Two years since Russia’s invasion, Ukraine’s startups soldier on

February 23, 2024 ndowd

This weekend marks exactly two years since Russia’s illegal, unprovoked and brutal invasion of Ukraine. Despite overwhelming odds and continued hiccups in the supplies of Western aid to fight off Russia’s onslaught, and the trail of destruction resulting from the fighting, the country and its tech startup ecosystem have soldiered on, becoming a case study in resilience.

Of the 511 tech companies based in Kharkiv before February 2022 — these days a city better known for coming under regular Russian bombardment — 500 are still operating, according to the organization overseeing Kharkiv’s tech cluster.

Tech companies in the West have rallied around the sector, increasingly working with Ukrainian tech firms on a range of initiatives.

This week, Google launched its second “Google for Startups Ukraine Support Fund” with a budget of $10 million to support Ukrainian startups during 2024 and 2025. Selected Ukrainian startups will receive up to $200,000 in equity-free funding, as well as Google mentorship, product support and $300,000 in Google Cloud credits. Since the war started, Google claims to have allocated more than $45 million in direct aid and $7 million to support humanitarian efforts.

Since the war broke out, the scheme has provided 58 startups with $5 million in non-equity grants and $15.8 million in follow-on funding. Tech companies supported in this way have included Skyworker.ai, Mindly and Zeely. Zeely raised a $1 million seed round last year.

Meanwhile, Estonian accelerator Startup Wise Guys launched Growth Ukraine, a program for startups in Ukraine.

And the EU-funded “Seeds of Bravery” project has launched five programs to support Ukrainian tech startups, with grants ranging from €10,000 to €50,000.

Last week, the nonprofit startup support program UK-Ukraine TechExchange launched, specializing in defense tech and agtech.

The private pro-bono program mainly works with startups developing drones, UAVs sound-based missile detection, counter-drone technology and drones for agricultural applications.

Ukraine’s tech sector is astoundingly resilient, and even growing.

A recent survey from the Lviv IT Cluster (“Adaptability and Resilience Amidst War”) — which it said is based on interviews with 7,000 tech specialists and more than 400 companies — found that while a substantial number of technology specialists have fled the country, the majority remain, including Ukrainians studying and entering the workforce at home and abroad.

The total number of tech specialists, it said, has increased by more than 7%, to 307,600 people. Some 242,000 of these continue to live and work in Ukraine. The number of Ukrainian tech people dispersing internationally is up to 65,000 from 55,000-57,000 a year ago, a rise of 20%.

Those workers, and Ukraine’s tech sector, have contributed to keeping the country’s economy afloat amid the war.

The tech industry contributed 4.9% (or $7.1 billion) to Ukraine’s GDP last year. In Emerging Europe’s IT Competitiveness Index, published in April last year, Ukraine took 12th place, rising from 14th in 2022.

Poland, unsurprisingly considering its shared border, has quickly become the top country for those fleeing the country. Some 36% of Ukrainian CEOs plan to open new offices, 28% of them abroad, with the majority choosing Poland as their second base of operation.

Ukraine is also exporting the technology behind its rapidly developing digital government. mRiik, Estonia’s latest digital tool, has been based on Ukraine’s Minister of Digital Transformation Diia app, which securely stores ID cards, passports and driving licenses digitally, as well as allows access to some public services.

The same Ministry of Digital Transformation also runs the Ukrainian Startup Fund, which has become the country’s largest angel investor, backing over 350 startups. Many of these startups, responding to the climate in which they are working and getting funded, have pivoted toward defense and dual-use applications.

To fuel that ecosystem further, in Spring 2023, the country launched a defense tech initiative called BRAVE1. This fast-tracks innovation in the defense and security sectors. It has funded more than 400 projects, with almost 200 having also undergone live military testing.

More mature Ukrainian startups, and startups headed by Ukrainian founders, have not stood still, either:

Preply raised a further $70 million in funding last year — a combination of debt and equity — to extend its Series C to $120 million. It now has 650 employees and 40,000 language tutors. It claims to have increased revenue by 10-fold since 2021, and recently set up a new office in New York City. It is providing free group language lessons to displaced Ukrainians, and charges no commission fees to any tutors based in Ukraine and more.
Ukrainian software company MacPaw is in the final stages of developing a beta version of an app store for iOS apps, aimed at EU-based iPhone users.
At the end of 2023, Firefly Aerospace closed another tranche of financing, valuing the company at $1.5 billion pre-money, it claims. It says it’s raised $300 million in funding since February 2023.
Carmoola, a British fintech for car financing co-founded by Ukrainians Roman Sumnikov and Ihor Hordiychuk, secured $125 million in funding in February 2023, followed by an additional $16 million in January 2024. It’s backed by VCs including VentureFriends, InMotion Ventures and u.ventures.
Fintech Farm, a digital banking solution pioneer founded by Ukrainians, raised $22 million to venture into emerging markets.
DressX, a digital fashion retailer initiated by Ukrainians Darya Shapovalova and Natalia Modenova, secured $15 million to expand its AR and digital clothing offerings.
Vidby, which has AI-based voice translation solutions, with an R&D center in Ukraine (and a Ukrainian CEO and co-founder).
NewHomesMate, a marketplace of new construction homes in the U.S., has raised $5.5 million in funding.
ELVTR, an education startup with Ukrainian founders and team, retains 45% of its staff in Ukraine.
Geek VC is a $23-million VC fund which invests in Ukrainian immigrant founders. The fund was created by Ukrainian Vadim Rogovskiy in partnership with Ihar Mahaniok months before the war began. Twenty-five percent of their portfolio companies are run by Ukrainian founders.
Hypra Fund launched shortly after the invasion of Ukraine. The fund has allocated nearly $20 million toward companies with Ukrainian heritage, including a $10 million in Trinetix.
Spend With Ukraine is a nonprofit that curates a web platform with more than 240 Ukrainian-rooted brands. By choosing to #spendwithUkraine, consumers worldwide can stand in solidarity with the people of Ukraine.
Respeecher is an AI tool for voice replication technology that works with Hollywood movie studios. Because the Crimean Tatar language is deemed critically endangered by UNESCO, Respeecher’s team gathers the voices of Crimean Tatar speakers to safeguard a language threatened during Russia’s occupation.
Petcube, a company that develops interactive pet cameras, launched Cam 360 and a GPS Tracker for pets.
Everyrun is a Ukrainian-British social running platform offering solutions for marathon organizers, charities and corporations aiming to host running events. In the last year it launched its product, the company has formed partnerships with marathon organizers in Lithuania and Italy, and attracted runners from 32 countries.