12% of Ukrainian startups stopped operations since the war started — research

64% of startups still operating in Ukraine base their business on the global market. While 12% of the surveyed companies stopped their operations after the Russian invasion. This is revealed in the research conducted by the Polish-Ukrainian Startup Bridge team in partnership with the Warsaw Stock Exchange and the Ukrainian Startup Fund.

The state of the market after the start of the full-scale war

Ukrainian startups
Graph: Polish-Ukrainian Startup Bridge

Almost all respondents note that the war had clearly negative impact on the possibility of doing business in the country. Most startup leaders rate the current situation as bad. 12% of the surveyed companies closed their operations after the Russian invasion.

The reasons for the startups in Ukraine to close are diverse: there are 4 most common reasons that lead to stopping business or limiting it. 

  • For about 33% of startups, the reason for the shutdown was the drop in sales of products and services on the Ukrainian market. 
  • In the case of approximately 25% of the respondents, it was due to the impossibility of going abroad (which in their case was necessary to continue the activity) and the loss of capital. This would have allowed the company to maintain its financial liquidity.

Out of the 27 companies whose representatives claimed to be participating in military actions, 56% had one of their employees participating in the defense of Ukraine. As a result, more than 20% of the companies whose employees take part in the war have as many as two people fighting at the front.

Plans to move after the end of the war

Ukrainian startups
Graph: Polish-Ukrainian Startup Bridge

Almost half of the surveyed enterprises are located in Kyiv. Lviv, Kharkiv, and Vinnytsia regions are also important places on the startup map of Ukraine.

There are problems with Ukrainian startup operations, which are reflected in the markets far outside the country and are an obstacle for all entities that cooperate with them or buy their services and products. At the same time, for some of the analyzed companies, the fact of having to work for foreign clients and cooperation with them is a chance to survive in a very difficult economic, political, and social situation in the country.

Among the respondents who answered the question about their plans to move their startups after the victory of Ukraine, the largest percentage indicated that they plan to return to the Ukrainian market or stay in it (43%). Almost 1/3 of the sample consists of people who want to move their company to the European Union market, less often (only 5%) — to the US. Some companies completing the survey were already outside Ukraine (16%).