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The Ukrainian startup ecosystem during wartime: how they survive and what they need (survey)

The Ukrainian Startup Fund in partnership with TechUkraine, the Ministry of Digital Transformation of Ukraine, Tech Emerging Europe Advocates and Global Tech Advocates, as well as TA Ventures conducted a survey about the Ukrainian startup ecosystem during wartime.

The survey, The country at war: The voice of Ukrainian Start-ups, is aimed at understanding the impact of the Russian invasion on the startup scene in Ukraine and at defining the most suitable tools to support Ukrainian startups.

AIN.Capital picked the most important findings from the survey. You can find the full report here.

Key findings

  • Despite the ongoing war, Ukrainian startups have demonstrated resilience and entrepreneurs continue to operate their businesses, remaining committed to their success even in these dire circumstances.
  • Some Ukrainian startups have relocated but the vast majority have kept at least a part of their operations or teams in Ukraine. Also, those startups that have not relocated are not planning on doing so at the moment. And more than half continue to operate exclusively from Ukraine.
  • More than one in ten startup employees has had to leave their respective firms since the beginning of Russia’s invasion. Not all startups, however, have experienced team reduction. More than four in ten startups have not felt any change.
  • Nine out of ten startups confirm they need financial support to continue operations and/or expand. But there is a small percentage saying they do not require any assistance.
  • Whether they need financial support or not, more than half of the startups surveyed say they expect to expand their operations in the short-term. Every fourth startup says it will maintain the status quo. Only four percent of startups believe their operations might be reduced.
  • Ukrainian startup ecosystem during wartime-8
  • Ukrainian startup ecosystem during wartime-7
  • Ukrainian startup ecosystem during wartime-6
  • Ukrainian startup ecosystem during wartime-5
  • Ukraine remains the key market for 60 percent of the country’s startups, followed by the European market (EU and EEA; 46.4 percent) and North America (United States 34.3 percent, Canada (9.3 percent). Every fifth Ukrainian startup considers the global market as their main target.
Ukrainian startup ecosystem during wartime-4

Finances

  • The financial state of Ukrainian startups is considered to be unstable, with almost half having a run rate of one to three months. It is worth mentioning that 1.7 percent of all startups say that they cannot continue their activities in the current circumstances – even looking just one month forward.
  • The difference between teams which relocated and those that didn’t can be clearly seen, when the startups try to forecast their financial stability more than a year from now. 13 percent of relocated teams say that they will manage going forward, while for non-relocated startups that figure reaches just 3.2 percent.
  • Therefore, it’s no surprise that nine out of 10 startups indicate that they require financial support. However, only one in five say that they have already received support. Just 1.4 percent of respondents stated that they did not need any support to continue their operations.
Ukrainian startup ecosystem during wartime-3

How to save Ukrainian startups

Despite the adverse conditions created by the war, alike the whole of Ukraine, the country’s tech sector is showing remarkable resilience. The tech sector in Ukraine is now one of the driving forces of the sustainable Ukrainian economy, and will be one of the main pillars of post-war economic recovery and growth. As for now, the livelihoods of 300,000 people depend on the tech sector staying afloat.

A quarter of respondents indicated that they have got new contacts to help retain and grow their business during the war, while 35.7 percent are searching for new contacts in the respondent field. Similarly, 15.8 percent of startups indicated that they received support from value chain partners (“partnerships”; mainly in the form of non-financial support in product improvement, development or distribution). Almost half of startups are still looking for such partnerships.

Ukrainian startup ecosystem during wartime-2

Ukrainian startup ecosystem during wartime-1

One of the untraditional ways in which respondents received support is participation in events (conferences and pitch days, accelerator summits). Meanwhile, 3.6 percent of respondents stated that they require help with human resource management to continue their operations, while some teams are waiting for their colleagues to return to work after the end of military service or volunteering.

Overall, Ukrainian startups have demonstrated strong resilience during wartime: a recent Forbes survey suggests that less than four percent of more than 250 startups — 19 in the portfolios of the most active VC players — have significantly reduced turnover. The 10 largest venture capital firms reported that among 245 startups in their portfolios, none have so far terminated their operations.

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