outweigh the cons. That’s why we moved.

Despite the negative background, Ukraine remains one of the best locations for a back-development office. Moving the head office to the US helps keep jobs; employees continue spending money, helping families and paying taxes in Ukraine. I am pleased that IT professionals have topped the ranking of highest-paid professionals in Ukraine over the past 1–2 years — they make their living with their heads, not through corruption.

Our country’s main problems are the lack of stability and controlled legislation, corruption, and deteriorating personal security. This is critical for IT business, because programmers are mobile people; if they don’t like something, there are no barriers to moving. Such specialists cannot be “fixed” to a territory with restrictive measures — the right conditions must be created for them. Right now, Ukraine does the opposite.

Our politicians and bureaucrats must understand one simple thing: they will be able to receive salaries from Ukrainian IT-business taxes only if they become more competitive in running the country than Western politicians and bureaucrats. Entrepreneurs are mostly optimists, so I hope we will come back to a positive development track. My friends’ efforts in state reforms allow me to be optimistic.

Best regards,
Vitaliy Goncharuk
LinkedIn