Czech Startup Founders Turn Billionaires Without VC Help

(Bloomberg) -- While investment funds in Silicon Valley have turned the owners of many unprofitable startups into billionaires overnight, the founders of JetBrains s.r.o. have managed the feat without the help of venture capital.

The Prague-based startup, whose programming language last year became Google’s preferred development tool for Android, is worth about $7 billion, according to the Bloomberg Billionaires Index. That valuation would make Sergey Dmitriev and Valentin Kipiatkov, two of the three Russian founders who incorporated JetBrains in 2000, billionaires.

The firm, which boasts it is among the biggest employers of programmers in St. Petersburg, isn’t interested in raising capital amid high demand for technology companies, according to Chief Executive Officer Maxim Shafirov.

“Venture capitalists write every other day, and I feel like a very impolite, unkind person, because I’ve stopped answering,” Shafirov said an interview. “We’ve got enough resources to realize our ambitions.”

The lack of investors means JetBrains is under no pressure to sell shares amid the current listing boom, with December set to be the busiest year-end on record for initial public offerings in the U.S. Venture capital investments in the country hit the highest in almost two years in the third quarter, reaching $36.5 billion, according to a CB Insights report.

Unlike many companies selling stakes this year, JetBrains already turns a profit. It is on track this year to boost earnings before interest, taxes, depreciation, and amortization by more than 10% to over $200 million, according to Shafirov.

Its recent success stems from its open-source Kotlin programming language for Alphabet Inc.’s Android. In 2019, Google announced Android development is “Kotlin-first,” making it the preferred language for the world’s most popular mobile operating system. Google says over 60% of professional Android developers use Kotlin, including Google itself, which tapped it to design its Maps, Home and Play apps.

“It’s a profitable private company that, as far as I know, never attracted external financing,” Konstantin Vinogradov, a principal at Runa Capital venture fund who helps manage $420 million in assets, said. “Big VCs would jump at the chance to buy a stake in JetBrains.”

Dmitriev and Kipiatkov maintain control over the company, according to Shafirov, who declined to disclose their stakes. The Bloomberg Billionaires Index valuation is based on JetBrains’ 2019 results and the value of publicly-traded peers.

JetBrains’s target audience is the IT sector, where its developer tools command a loyal following. 9.5 million programmers use JetBrains software and 20% of them are paying customers, Shafirov said.

430 of the Fortune 500 are clients, including Citigroup Inc., Google and Volkswagen AG, according to JetBrains. Its main programing hub is in St. Petersburg, where it employs almost half of its 1,500 staff.

The company is now seeking to expand into the wider market of workplace collaboration tools and last week introduced a product that will compete with Atlassian Corp. and Slack Technologies Inc., which this month reached a deal to be acquired by Salesforce.com Inc. for $27.7 billion.

JetBrains decided to introduce the program, called Space, after finding that existing options didn’t meet the demands of its growing workforce, according to Shafirov.

“We don’t have revenue growth targets,” Shafirov said. “Basically, we wrote all this so that making software would be a pleasant and creative process. And now our mission is to expand to other niches.”

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