Amazon bought Ring for $1 bln: what does this mean for Ukraine

Amazon придбав Ring за $1 млрд: що це значить для України

Innovation House has figured out how one of Amazon’s biggest investments may affect the Ukrainian market and whether this is possible at all.

It has been recently disclosed that Amazon bought Ring startup that creates gadgets and analytics for the “smart” home. The most famous product developed by Ring is the doorbell with video camera that transmits the signal and video in the real-time mode to the smartphone when someone rings at the door.

This development is only the “top of the iceberg”. Ring’s website says that the mission of the startup is to reduce crime in communities. American market already has doorbells equipped with movement sensors that may recognize people within the visibility field of the camera and may collect data. Safety is of prime importance for the internet giant Amazon that deals with the delivery of goods to homes and even tests drone delivery service. Therefore, Ring is of considerable value to Amazon.

Reuters news agency said that transaction amount has exceeded $1 billion, which makes it the largest one in the history of Amazon. So far, the companies provide no official comments in this regard.

Ring Labs is of California origin, but it has some linkages with Ukraine. Thus, its largest engineering office, where more than 400 people work, is located in Kyiv city.

Amazon придбав Ring за $1 млрд: що це значить для України Amazon купил Ring за $1 млрд: что это значит для Украины

Innovation House has found out how one of Amazon’s biggest investments may affect the Ukrainian market and whether this is possible at all.

Country’s image

Website of Ring has no information about the existence of Ukrainian office, suggesting that the company is not very proud of this fact. On the other hand, Ring Ukraine website states that local office is startup’s largest engineering center. Website is in English and this information is available for anyone outside the country.

“This deal will explicitly draw the attention of international investment community to Ukraine”, – Olga Afanasyeva, Executive Director at Ukrainian Venture Capital and Private Equity Association (UVCA), said.

According to her, this deal is a testament to the message stating that Ukraine may become a new global technology partner. In sober fact, this is exactly what was told by the hosts of Ukraine House Davos, inclusive of UVCA. “But facts always work better than conversations, and purchase of Ring is yet another argument in favor of Ukraine. Now we will be more frequently considered as country, where R&D of major international companies may be located.” – Afanasyeva said.

Money

We cannot treat this deal as an investment in Ukraine. Both Amazon and Ring are U.S.-based companies. Amazon’s headquarter is located in Seattle, Ring’s headquarter is in Santa Monica. It is the USA, where transaction is being made. “Monetary capital will move from point A to point B within the USA. New owner will get money. As for me, this deal means nothing for Ukraine”, – Roman Kravchenko, founder of DIY Lab and IoT Hub, said.

However, it is too early to draw some conclusions. We are unaware of what Amazon will do with Ukrainian office of Ring. It may invest in the development, or on the contrary, may expropriate its developers to the USA.

Olga Afanasyeva believes that it can be the case of additional jobs and taxes. “The fact that Amazon is getting closer, cannot but please us. There is still work to be done on the unicorn (startup company valued at over $1 billion – Editor’s note) and truly Ukrainian investment”, – she said.

Challenge

Yaroslav Romashko, Managing Partner at ARTKB Hardware Product Development Bureau, believes that these developments provide impetus for hardware startups. “If there is impetus, there will definitely be hardware startups boom. But there will also be understanding that hardware is hard”, – he said.

Ukraine has some initiatives aimed at the development of new products, teams, and leaders, like IoT-startups acceleration in IoT Hub. But overall, the country remains to be quite isolated from the global market, where major transactions are being performed. “Ukraine is far from this feast of life. Any hardware startup will probably have to move to the USA to be purchased”, – Mr. Romashko said.

To spark the interest of any large IT-company like Amazon in any hardware startup, at the very least it shall have sales history and product portfolio. Mr. Romashko believes that there is a small quantity of such projects in Ukraine.



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