How to buy a wrecked Russian tank

Key takeaways

[2:15] Oleksii Sobolev shares good news regarding the war in Ukraine and the financial strategy of the Ministry of Defense in funding the war. 

[5:40] Sobelev shares upcoming plans for auctioning off destroyed Russian tanks along with other war memorabilia. 

[10:40] Sobolev describes building a successful company like Prozorro in the midst of war.

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Prozorro.Sale, the Ukrainian-built, world’s most transparent e-auction system, faces obstacles like the Ukraine-Russia war in addition to the usual hurdles most start-up businesses face.

“Imagine running a startup where your shareholder doesn’t provide you any capital and they get 80% of whatever you make every quarter.” Oleksii Sobolev, CEO and President of CFA Ukraine and one of the company’s founders told The Yield.

From a podcast studio in Kyiv, Ukraine, Oleksii has joined the show for a conversation about the current state of the country, the importance of democratic participation and how the war has affected doing business in Ukraine for even the most innovative companies. 

Want to buy a tank

Oleksii shares an update on the war in Ukraine, highlighting the everyday realities of air raids, the effect of opening up marine routes out of Ukraine for global food prices, plans from their Ministry of Defense regarding funding the war, and the upcoming launch of public auctions – on Prozorro – for the purchase of destroyed Russian tanks and other weapons, with proceeds earmarked to fund the Ukrainian war effort. 

The Ukrainian flag near the Russian tank was destroyed by the armed forces of Ukraine.

As a 38-year-old born and raised in Ukraine, Oleksii reflects on corruption and the state of pre-war Ukraine – for our readers, Ukrainians believe the war started in 2014 with the illegal annexation of Crimea by Russia. As an advisor in the Ministry of Infrastructure right after the revolution that toppled former President Viktor Yanukovich’s government, he has worked with others of his generation to build a government freed from the complete control of the political elite. 

Oleksii originally and optimistically intended to work with the government for one year, but six years later he is still hard at work. As a result of his and so many others’ efforts, Ukraine has moved a lot but, as Oleksii puts it, there is still a lot of work to be done. He points out that the importance of democratic participation is critical in every country, as is highlighted in the extraordinary tale of citizens leading a country from corruption to democracy, as has happened in Ukraine. And Prozorro was precisely aimed at minimizing corruption in the sale of public assets, which is the way that oligarchs became rich in Russia – and Ukraine. Through a decentralized auction system, Prozorro is able to minimize the possibilities of corruption. 

Oleksii also highlights the process of building a successful company like Prozorro in the midst of war. From raising capital to starting and managing the business, all while maintaining his job with the government, has not been an easy task. While the company is mostly an ordinary startup, they are 100% owned by the Ukrainian government, and the government doesn’t provide the company with any capital. Fundraising happens not with venture capitalists or private investors, rather it happens with donors, including international organizations. 

As a state-owned enterprise, they are also subject to a regulation in Ukraine that requires a quarterly payment of 80% of net income to be paid out as dividends to the government.

Oleksii outlines the pilot system with non-governmental organizations that has been developed and actually works. Donors and businesses contribute capital of around $100,000 to $200,000, and within the first year, they have seen $10 to $20 million in transactions on the platform. The company helped the auction system operate transparently and avoid scandals, which has helped the Ukrainian government sell public assets from non-performing loans to real estate. The company has been running successfully since 2018, but in light of the current war, they have been forced to operate at 20% capacity. As a result, Prozorro is looking for international markets to do business with as well. 

Despite the war, Oleksii says the future is bright and there are opportunities waiting to be capitalized on, especially as Western Europe is lagging on building a transparent system for public auctions, and even US states’ auction websites appear to be behind the curve. 

Yieldstreet does not offer captured Russian tanks on its platform, but its products include attractive private market opportunities which can help diversify portfolio exposure. To learn more about the offers available to our investors, visit www.yieldstreet.com today. 

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