It’s hard to run a startup at the best of times. Tragically, these are the worst of times for Ukraine. Since Russia’s full-scale invasion of the country three years ago, founders have had to contend with the threat of bombardment, electricity outages, the displacement of millions of people, international travel restrictions and the sudden conscription of key employees.
Russian drones, or “flying mopeds” as they are known because of the whirring noise they make, are still a regular sight above the skies of Kyiv and team meetings and pitch sessions sometimes have to take place in bomb shelters.
But running a business in wartime can also instil an extreme sense of urgency and clarity of purpose, according to local entrepreneurs. “If you know that you can die at any minute then you have to move super fast,” Tanya Chaikovska, chief executive of Lift99, tells me as we walk through her co-working hub in Kyiv.
Despite the many obstacles, Ukraine’s startup sector is bouncing back and attracting the renewed interest of foreign frontier investors, particularly in areas such as defence tech, healthtech, robotics and AI. Last year, investment grew 102% to $462m, according to AVentures Capital.
By its reckoning, six startups cofounded by Ukrainian entrepreneurs have become unicorns (even if some of them now operate mostly from abroad): Grammarly, GitLab, Bitfury, People.ai, AirSlate and Creatio.
But as in many other countries, investment levels still remain well below the peak of 2021 ($832m), when Ukraine was thriving as an outsourcing centre for tech services.
As a result of the war, Ukrainian startups have had to radically restructure their operations and try to find new business abroad. For example, YouScan, a social media intelligence company that works with brands such as Coca-Cola and McDonalds, was forced to abandon its business in Russia, reconnect with staff who had fled to Poland and Austria and seek new customers in the US and Latin America.
“We had a tough year in 2022 but we are building back and have good growth momentum,” says Alex Orap, YouScan’s founder. “We grew 50% in revenue terms last year.”
Orap says that Ukraine still boasts several universities that turn out strong software engineers. “Tech education is pretty good in Ukraine. The quality of talent is pretty high,” he says.
Even so, the Kyiv startup scene is much depleted from what it was before the conflict and a lot of companies have moved abroad. Lift99’s Kyiv hub now hosts 47 startups, down from more than 100 before Russia’s invasion. Evidence of the war’s impact is highlighted by the blood donation centre that operates from its premises and the drone jammers that fill its shelves.
Chaikovska says the biggest challenges facing Ukrainian founders are access and trust. Accessing customers and investors is a major problem given the difficulties of travel. In the absence of that access, it is hard to build trust.
But in a recent Substack post, she argues that three magic ingredients have helped keep Ukrainian startups functioning: community, technology and optimism.
A Slack channel set up by founders to solve problems in the earliest days of the war has blossomed into a full-scale NGO to support Ukraine’s war effort. In addition, it has helped connect founders with remote coaches across the rest of Europe.
Founders have also pioneered the use of the latest technologies to tackle urgent defence needs. This has led to the creation of 800 defence tech startups, with Ukraine emerging as a world leader in the use of drones.
But all this is only possible, Chaikovska argues, by harnessing the power of optimism. “It’s not about believing the war will end tomorrow. It’s about believing in yourself, and knowing that you do unimaginable things,” she writes.
Startups, it is often said, are powered by irrational optimism and resilience. Ukraine is certainly an inspiring example of both.
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