Is Ukraine a startup nation?

Ukraine is very well known to the world as an IT hub, but can Ukraine be named “Silicon Valley”? There are many talented engineers and projects that we developed according to the service contracts for Clients from the US, EU, and Asia, but are we ready to take a considerable risk, invest and develop ideas on our own?

Some excellent product startup companies are already very active on the market and have taken risks in the past, like Grammarly, AJAX, Petcube, 3DLOOK, MacPaw, Reface, VanOnGo, Delfast, Competera, and Esper Bionics. But the number of such companies is relatively small, which contributed to the Ukraine Startups ecosystem, and proved that the impossible could become possible. You can find some of them on the website SpendWithUkraine.

Access to capital

As a startup, you need initial investments to develop a Minimum Viable Product. And it was always challenging to raise the money as classical VCs usually invest in hype companies or tech. Even if the investment failed in the end, it is easy to justify such investments internally and not be blamed as all other VCs with big names invested. So instead of your own independent opinion and believing in the Team and idea you as VC, you better join the direction of all other VCs and big names regardless of whether you share the vision. In addition, many VCs ask for big progress and a lot of data for them to justify the investments in the early stage. For me, it was always a question of how the startup could answer these questions at such an early stage as the idea might change 5 times during the near future. And if we have had such a significant number of Clients, would we need to talk to VCs in general? Some founders who faced such a problem in the past created their own funds, like Revolut’s CEO.

Also, it was always an issue to get an investment from Europe, and as we all know, the number of unicorns is relatively small in Europe vs. UK, USA, Israel, or China. So European VCs are more conservative and not ready to take a risk.

Access to talent

It is clear that when almost all companies are working in the field of outsourcing or providing service, it is difficult to find a candidate with the product way of thinking mindest and attract talent. As usual, you can not offer big salaries unless US-based VCs back your startup. So usually, a startup in Ukraine can provide a fascinating job, a team of super motivated professionals, a vision and mission (why the company was established and what problem is trying to solve), and SOP (Stock Options Plans). SOP is compelling motivation and works very well in Europe and the US. Unfortunately, it is still a rare case in Ukraine. Not so many success stories on the market, and there is still an effort for the local startup community to unlock the value of that mechanism.

The efforts to build a truly startup ecosystem in Ukraine: If we want to build a “Silicon Valley” in Ukraine, we need to have more VC funds in Ukraine and abroad who are willing to accept the risk and invest in ideas.

I believe that there should be no doubt that Ukraine’s IT industry is a reliable partner. And if your startup survived not only during the COVID but also during the war, that is 100% stress test proof. Working under such uncertainties and changing the business on the fly is one of the uniqueness of the Ukraine startup ecosystem. I do not think there are so many startups worldwide who can say they know how to deliver results and continue business development during a real war.

And of course, there is a strong need for government support to build and develop different incubators in different regions. We also need a mindset change when young and talented people want to take risks and join early-stage startups. And develop themself to the stage when the startup idea comes true and disrupts the market and benefits from the company’s success with stock options.

Today, we can also see IT volunteers trying to build products with a lot of scientific complexity and help the Ukraine Army. If we take Israel as an example, many startups were established due to previous projects running for the Army. So we can anticipate the same when Ukraine wins.

Special big thanks to VCs and initiatives of different funds and accelerators in Ukraine and abroad who keep supporting startups during the war.

This is vital for Ukraine’s IT future, and I wish Ukraine becomes a Hub of Tech products and startup’s way of thinking! I also encourage VCs from all over the world to invest in Ukrainian startups today. And not only because there is a need, but because the Teams are supper reliable and know how to deal with risks, and with the proper injection of capital and guidance, they will bring the ideas to the next level that will change our lives forever.

Andrey Golubinskiy, ex-CEO of Apostera Company, was acquired by Harman.

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