Why invest in Ukrainian startups today? • TechCrunch

The European Union does Invest €13.5 billion in research and innovation as part of the Horizon Europe program for 2023-2024. For the first time in the program’s history, it includes targeted support for Ukraine. This is one of the first real steps towards Ukraine’s integration with the European Union and I couldn’t be happier that we are part of the European business and scientific communities.

Why is this an important sign? Ukraine has been defending itself against Russia for 11 months. Uncertain times make investors think twice before putting their money online. So such an organization sways the mind that hesitates when weighing its rhetoric with action.

And if that’s not convincing enough, let me share with you a few more reasons why the prospects for Ukraine’s tech sector are not as bleak as they may seem from the outside.

Ukraine’s technology sector is adaptable and export-oriented.

Ukraine’s IT sector gets most of its business from Europe and the US. While it caters to domestic needs, most of the sector’s revenue comes from exports.

Over the past six years, exports have grown by 26.8 percent annually. In the year Exports will reach $6.9 billion in 2021, $100 million more than forecast, according to the National Bank of Ukraine. While the war has certainly shaken the country’s economy, the IT sector has fared better than most.

Another factor contributing to the sector’s resilience is its ability to adapt to new challenges. Hybrid and remote work is a local staple and has been refined over the years. So when nearly three-quarters of IT companies had to relocate due to the raids, they quickly continued to operate at high efficiency.

This experience in managing distributed teams means that Ukrainian IT has no problem with expansion. In 2022, Ukrainian companies began to go international. They have opened offices in Poland, Czech Republic, Germany and other EU countries. This not only brought the product closer to the customers, but also made the sector better protected from the post-war shocks.

In the year According to the statistics of the first 10 months of 2022, the export of IT services of Ukraine grew by 9.9% from a year ago and generated more than 6 billion dollars, in 2021 the revenue will be more than 542 million dollars. Outsourcing of IT services remains. According to the Lviv IT cluster study, it is one of the few areas that continued to grow despite the war.

Another study conducted by the Polish-Ukrainian Startup Bridge Group in collaboration with the Warsaw Stock Exchange and Ukrainian Startup Fund shows that more than two-thirds of startups still operating in Ukraine are basing their business on the international market. 12% of the companies surveyed closed their operations after the Russian invasion.

In combination, these factors are the biggest problems of Ukrainian IT since the war. The loss of local markets and centralized office space has caused some problems in the health of the sector.

Ukrainian startups are a betting horse.

Ukraine’s startup ecosystem has been growing rapidly over the past few years. Until 2018, there was not a single unicorn from Ukraine. Today, there are at least six Ukrainian startups worth $1 billion.

• GitLab
• Grammar
• Genesis
• Bitfury
• People.ai
• Firefly Aerospace

Grammar is the highlight here. In the year In 2021, dubbed the Year of the Decacorn ($10+ billion valuation), Grammarly was the first Ukrainian startup to join the club.

If one unicorn is lucky and two are by chance, Ukraine’s ability to nurture six startups to $1 billion each in three years is certainly a trend — showing the untapped potential of Ukraine’s IT sector, which has not been dominated by war. to reduce speed.

Want more convincing? How about these startups looking to international markets right from the start.

According to the Ukrainian Startup Ecosystem report, two-thirds of startups say they work on the international market; 12% never work in Ukraine; And 80% plans to be competitive in the foreign market.

In general, these numbers suggest that Ukrainian IT (IT) needs a high presence in Western markets, not as an opportunity, but with long-term planning. They don’t want to tie themselves to the fluctuations of the local market. Investing in such a startup is just a bad plan if you suspect that the EU and the US will cease to be profitable markets.

Ukraine’s tech talent has a rock-solid foundation and experience.

Ukraine is a big center for IT development. Its talent pool features a total of 200,000 software developers. In the year By 2022, the largest number of students enrolled in IT-adjacent majors.

The secret to success is a historical foundation nurtured with a modern sensibility.

On the one hand, you have Ukraine’s strong engineering and academic pedigree. Technological universities of Kyiv, Lviv and Kharkiv have been at the forefront of technological development for centuries. On the other hand, you have IT companies setting up bootcamps in the said universities, tracking talent and supporting students with tools and practical training.

As a result, Ukrainian students are not only well versed in software engineering theory. Thanks to a refined blend of theory and practice, they graduate ready to code.

If you need statistics to back up my claims about the quality of Ukrainian talent, let’s turn to international awards (N-iX report):

• Ukraine ranks 20th in the AT Kearney Services Location Index.
• The GSA calls it the “Beach Destination of the Year.”
• Many Ukrainian companies are listed in IAOP’s Global Outsourcing 100 and Software 500, Inc.

As the demand for specialized software engineers is constantly growing, Ukrainian Academy and IT are ready to provide. Thanks to our expertise and ever-evolving talent pipelines, Ukraine’s talent pool will only grow.

The indomitable spirit of the Ukrainian people

We think of ourselves as rational and only believe in things that we can quantify. I disagree with this statement. The always unpredictable human condition can tell you more than spreadsheets.

In the year On February 24, 2022, all foreign experts predicted that Ukraine would collapse quickly. The numbers indicate that the Russian army was better equipped and had more men. Yet, 11 months in, Ukraine is not only doing what it can, but struggling.

What does this have to do with the economy and investment prospects?

The numbers predict that Ukraine’s economy will shrink by 32%-33% in 2022. However, these dire predictions were quickly overshadowed as the country was able to adapt and overcome.

Logic dictates that mass migration would have caused a demographic and economic crisis. According to research by Do Ukraine, 81.5% of IT companies that have moved abroad still plan to return to Ukraine, and 5.6% are already in the process of returning. Some Ukrainians have done this. According to OpenDataBot statistics (Ukrainian service for tracking registration data, providing complete information about a person or company in Ukraine), since February, about 9.3 million Ukrainians have crossed the border, about 7.4 million have returned, and others are returning.

These people are showing that they are ready to work hard to build their country.

So when the European Union included Ukraine in the Horizon program, it was not just a charity. The experts predict that the Ukrainian economy will come back and the investment made today will bring profit for the coming years.

Ukraine just needs a helping hand for post-war recovery, so investors will have more opportunities to invest and reap the benefits.

History is watching before our eyes – let’s be a part of it!