We are now reaching the two-year anniversary of Russia’s unlawful and unprovoked invasion of Ukraine. Despite the devastating challenges brought about by the war, specifically the widespread destruction and the difficulties in receiving aid from the West, Ukraine and its tech startup industry have admirably pressed on, truly embodying resilience.
Before the invasion in February 2022, Kharkiv, a city that has since been relentlessly bombed by Russia, was the birthplace of 511 tech companies. Remarkably, 500 of these companies continue to operate today, as reported by the group responsible for managing Kharkiv’s tech sector.
Tech companies in the West have shown immense support to their Ukrainian counterparts during these trying times, working collaboratively on a multitude of initiatives.
In fact, just recently, Google announced its second iteration of the “Google for Startups Ukraine Support Fund,” which carries a budget of $10 million to aid Ukrainian startups throughout 2024 and 2025. Ukrainian start-ups selected under this program will receive as much as $200,000 in non-equity aid, including $300,000 in Google Cloud credits, alongside mentorship and product support. Since the start of the war, Google has reportedly disseminated over $45 million in direct aid and $7 million to support humanitarian endeavors.
The program has already extended $5 million in non-equity grants and $15.8 million in subsequent funding to 58 startups, including device management company Skyworker.ai, mental health app Mindly, and inclusive social platform Zeely, which successfully raised a seed round of a million dollars the year prior.
Other initiatives have also taken root, like the Estonian accelerator Startup Wise Guys’ commencement of Growth Ukraine, a new program created for Ukrainian startups, the EU-funded “Seeds of Bravery” project, which has initiated five programs that provide financial aid ranging from €10,000 to €50,000 for Ukrainian tech startups, and the UK-Ukraine TechExchange, a nonprofit program specializing in defense and agricultural technology.
Ukraine’s tech sector, amid the adversity, shows an extraordinary capacity for resilience and even growth. A recent survey conducted by Lviv IT Cluster, based on interviews with 7000 tech specialists and over 400 companies, revealed that while many tech specialists have migrated, a significant portion have chosen to stay in the country.
The survey further showed a 7% increase in tech specialists totaling 307,600, of which 242,000 are still residing and working in Ukraine. Notably, the number of Ukrainian tech individuals working abroad has seen a 20% rise, reaching 65,000 from an initial 55,000-57,000 a year ago.
This sector has greatly contributed to upholding Ukraine’s economy throughout the war. The tech industry contributed a substantial 4.9% (equivalent to $7.1 billion) to Ukraine’s GDP last year. In the IT Competitiveness Index published by Emerging Europe in April last year, Ukraine claimed the 12th spot, rising from the 14th position in 2022.
As Ukraine’s situation evolves, the country is increasingly becoming a significant exporter of government digital innovation. Estonia’s latest digital tool, mRiik, is based on Ukraine’s Diia app. This application, developed by Ukraine’s Ministry of Digital Transformation, not only stores identification documents digitally but also provides access to some public services.
This very Ministry of Digital Transformation also oversees the Ukrainian Startup Fund, the country’s biggest angel investor, having supported more than 350 startups. Many of these startups, acclimating to the current circumstances, have accordingly pivoted their businesses towards defense and dual-use applications.
To further promote this growth, Ukraine introduced a defense tech program called BRAVE1 in Spring 2023. This initiative fast-tracks innovation within the defense and security sectors and has already funded over 400 projects, with almost half successfully undergoing 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.
