Before the war, Ukraine had one of the most promising startup ecosystems around the world – with a double-digit annual growth rate and a growth amount of venture capital invested in Ukrainian startups.
Today, the country already has a track record of creating successful tech companies such as Grammarly, GitLab, Depositphotos, Preply, Ajax, People.ai and many others.
And while the Russian invasion threatens to destroy Ukrainian cities and infrastructure, including the country’s tech ecosystem, a number of Ukrainian startups remain vigilant and pledge to continue working and conducting business as usual. habit, even in the most difficult circumstances.
According to Elena Malitskaya, founder and CEO of the Ukrainian ISE (Innovation*Startups*Entrepreneurship) Group, despite the war, most startup founders at all levels continue to work and develop their products. Malitskaya’s organization is also dedicated to finding opportunities to support startups and promote Ukraine around the world.
“We understand that we all have to work to contribute to our economy and the IT sector is one of the most resilient sectors of the economy. Most startups and IT companies have resumed their work at the pre-war level. I would say that up to 80% of startups continue to operate at some level. About 5% of founders decided to join the army and military forces, while other founders decided to temporarily join the cyber army or the so-called IT army,” Malitskaya told The Recursive .
As Malitskaya explains, in the current situation, the role of the Ukrainian IT army is crucial in the war because it allows Ukrainian authorities to obtain information directly from Russian servers, such as the names of Russian soldiers who participated in the Bucha massacre, evidence of other war crimes, as well as Russian correspondence.
Different IT clusters also contribute to helping the Ukrainian people, as shown by the Lviv IT Cluster, a project that aims to bring together the Ukrainian IT community.
“In this difficult time when Ukraine is fighting for its sovereign territory, Lviv IT Cluster has implemented urgent projects. The Lviv IT Cluster team provides the necessary humanitarian aid to the Armed Forces of Ukraine, territorial defense forces of various cities and hospitals,” Stepan Veselovskyi, CEO of the Lviv IT Cluster, told The Recursive.
Additionally, many female startup founders decided to stay in the country and actively participate in the war by volunteering, sewing clothes for the army, saving people or animals.
“Founders may leave the country and go abroad to safer places, but many of them have decided to stay and contribute,” Malitskaya adds.
Adaptability, passion and remote work
iLogos Game Studios, founded in Donbass, is one of the technology companies that continued their work in Ukraine over the past two months.
The company has already had a similar experience: in 2014, when the conflict broke out in the Donbass region, iLogos offices were in the city of Luhansk. Soon after, the Ukrainian company had to think about a different approach that would allow it to retain its international customers.
“In 2014, we relocated 300 game development professionals with their families to safer locations. We were therefore “lucky” to encounter the second prepared war. Our work pipelines have been fully remote for the past eight years, and since Russia’s first invasion of Donbas, our infrastructure has hosted distributed teams located in 13 countries,” said Svitlanka Sergiichuk Romaniuk, CBDO of iLogos, at The Recursive.
Since then, the Ukrainian company has been working remotely with specialists from 15 countries and important clients around the world.
“Our work processes have long been adapted to remote working; our specialists manage to work in different conditions without losing quality,” explained Romaniuk.
For many other Ukrainian startups and businesses, it has also become extremely difficult to operate. They therefore had to adopt the same strategy as iLogos, by relocating their employees to the western regions of the country and abroad.
“IT companies and startups have moved to safer regions in western and central Ukraine, and now they can continue to work and complete their daily tasks, take on new clients and develop their startups,” emphasizes Malitskaya.
According to her, although what is happening now with startups and IT workers is not systematic offshoring and people are going wherever they can, those who want to work remotely can do so from anywhere.
“Many go to Poland, establish legal entities there and obtain subsidies from certain programs. But we have people everywhere – in Lithuania, Germany, Portugal, a startup is also in Ireland, etc. », Emphasizes Malitskaya.
Now, the main concern for most of these startups is how to continue to obtain the financing they need for their operations, she adds.
“Many startups donated their working capital and savings to the military, or voluntary purchases of basic necessities, to rescue and relocate their neighbors from damaged cities, to help their colleagues escape from dangerous regions . So we now need grants and support funds to replenish these working capital needs. We deeply appreciate the support of Google, which understood this situation and launched the Ukrainian Startup Support Fund,” she told The Recursive.
Venture capital funds also contribute to proof Ukrainian startups and, according to Malitskaya, need to continue investing to preserve Ukrainian digital products, intellectual capital and capabilities.
“The thing to understand here is that it’s easy to destroy buildings, but you can’t destroy digital products that are on secure servers. And Ukrainian entrepreneurship and perseverance will not be destroyed during the war.
So it’s remarkable that there are even venture capital deals in early-stage startups. SID Venture partners invested in 4 Ukrainian startups – Elai.io, SPOKK, Mindlist.io and NEAR Protokol in March. Another New York-based VC Geek Ventures invested in Competition, V-Art, Roommate And Spokk“, Malitskaya tells The Recursive.
Establishing a deeper connection with the Balkans
While many Ukrainian IT professionals have moved elsewhere in Europe, Ukrainian companies are also relocating or expanding into neighboring countries. Ukrainian IT company Intellias is one of them, as it recently announced the opening of a new development center in Bulgaria.
After opening three offices in Poland and a South European IT hub in Croatia, Intellias now plans to expand to Bulgaria in early summer 2022, with a new office in Sofia.
The company plans to assemble a strong team of local IT experts in Sofia who will join its existing global team of 2,500 specialists.
For Malitskaya, such examples can only benefit Ukraine and the Balkan countries, while developing and maintaining the already vast IT potential of Ukraine and the Balkans.
“We need to build a relationship with the Balkans, but we haven’t had a real connection with the region yet, so it would be great to deepen and explore ways in which we could cooperate together,” Malitskaya says.
As for what the future holds for Ukrainian startups, entrepreneurs and innovators, she says the only way forward is to continue doing business, developing innovation and growing technology companies, even in such circumstances. difficult.
“My advice is to keep trying, keep building relationships, and one day we will all succeed.” Sooner or later, it doesn’t matter. Ukrainian entrepreneurs are people of steel, both strong and flexible. There is no doubt that we will once again prove this strength,” concludes Malitskaya.