Data from research firm PitchBook shows that early-stage startups in Ukraine raised a collective $17 million in seed or Series A funding in 2022, up from $14.1 million in 2021. startup this year has already exceeded that of the last quarter of 2022., including $1 million recently raised by Fuelfinance.
But despite promising signs, the broader outlook for Ukrainian businesses is bleaker. In September, The Wall Street Journal reported that although Ukrainian companies in 2021 raised a total of $832 million in venture capital and private equity, which typically invest larger sums, one analyst estimated that the number of Ukrainian equity deals -risk had decreased by at least 50% in 2022.
Let’s Enhance’s last fundraising round was $3 million in October 2021, and its founders planned to expand it throughout 2022 with a focus on a new product. They may try to raise more funds this year, battling macroeconomic headwinds, in addition to war instability, that have slowed startup investments.
Shvets nevertheless remains optimistic about fundraising. Several funds have emerged to support Ukrainian technology companies, both from the private sector and from governments. Last year, the European Commission pledged 20 million euros (about $21 million) to support tech companies in Ukraine. Some private investors are encouraged by the fact that many Ukrainian startups are selling their software in the United States.
“I would say the narrative has definitely changed since last year. When the war broke out, we were all in shock, as were our investors,” says Shvets. “They were asking, ‘What’s going to happen with Ukraine?’ But we haven’t had any production issues and at the moment I feel like we have a lot of support.
Dmitry Dontov, CEO and founder of data protection company Spin Technology, also says investors seem comfortable continuing to work with startups with a strong Ukrainian presence. Shortly after the invasion, Dontov, a Moldovan based in Silicon Valley, provided generators to his Ukrainian research and development team and set up a shelter for them in the village of Koncha-Zaspa, about 33 kilometers from kyiv . It moved a third of the staff to an office in Portugal.
“At first, investors were worried. They asked: “How many lines of code were written last month?” “, says Dontov. “But over time, I think investors realized that we were taking all the steps necessary to maintain performance.”
Not all startups are doing so well. Oleksandr Kosovan, the co-founder of MacPaw, also invests in other startups through a fund called SMRK. This week, it invested $1.5 million in a Ukrainian robotics startup. But Kosovan says at least two of the fund’s portfolio companies have closed their doors in the past year.
One of them was Seadora Seafood, a Kyiv-based fish delivery startup founded in 2019. The company transported part of its cargo by air and could no longer operate in Ukrainian airspace. Another startup selling casual clothing is still in business but is struggling; From the start of the war, Kosovan says, “the demand for such products was reduced to almost zero.”
In the context of war, the necessities become more obvious. So are boundaries, connections with colleagues, and glimpses of the future, even if they appear in the form of a candlelight Zoom call or a flash of reflective clothing on a dark street in the city.
