Coming to bookshelves sometime in the near future: business self-help guides describing the grit and adaptability of Ukraine’s founders.
Consider Yaroslav Azhnyuk, a tech entrepreneur and self-described geek (also a lindy-hop dancer, according to his LinkedIn). Azhnyuk’s big success is Petcube, a company making GPS tracking collars for pets, sold across Europe and the US.
But his new venture is a radical left turn from pet care — he’s building guidance systems for drones, a career switch that tells us plenty about how Ukraine has changed since Russia’s full-scale invasion in February 2022.
Tech people love to talk about disruption, but rarely anything like this. Ukrainian tech workers have endured buildings collapsing around them, sirens blaring and electricity and heating outages. Travel is limited — there are no flights for civilians — and work happens wherever it can: in bunkers, basements, or makeshift offices.
“Devices costing $1,500 have taken out multimillion-dollar aircraft.”
Homegrown tech such as drones and drone interceptors has been vital in the war effort; devices costing $1,500 have taken out multimillion-dollar aircraft. Technology deployment times in Ukraine are now measured in days, not months or years.
Somehow, life goes on amid the heavy Russian shelling. Kharkiv, the main city of the north-east Ukrainian region of the same name, is a regular target of Russian strikes. Less than 30km from the Russian border, it’s home to over 500 tech companies, the majority of which are still operating, albeit with employees scattered around the country.
There are, unsurprisingly, plenty of government contracts for companies to jostle for. Ukrainian military spending hit a record $65bn (x9 since 2021) in 2023, according to data by data-driven, a research agency.
“It’s an unfortunate truth that war breeds innovation,” says Andriy Dovbenko, founder and principal of UK-Ukraine TechExchange, which connects founders from the two countries. This rush of activity has been accompanied by tragic loss — it’s impossible to say how many have died in Ukraine since 2022, but it’s in the high tens of thousands.
“When technologies fail on the battlefield, lives are lost. There is no ‘soft launch’.”
“And when technologies fail on the battlefield, lives are lost. There is no ‘soft launch’,” Dovbenko adds.
Techies have travelled to Ukraine to see firsthand this new technology. “Investors can be confident that many of these startups have already proven their concepts in the world’s most rigorous test environment,” says Viktor Gursky, partner and cofounder at 1991 Ventures, a London-based VC firm.
A recent tech event in Lviv, the largest city in western Ukraine, saw startups showcasing missiles, drones, de-mining equipment and military software. Innovators at a similar meetup in Kyiv coined a new label for the country: defence tech valley.
Europe’s east on the defence
In April, a man in full military uniform — this was Major Ronalds Mandelis, commander of Latvia’s National Guard Cyber Defence Unit — went on stage at Riga’s TechChill conference to talk about cybersecurity.
The camouflage garb was a striking break from the usual, casually dressed crowd you find at tech events — and a sign of the times in the Baltics.
After years of declining defence spending in Europe, suddenly there’s a scramble to upgrade ageing military tech and unlock new financing options for defence or dual-use technologies.
Nato is not directly involved in the conflict but longer-term concerns about Russia have seen the alliance’s European members increase their combined military spending by 19% in real terms in 2024, according to a recent study by the International Institute for Strategic Studies.
The military alliance is also doing its bit, launching a €1bn venture capital fund to back capabilities such as drones, AI and cyber. Nato has also announced an expansion of its network of tech accelerator sites, with new sites in Latvia, Estonia and Lithuania.
In May, the European Investment Bank opened the door to more defence tech deals by tweaking the conditions for companies that receive its funds. Also in May, Estonia announced a €50m fund to invest in new military tech.
US takes lead in European defence
US investors have accounted for the largest chunk of private capital flowing to European defence startups this year, according to Dealroom data. The defence tech sector now makes up 1.8% of European VC funding. This has more than tripled since 2022. European VCs — fearful of falling foul of environmental, social and governance rules — are moving much more gingerly towards defence tech.
A defence-focused startup to receive US investment this year is Estonia’s SensusQ, which secured €3.8m from VC firm New North Ventures in June. The company translates data from different sources into clearly understandable information — a tool the military veteran founders say they wish they had during their deployments.
Makers of military drones — tech that’s cheap and is having an outsized impact in Ukraine — are also among the big winners of increased investment. Riga’s Origin Robotics announced a €4m raise in October for its drone-mounted precision-guided weapon system.
These rounds are relatively small; a tiny fraction of the total sum raised by Europe’s frontrunner defence tech company, Helsing, based in Munich. This company, which creates AI software to process information from defence systems, announced a €450m round earlier this year.
“It’s likely that the next Baltic unicorn could emerge from defence.”
Still, Baltic founders are optimistic about rising to Helsing levels. “It’s likely that the next Baltic unicorn could emerge from defence,” says Agris Kipurs, cofounder and CEO of Origin Robotics.
Morale fluctuates, but hope remains
Some future European defence techs will have Ukrainian roots. While many have stayed in Ukraine, numerous entrepreneurs and IT professionals have fled to other parts of Europe. Today, Ukrainians are creating startups in Poland, Estonia, Lithuania, Germany, the UK and elsewhere.
The expanded diaspora is “an opportunity”, says 1991 Ventures’ Gursky, who’s also a Ukrainian living abroad. “Ukrainian startups [can] settle in more VC-friendly economies [and] become more international and credible in the eyes of VCs.”
Of course, this is all talk for the future. Right now, for Ukrainians, there’s a war to survive.
Few countries since World War II have experienced this level of devastation. And while it’s impossible to say how long the war will last, tech workers are sure to play a big role in the difficult rebuild.
Already, in Kharkiv — a place where you couldn’t imagine there’s much headspace to think about the future — tech workers are planning to launch a “European Digital Innovation Hub” to help keep skills topped up, says Olga Shapoval, executive director of Kharkiv IT Cluster.
“Our morale fluctuates. But our outlook remains hopeful,” she says.
This article also appears in Sifted’s Eastern Europe & Baltics Leaderboard report. You can download it here
Read the orginal article: https://sifted.eu/articles/ukraine-tech-workers-startup/
