Since the beginning of the war, we at SMRK have been thinking about how to effectively help the Ukrainian startup ecosystem. As a result, we formulated a vision of a “Matching Grants” program to provide additional funding to tech startups.
This week, such a program was added to the United 24 Ukraine reconstruction plan (Ukrainian version of the Marshall plan). The €750 B plan aims to rebuild Ukraine’s infrastructure, improve the business environment, speed up the transition to the green economy, and part of the budget (€400M+) will go to the matching grants program. It is difficult to say precisely how this program will be implemented in the future, but I would like to share how we at SMRK see it.
Why do we need this program?
Ukrainian startups lacked capital even in peacetime, and now the situation has gotten worse. One of the reasons is that startups and investors have moved away from their normal work and redirected a lot of effort and money to help Ukraine in a state of full-scale war. We believe the startup grant program can significantly accelerate the growth of the Ukrainian startup industry in post-war times.
Where will the money go?
The money will go to early-stage Ukrainian startups that have attracted VC investment. One of the important requirements is to be legally incorporated in Diya City – our new trade zone for startups. This virtual zone is designed to be more transparent and closely model the western business and regulatory environment.
Which investors can be involved?
Both Ukrainian and foreign VCs can join the program. It is essential not to give access to the program to Russian, oligarchic, and other dirty capital sources.
How will the program work?
It is assumed that startups can double the money raised from VCs. For example, if a startup raises €1M, a matching €1M will be given to the startup as a grant from this program.
Where else do such programs work?
Similar programs were implemented in many developing and developed countries, including Poland, Finland, and Israel. Our goal was to adapt this concept to the current Ukrainian situation.
What’s next?
The Ukrainian government will develop this program further. I hope that the officials will find funding for it and will be able to effectively implement this program so that our startups will have a much greater opportunity to realize their most ambitious projects. In turn, this will lead to a healthier, more financially attractive Ukraine with a strong startup ecosystem. It is vital that the best entrepreneurs and business ideas stay in the country instead of moving abroad or failing to find success as they would in other ecosystems.
