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

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, the country and its tech startup ecosystem has literally soldiered on, becoming a case-study in resilience.

For instance, 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 Kharkiv’s tech “cluster” organisation.

And 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 $10M 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 $7M to support humanitarian efforts.

Since the war broke out, the scheme has so far 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 $1M seed round last year.

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

And the EU-funded project ‘Seeds of Bravery’ programme has five programmes to support Ukrainian tech startups with grants ranging from €10,000 to €50,000.

Last week the non-profit startup support programme UK-Ukraine TechExchange launched, specialising in defencetech and agritech.

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 consulted over 7,000 tech specialists and more than 400 companies.

Ukraine’s tech sector has helped keep its 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.

The number of Ukrainians working in the tech sector has increased by over 7% (even as the wider economy shrunk by almost a third), reaching a total of 307,600 people, with 242,000 living and working in Ukraine, despite the ravages of the war.

Understandably, the number of Ukrainians working in tech abroad has grown by 20%, with the current figure standing at 65,000 compared to 55-57,000 last year.

Poland’s tech economy is becoming “Ukrainians abroad”.

Some 36% of Ukrainian CEOs plan to open new offices, 28% of them abroad, and the majority are 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 have obviously pivoted towards defense and dual-use applications.

Launched in Spring 2023, the country’s defense tech initiative is called BRAVE1. This fast-tracks innovation in the defense and security sectors. It has funded over 400 projects, with almost 200 having also undergone live military testing.

Below, we present a selection of the latest news from Ukrainian-origin startups and tech companies.

• 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 US, 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. 25% 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 towards companies with Ukrainian heritage, including a $10 million in Trinetix.

• Spend With Ukraine, is a non-profit 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 organisers, charities, and corporations aiming to host running events. In the last year it launched its product, the company has formed partnerships with marathon organisers in Lithuania and Italy, and attracted runners from 32 countries.

By 111 Tech

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