Ukrainian startup market: business types, earnings, challenges

The Polish-Ukrainian Startup Bridge project has published a study about the Ukrainian startup ecosystem. The authors have surveyed 158 representatives of local startups and identified the problems of the companies and their immediate goals. The startups named the lack of funds for team growth as the biggest obstacle in their development. The editorial staff of AIN.UA selected the highlights from the report.

• The majority of startups have a legal form of limited liability companies or sole proprietorships.
• Almost 25% of all enterprises participating in the survey do not have an established form of legal entity incorporation. However, a third of them appeared in 2021.

Almost 50% of the surveyed startups were at the initial stage of development (pre-seed) at the time of the surveying, while 3/4 operated for no more than three years, and 87.3% of them operated in the market for less than five years.

• Among 158 surveyed enterprises, 19.6% of startups were created by one founder, 37.3% of projects were initiated by two founders, 24.7% — by three co-founders. One startup has as many as eight founders.
• More than half of the surveyed startups do not bring any income. For 84.2%, personal savings are one of the sources of funding, and for 39.2% — the only source. At the time of the survey, one out of three entities benefited from the support of the Ukrainian Startup Fund and another 18% – from other public grants.

• Almost 20% of the startups have three permanently employed people. The largest projects employ 46 people. The average Ukrainian startup employs six people on a permanent basis. In 7% of the surveyed companies, no one works permanently.

The clients of most startups are small and medium-sized companies, as well as individuals. Only 12% of enterprises offer B2A services for local administration, and 8.9% – for central administration. Most startups operate in industries related to new technologies and computer software development.

• 15.2% of surveyed companies noted that the level of competencies of their employees is insufficient. Almost 20% of the surveyed startups see no need to improve the skills of their employees.
• The startups that took part in the survey have their headquarters in 16 Ukrainian regions — 55.1% of them are located in the Kyiv region. Kharkiv and Lviv regions are also important points on the startup map of Ukraine. Less than 4.5% of the surveyed enterprises have their headquarters in cities with a population equal to or less than 100,000 people.