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Two Years on the Brink of Destruction: How Unbreakable Ukrainian Tech Survives and Grows Amid the War

For most Ukrainians, life will always remain divided into their happy “before” and brutal “after” Russia’s unprovoked, savage full-scale invasion that defies every norm of morality and humanitarian laws. Nevertheless, Ukraine as a whole, and notably its tech sector, has been showing incredible resilience and even, surprisingly, progress. As we take a look over the last two turbulent years in Ukrainian history, we cannot but admire how local tech startups and initiatives continuously support and boost the economy of the country at war. 

Two Years on the Brink of Destruction: How Unbreakable Ukrainian Tech Survives and Grows Amid the War

The past weekend was a time for sad memories for all the Ukrainians in every corner of the world. In many European cities crowds with Ukrainian flags and national symbols gathered to remind everyone that the big war in the very heart of Europe is still not over. 

It has been rough two years of struggle, tragedies, losses, dire shortage of ammunition, astonishing bravery, and unprecedented global support for Ukrainians. While many families fled the country in search of safety, numerous Ukrainian businesses also needed to relocate their teams and production sites to continue operations. And yet, they didn’t give up. 

Even in the heavily-bombarded cities such as Kharkiv, most tech companies managed to preserve their operations up-to-date. Moreover, IT Research Ukraine 2023: Adaptability and Resilience Amidst War study conducted by the Lviv IT Cluster revealed that the majority of tech specialists (almost 80%) remained in the country despite the ongoing war. To top it all, the industry is rapidly growing. Over the past year, the number of tech specialists has increased by over 7%, reaching a total of 307,600 people, according to the research data.

International Initiatives to Support Ukrainian Tech

The progress of adamant Ukrainian tech is generously supported by international grant programs. The latest initiative by Google is the second “Google for Startups Ukraine Support Fund” with a $10 million budget dedicated to startup support between 2024-2025. Selected Ukrainian startups can receive up to $200,000 in equity-free funding and $300,000 in Google Cloud credits. Besides, the participants get Google mentorship and product support. 

Within the first phase of the support fund, which started in March 2022, Google distributed $5 million between 58 chosen startups. Among the companies supported by this fund, there is AI-powered job search platform Skyworker.ai, online psychological support portal Mindly and AI-enabled e-commerce sales accelerator Zeely which raised a $1 million seed round last year.

The EU has recently funded “Seeds of Bravery” (UASEEDs) project for Ukrainian innovative tech SMEs (both start-ups and scale-ups) to be integrated into the European Innovation Ecosystems. Within the project, there are five different programs, with grants ranging from €10,000 to €50,000. The overall funding to be distributed under UASEEDs to Ukrainian tech innovators is EUR 12 million.

Meanwhile, in the UK, the nonprofit startup support program UK-Ukraine TechExchange has launched, aiming to help British and Ukrainian AgriTech and DefenceTech startups raise the investments needed to contribute to Ukraine’s war effort and future reconstruction. The program currently supports more of the DefenceTech startups, mainly dealing with drones and demining. However, once the war is over, AgriTech will play a crucial role in rebuilding the Ukrainian economy, so the nonprofit will focus on that. 

The U.S. government program Global Innovation through Science and Technology (GIST) has also launched the Business Incubation Ukraine initiative. The program lasts for the whole year, providing select startup founders with personalized comprehensive support, training, panel discussions, exhibitions, presentations from high-level officials, individual consulting and business coaching, personalized plan of results-oriented work, fundraising assistance and professional networking with the access to co-working space, prototyping laboratory and materials library. The priority areas for the project are AgroTech, HealthTech, alternative energy, creative industries and aviation.

In Ukraine itself, the Ministry of Digital Transformation also runs the Ukrainian Startup Fund, the country’s largest angel investor so far, backing over 350 startups. 

Two Years on the Brink of Destruction: How Unbreakable Ukrainian Tech Survives and Grows Amid the War

Ukrainian Tech Startups That Grow During the War

With or without grants, many Ukrainian startups focusing on tech solutions have raised funding and scaled their operations amid the ongoing war. TechCrunch has compiled a list of Ukrainian tech players who made significant progress since 24.02.2022:

  • Online language learning marketplace Preply raised $70 million in funding last year, claiming to have increased revenue by 10-fold since 2021. The platform, founded in 2012 by three Ukrainians in the US, has also recently set up a new office in New York City.
  • Firefly Aerospace, working on end-to-end space transportation services, closed another tranche of financing, having raised a total of $300 million in funding since February 2023. It claims to now reach a $1.5 billion pre-money valuation.
  • MacPaw, which runs an innovative app store for Mac users, is in the final stages of ​​readying an alternative app store for iPhone users in the EU.
  • Fintech Farm, a platform for launching neobanks founded by Ukrainians, has recently raised $22 million to venture into emerging markets. In 2023, the firm launched a 100% digital bank – Liobank – in Vietnam.
  • DressX, a Ukrainian digital fashion retailer, secured $15 million to expand its AR and digital clothing offerings.
  • Spend With Ukraine nonprofit that curates a web platform enabling customers to discover Ukrainian brands has accumulated more than 220 companies and brands on its portal. It helps not only to enlarge the consumer base of the given creators and developers but also support the Ukrainian economy. 
  • Respeecher – AI tool for voice replication technology that works with Hollywood movie studios – started gathering the voices of Crimean Tatar speakers to safeguard a language threatened by extinction during Russia’s occupation.
  • GameTree, an American-Ukrainian SocialTech startup which builds “”inclusive gaming communities”, raised $1.7 million in seed funding and now claims to have 600K+ users across the US, UK, and Canada.
  • bill_line, a Ukrainian-based fintech company, managed not only to upscale their worldwide payment business, but also to start an active growth stage in 2022.
  • As a company with deep roots in Ukraine, Grammarly text checker launched a new AI tool last year that will not only highlight grammar mistakes but also analyze context to create and suggest wording for various formality and tone scenarios. 

Two Years on the Brink of Destruction: How Unbreakable Ukrainian Tech Survives and Grows Amid the War

Lessons to Learn From Ukrainian Tech Case

Overall, Ukrainian tech startups are “an example for the entire technological world to follow,” believes Viktor Gurskyi, Impact Entrepreneur, CEO, and Co-founder at SocialBoost, an international civic tech organization which brings together startups and technical expertise with governments and civil society to solve problems in developing economies.

Truly, at harsh times like these, Ukraine is not only receiving support and mentoring from international organizations but also sharing its innovative ideas with the world. For example, its rapidly developing digital government model became an inspiration and a foundation for mRiik, Estonia’s latest digital tool. It is based on Ukraine’s Minister of Digital Transformation Diia app, which securely stores ID cards, passports and driving licenses digitally, allows remote access to some public services and certificates, provides biometric authentication for petitions, public surveys, etc. and enables digital signatures for some official documents, contracts, bank account applications, and more.

Right before the full-scale invasion Diia commenced an innovative project “Diia.City” – a special legal regime with favorable conditions for the development of the Ukrainian IT industry, where both domestic and foreign companies can participate. The participants receive favorable tax conditions, effective tools for attracting investment, additional mechanisms for protecting intellectual property rights, as well as a new form of legal cooperation with professionals – gig contracts. 

The IT sector accounts for 4.9% of Ukraine’s GDP, remaining a key component of the Ukrainian economy. Even when all the major economy sectors faced stagnation in 2022, IT and fintech managed to grow. Moreover, in 2022 seven new Ukrainian fintech companies launched, according to Ukrainian FinTech Catalog 2023 survey

Fintech crowdfunding solutions like Monobank’s savings “jars” have become a revolutionary tool for Ukrainian volunteers and influencers, enabling them to carry out large-scale donation initiatives quickly and seamlessly. 

Along with traditional tech segments, the war has given rise to a new and thriving “miltech” sector in Ukraine, mainly focusing on unmanned aerial and land-based vehicles, as well as cybersecurity, robots and munitions. 

If one can learn something from the case of the Ukrainian blooming tech market, it is that you should never give up on promoting innovation, despite all the challenges. Innovative technologies can literally save the lives of hundreds and thousands of people. Besides, they can provide much-needed cybersecurity just when your enemy pours immense funding into targeted hacks on the national critical infrastructure. That is one of the reasons why Ukraine’s tech sector keeps on striving throughout these two long years and will continue to do so as long as possible. 

Nina Bobro

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https://payspacemagazine.com/

Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.