Nuka raises $400k for “eternal stationery” but does not release the product. What’s going on at the startup?
Today, there is a lot of talk about Nuka, a startup that has designed an “eternal stationery” project. On vc.ru, there is a story saying that Nuka’s notebooks, despite investments and fundraising through crowdfunding platforms, have not become publicly available after several years.
Launching a product like this is a complicated and slow process, especially if you have no experience prior experience with a similar project. One of Nuka’s investors, Ragnar Saas, said, “When building a brand new product, it’s always a ‘mission impossible,’ with people making lots of mistakes every day and the process can take 5-10 times more time and money.” Moreover, according to AIN.UA, the process of preparing the notebooks for release is still going on, although not as fast as previously promised.
It is worth telling about Nuka not because of the notebooks and the delivery delays, but for a completely different reason. That reason concerns the founders of the project.
Officially there are three of them — Kateryna Mikhalko, Nikita Vladykin, and Eugene Shylo. In the summer of 2020, the AIN.UA team noticed that one of the founders, Kateryna, was missing from the photos associated with the company. For some unknown reason, she disappeared from the site and all communication, although previously, there were always three founders at each event.
The story below is not about how the three very young people who conceived the project failed to set up production in China. It is another story about why all documents should be signed, decisions should be officially certified, communication within the project should be transparent and clear to all involved, and personal relationships should not interfere with work.
In the spring of 2018, the media wrote a lot about the startup Nuka. It is an “eternal stationery” – a water-resistant, refillable notebook and pencil that cannot be used up. The founders had a prototype ready, and everything developed very quickly: the startup raised financing from several angels and was preparing a campaign on Kickstarter.
The articles placed a special emphasis on the founders – Nuka was represented by 17-year-old Ukrainians Kateryna Mikhalko and Nikita Vladykin. Later, Eugene Shylo, who was 20 years old at the time, joined them. Then, the project raised over $400,000 via crowdfunding and received funding from investors. Time passed, but the Nuka notebook never appeared. However, AIN.UA sources claimed that the work is actively carried out — there are test samples, and everything is fine.
However, in 2019, when the media stopped writing about the startup, Mikhalko quietly disappeared from the founding team. Everything went so quietly that Kateryna is considered part of the team even now, but she isn’t. In 2020, the editors of AIN.UA first met with Mikhalko and found out her version of the exit from Nuka. Also, we talked to two other founders and investors about what’s going on at Nuka.
The backstory
Nuka started as a project of Kateryna and Nikita in 2016. They were a couple, and they did not hide their relationship. They met back in high school, where they studied in parallel classes, and then both went to KAMA. In 2017, Eugene, whom Nikita had known long before, joined the team.
The first research and prototypes were done using pocket money. When it became clear that the project could become a real business, they decided to incorporate the company. It was decided that all of the cofounders would receive an equal share at Nuka. The corresponding legal document was drawn up only a year later, in April 2018, after Nuka won the startup contest at iForum and received its first $20,000 investment.
The company was registered under US law. At that time, each of the founders received a 30% of Nuka’s shares by vesting: a year of work on the project yielded a small fraction of that share. The founders had to work at Nuka for four years in order to get their full share.
After the iForum, the three founders became public faces. The press service of Volodymyr Groysman, who was Prime Minister of Ukraine at the time, made a story about Nuka, after which many media outlets, including foreign ones, wrote about the project. For the next 3-4 months, the team participated in contests, gave interviews, and at the same time, finalized the product together with Fabricator and Concepter, which became a shareholder of the startup.
In the winter of 2019, Nuka raised funding from angels Denys Yurchenko and Ragnar Saas and began planning to launch a campaign on Kickstarter. In May 2019, Nuka launched the campaign and raised a total of $215,000 (including additional funding on Indiegogo). Everything seemed great — the startup had great prospects and a good product.
But in July 2019, Kateryna Mikhalko left the project. After that, mentions of her as a co-founder of Nuka were removed from the website and all the startup’s social media pages. Her name remained only in the description of the Kickstarter campaign because it could not be edited after publication. Nikita and Eugene continued working together.
Why did Kateryna leave
An official version explained to investors by Nikita, Eugene, and Kateryna herself is some unsolved disputes during the product development.
But sometime later, Mikhalko told AIN.UA the real version of what exactly forced her to leave the company. Just for reference, Kateryna and Nikita were a couple. According to Kateryna, she and Nikita used to quarrel as they were together. “He always claimed it was my fault, so I cannot say that our relationship was good at all; I was under pressure and even more,” said Kateryna. The lawyers advised her not to discover some moments of their relationship.
“I’ve tried to leave many times, and it always led to manipulations with the company,” explained Mikhalko.
The romantic relationship between them ended in December 2018. At that time, Mikhalko had not yet turned 18.
After the breakup, it became difficult for Mikhalko to work at the startup. Nikita, she said, pushed her away from managing Nuka: he did not take her to meetings with partners and did not even inform her that such meetings were planned, and he made some decisions without informing Katerina.
“It is normal that not all of the founders can come to the meetings. That is why partners often did not even ask why I was absent,” said Kateryna.
So, Kateryna concluded that she could directly participate in Nuka’s development only by getting back into a romantic relationship with Nikita. But she didn’t want it because of the experience she’s got. “One day, Nikita just said to me, ‘You can’t come to the office anymore.’ Why? Because it is my decision. Because we do not work together anymore,” told Kateryna AIN.UA.
Eugene communicated mostly with Vladykin, so he has chosen his side, thinks Kateryna. Without getting support, Kateryna decided to leave the company, and it happened in July 2019.
Why I never talked about the reasons why I left?
“I was afraid to become a toxic founder. Now I understand that it’s very bad to hide some facts. My silence did not help the company,” concluded Kateryna and added that she never wanted to hurt the reputation of Nuka.
Nikita denies that he intentionally suspended Mikhalko from her position at Nuka: “We had so many meetings in that time. So, I suppose we could be just desynchronized. I never wanted to hide something from her.”
He believes there was a two-way-bulling between them because of their young age.
“Looking back, I realize that we have had a toxic relationship where both of us tried to boost self-esteem at the expense of the other. It should not be in a family. It is not normal; many people are not ready for a new relationship until they don’t fix their current internal problems,” explained Nikita Vladykin.
They involved Eugene in this conflict without his will. Their quarrels often have expanded from the personal to the work environment.
“Sometimes, it was hard to make a decision. Kate and Nikita never wanted to concede anything to each other in both personal life and work; they couldn’t split them because of their young age,” said Eugene Shylo.
According to him, the situation was at its peak when the team went to CES. After they returned, Kateryna used to get less involved in the work. So, in fact, Mikhalko did not cooperate with Nikita and Eugene anymore after they returned from the USA.
The problem failed to be solved. And finally, according to Eugene, in April 2019, Kate has initiated a meeting with co-founders, where she resigned from her position. She assured all that it was her free will, and she went not because someone forced her to leave, Eugene added. “In case of conflicts, she used to say that we force her to leave the company, but we never pretended to constrain her to leave the project,” Eugene added.
According to Kateryna, Eugene was aware of the real cause of her resignation, but he supported his friend.
According to the information of AIN.UA, some investors also knew the reason why Kateryna left.
Shares
After Kateryna left her executive position, she still owned the startup shares.
So, the Nuka shares belong to the founders (20% each, effective winter 2020) based on vesting requirements and the investors: Ragnar Saas, Denys Yurchenko, Concepter, and Biosphere Ventures (Vlad Huristrimba and Andriy Zdesenko).
But Nikita claims that Tyslenko is not a shareholder anymore. Vladykin explained: “We have reviewed [the Tyslenko’s stake in Nuka] … The legalization is in progress now, as we agreed by shaking our hands.”
It’s worth mentioning that Eugene was not aware of that agreement because he said that Vlad Tyslenko still was a shareholder of Nuka even though Concepter changed the owner [Editor’s note: Ajax bought the engineering team only]. The AIN.UA editor spoke with two founders separately, and some of their answers do vary indeed.
In 2020, there was an obvious lack of funding for development. The team had a deal with present and new investors about a new investment that should be followed by another large round. But then the deal failed during due diligence. The problem is that in 2019 when Mikhalko resigned, the team has made no legal changes. So now Kateryna has 20% of Nuka instead of the supposed 5%, claimed the current executives.
Here is Eugene’s answer to the question ‘How could it be possible?’: “We thought we discussed and processed all the staff. At that meeting [in April 2019], everybody was OK and was thinking clearly about this issue. Kate invited us to that meeting, and we thought we had a deal.”
According to Eugene, he and Nikita tried to agree with Mikhalko to divide the shares honestly. But she declined their offer, and sometime later, she started to ignore their messages and emails.
“Under such circumstances, the further investments in Nuka are doubtful. If in the early stage of the company development 1/5 of shares belongs to an inactive founder,” claimed Nikita. “Give us the part that will allow us to raise funds. We would sell it to the investors, and the value of your part will increase — you will get rich together with us. And if you won’t, we will just shut the business down.” That was our idea, but the win-win situation did not happen. Kate’s answer was, ‘I won’t do anything.’
In a previous conversation with AIN.UA, Kateryna did not deny having a stake in Nuka. She confirmed that the current startup management offered her to sell her shares and quit the business. They should have involved a foreign investor for that. “After I asked them to give me the name, they refused without explaining a reason,” Kateryna said. “I wanted to know who would buy my stake. I wanted to know if the investor realized the whole situation.”
According to Kateryna, neither Nikita nor Eugene never showed her an official final financial statement. “I was ready to support them, but I must have an insight of the project with full information. Eugene has shown me a document in Notion only once, but it was a mix of numbers, not approved and not confirmed. I do not know how the money is spent, whether they paid taxes or not, etc.” added Kateryna. “At the moment, I am searching for ways to solve the conflict in the legal field,” said Kateryna.
According to Nikita and Eugene, they have legalized the resignation of Mikhalko with a resolution of the majority in 2021. They also confirmed her right on the 16% of the company.
To solve the problem with new investments, the management of Nuka decided to establish a brand-new company (it does already exist, AIN.UA has a confirmation). Now its founders wait for the approval of a new bank account. The shares will be divided between all shareholders as in the former company, but only Kateryna’s stake has been changed.
Vladykin said to the AIN.UA editor that the new legal entity under Nuka’s name would be represented only by two founders — him and Eugene. Kate is supposed to be a shareholder too (according to Nikita, she earned 5.4% of the company while working at Nuka). But the size of her stake is subject to further discussion. Nikita said Kate’s father represented her during the negotiations. They discussed the full or part purchase of Kateryna’s stake.
Mikhalko was surprised to hear about a new company. “You [editor of AIN.UA] are the first person who told me about the registration of a new legal entity. Nobody told me that, the same about changing my stake. I think this plan should make both current and future investors feel uncertain. Regarding negotiations with my father, I can only say there are me and my lawyer, and we have got no new requests. To continue the negotiation process, I asked them to show me the statements for the period when I was off-board to know how they have spent money. But they didn’t.”
She said she would like to end this story with Nuka as soon as possible and leave it behind. Now she is busy with other educational projects.
The editorial board of AIN.UA asked two investors (not affiliated with Nuka) if it is OK to register a new company without notifying one of the shareholders. Both of them wanted to keep their anonymity. The first one thinks it is a bad practice. But it will be hard to prove something in courts, especially in the case if the company didn’t mention that opportunity in their agreements. His investment firm would write off such an investment. The second one thinks that every investor has only one interest — profit. If the founders would solve the problem and start the business, most likely, the investors will have nothing against it. The main thing is that the product will be developing.
What is about statements
The financial reports of Nuka are a weakness of the project. Interestingly, after the Kickstarter, no report was received by any other investor except Ragnar Saas.
“The Nuka team has sent me reports only a few times, but I have not seen anything doubtful in their finances. When you develop a brand-new product, it is always a ‘mission impossible’ where people always make a lot of mistakes, and it could take 5 to 10 times more time and money,” explained Saas for AIN.UA.
Nikita and Eugene claim that the investors didn’t care about the absence of reports, except for Ragnar. Vladykin also said that he sends statements to Ragnar because he didn’t want to disappoint him: “I felt like I was at school telling the teacher that I’ve not made my homework.”
That’s why Nikita sent reports only when Nuka succeeded. And only for Ragnar. For example, in Summer 2020, the funds raised from the investors and via crowdfunding were not enough to finish the product. In order to not shut down the project, Nikita organized another crowdfunding campaign on a Taiwan platform and raised about $210,000. “I was very proud of that success. In such a small market at a miserable cost, we managed to raise so much! I shared it [in the report to Ragnar],” he said.
According to Nikita, the last statement was in December 2020; however, Ragnar knows everything about what is happening at Nuka. Other investors have got the information from Nikita via phone. Eugene confirms that Nikita has had calls nearly every three months.
The rest of the investors could not confirm this information to AIN.UA and added that there were indeed no regular reports from Nuka. One investor confirmed to AIN.UA that he also does not understand what is happening within the project and how the startup is developing in general. He hasn’t got any status updates for a long time. One of the interviewees of AIN.UA thinks that the problem with financial statements could be that the startup management hasn’t been accurate with numbers in the early stage. It means there is no chance to get old reports because they need to create them from scratch.
Together with Eugene and Nikita, ten people worked on the project. One of them is an experienced developer who works for Nuka full-time and, according to Nikita, he has a good market salary. Nikita said that they also involved chemistry scientists, a metal physicist, and other specialists in the project.
Mikhalko has never got any dividends or a wage from the project.
Where is the product?
According to all team members, the Nuka notepads and pencils are difficult products to implement and took a long time to be finalized. After it is final, you should organize the mass production. And this stage was on hold for a very long time because of the Covid.
According to Kate, just two years ago, when she left Nuka, the startup had final test samples of notebooks from Chinese plants, but the contract for delivery of the first charge hasn’t been concluded. What happened next, she does not know, as she did not receive any status updates of the project.
“When we launched the Kickstarter campaign, we had a good product that could not be realized because of some engineering and technical limits,” said Nikita. “The product was final, and we resolved all the technical issues only in the middle of 2020.”
According to Eugene, the prototype was almost completely rebuilt. It was needed because otherwise, the product wouldn’t have all the functions declared by the team. In theory, it should do everything. But practically, it was much harder to realize all of them.
Several independent sources confirmed to AIN.UA that they saw the finished notebooks, but they could not say if this is a test sample or a final product.
According to Nikita, now Nuka has 12 different suppliers in China who are responsible for the manufacturing of separate parts of the product.
The AIN.UA editor had more conversations with Nikita and Eugene. Last time Nikita assured her that the production of the first charge of 300 units should be in the final stage. The delivery must start at the end of May. However, Eugene has also stated that the delivery of this charge could fail. According to him, the company is in a crisis, it has had no money for five months, and new investments in Nuka are impossible because of that problem with shares.
In July, Nikita announced that the Taiwan partners helped to start the production.
An important note: sometimes people think Kickstarter (or another platform) is a shop where you can buy a good. It’s not true because it’s about raising money to launch a product. Some get it right away, some need time, some make mistakes and lose money. Therefore, the launch of a product, if the complexity of its production justifies it, can take longer.
Now Nuka pays no salaries to founders and most of the employees. The company also can’t give them options because of a mess with the shares. They negotiate with investors the new round. If the new company is successfully registered, the negotiations will go on. Nikita and Eugene try to fulfill their obligations regarding the production and delivery of the products with their own means.
“We took a loan, made a deal with partners, and they wanted to help us,” explained Nikita. “Our plan is simple — we want to manufacture the product. Therefore, we need to solve the problem with the Cap Table and raise at least a minimum amount of money according to our plan.”
In 2018, one of the familiar investors of the AIN.UA editorial board told us that he never thought about investment in Nuka. The reason is the founders. Two of them, a pair, are young people who just started to realize themselves, and the third one is a friend of one of the two.
“You should not build the business with your friends and family members. Here we have a combo; so, it will go bad for them in the future,” the investor said back in 2018.
According to Kateryna, she finished her story with Nuka in 2019 and is working on other projects. A source close to her said that she only wants to end her ties with the startup as soon as possible. Nikita and Eugene are still working on Nuka and are still preparing the first batch.