“Many people here and across the world were pissed off about some of his posts,” says Pranskevičius, who is based in Kyiv. “But what we’ve seen is that Starlink has continued to work. It’s been invaluable to most individuals and also to people on the front line, where there might be no connectivity at all.”
An Uncertain Future
Let’s Enhance has continued to grow, despite the challenges its founders and staff face. One colleague left to go fight on the front lines, and another signed up to work on military technology, joining the approximately 7,000 tech professionals who joined the ranks of the Armed Forces of Ukraine. One year ago, the company had 27 employees; now, it says it has more than 40.
But Let’s Enhance is in the minority. According to a 2022 report from TechUkraine, an organization that supports startups in the country, companies are feeling the heat of war. While 43 percent of teams surveyed remained the same size, 37 percent of founders say they’ve had to reduce headcount. And more than 90 percent of Ukrainian startups have indicated they would need more financial support in order to survive the war.
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, compared to $14.1 million in 2021. Early-stage funding this year has already surpassed that in the last quarter of 2022, including $1 million recently raised by Fuelfinance.
But despite promising signs, the broader prospects for Ukraine’s businesses are murkier. In September, The Wall Street Journal reported that, while Ukrainian companies in 2021 raised a total of $832 million in venture capital and from private equity, which typically invests larger sums, one analyst has estimated that the number of Ukrainian VC deals was down by at least 50 percent in 2022.
Let’s Enhance’s last fundraising round was for $3 million in October 2021, and its founders planned to stretch that throughout 2022 as they focused on a new product. They may try to raise more funding this year, taking on macroeconomic headwinds, in addition to the instability of war, that have slowed startup investment.
Still, Shvets is optimistic about fundraising. Several funds have cropped up in support of Ukrainian tech companies, both in the private sector and from governments. Last year the European Commission pledged €20 million (about $21 million) in support of tech companies in Ukraine. Some private investors are bolstered by the fact that many Ukrainian startups sell their software in the US.
“I would say the narrative has definitely changed since last year. When the war started, we were all in shock, and so were our investors,” Shvets says. “They were asking, ‘What’s going to happen with Ukraine?’ But we haven’t had any production issues, and right now I actually feel like we have a lot of support.”
Dmitry Dontov, the chief executive and founder of data protection company Spin Technology, also says investors seem comfortable to keep working with startups with a heavy Ukrainian presence. Shortly after the invasion, Dontov, a Moldovan based in Silicon Valley, supplied his Ukrainian research and development team with generators and set up a safe house for them in the village of Koncha-Zaspa, about 33 kilometers from Kyiv. He relocated a third of the staff to an office in Portugal.
“Initially, investors were worried. They were asking, ‘How many lines of code have been written last month?’” Dontov says. “But over time, I think investors saw that we were taking all the actions necessary to maintain performance.”
Not all startups have fared so well. Oleksandr Kosovan, the MacPaw cofounder, also invests in other startups through a fund called SMRK. It invested $1.5 million in a Ukrainian robotics startup just this week. But Kosovan says that at least two of the fund’s portfolio companies shut down within the past year.
One of them was Seadora Seafood, a Kyiv-based fish delivery startup founded in 2019. The company transported some of its cargo by air and could no longer operate within Ukrainian air space. Another startup selling casual clothing is still operating but is struggling; as soon as the war began, Kosovan says, “the demand for such things was reduced to almost zero.”
In the context of war, necessities come into sharper focus. So do borders, and bonds with coworkers, and glimpses of the future, even if they appear in the form of a candlelit Zoom call or a flash of reflective clothing on a dark city street.
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