How Ukraine Is Making Waves In The Global Startup Ecosystem

The growth of the tech sector in Ukraine has induced the emergence of new startup companies developing their products at a high level of technical excellence. According to “The Deal Book”, Ukrainian startups raised $265 million in 2017, which is 231% more comparing to the previous year.

What factors are moving this country to become a startup powerhouse with even more success stories on board? Let’s find out.

Strong Technical Education

If there’s one thing that all countries with thriving startup scenes have in common, it’s universities that produce large quantities of capable tech workers. Ukraine’s tech education system is robust. According to a report by Ukraine Digital News, the country’s 402 higher education establishments turn out over 36,000 technical graduates per year.

On top of that, there are also plenty of people who dump other industries and switch to ICT attracted by the stability and the high salaries it offers. While many of these “switchers” are self-taught, others get their education at the numerous private tech schools available across the country. They provide training in everything from software development and quality assurance to graphic design and project management. Generally, they’re also much faster to adapt their programs to the ever-changing market demands than state universities.

Massive Talent Pool

The constant inflow of new tech specialists cannot but have a profound effect on Ukraine’s tech talent pool, which according to Ukraine’s largest online development community DOU.UA has grown by 27% in 2017 alone. The total number of tech professionals in the country is now getting close to reaching 130,000.

Comparatively modest salaries may have been the number one factor bringing Western businesses to Ukraine ten years ago, but now it’s definitely the country’s talent.

“Even though more and more people choose IT-related education, there simply isn’t enough local tech talent coming from universities to meet companies’ needs,” says Jurgen Delfos, CTO at Carerix, a Dutch provider of recruitment software who has built a development team in Ukraine through Daxx, the company where I work as CTO.

Country’s Unicorns Attracting Huge Investments

Ukraine boasts a number of startups that are on their way to becoming the country’s first unicorns, and I’m sure their names will ring a bell. These are Grammarly, which has raised US$110M, Genesis, bpm online, Jooble, Readdle, and Poptop, a Ukrainian startup, which raised US$780.

Only in 2018 nearly $290 million were invested in the development of Ukrainian startups. According to Yevgen Sysoyev, managing partner of AVentures Capital: ”The fact that more than $630 million were invested in Ukrainian startups over the past years signals the industry’s resilience amid the country’s economic and political challenges.”

Large industry players are constantly showing interest in the local startup scene. There have been quite a few big acquisitions over the last couple of years. Google has purchased Viewdle, the local facial recognition company, Snapchat has acquired Looksery, which does a real-time facial modification of photos, and Oracle has bought Maxymiser, a provider of cloud-based software for marketers.

While IBM and Microsoft can easily afford to open their own R&D offices in Ukraine, many smaller companies opt for setting up their engineering teams here through technical partners.

New & Up-And-Coming Startups From Ukraine

Most Ukrainian startups are looking to compete on a global scale since their inception. Mobalytics, Petcube, Preply, and Allset have all certainly succeeded in moving beyond the local market.
“Following a dip in 2016, the data for 2017 indicates that the total venture capital investment in Ukrainian startups has reached its peak totaling US$258 million, which is triple previous year’s amount. We believe that this trend will continue in the coming years, and more Ukrainian startups will attract investment and create new jobs,” says Olga Afanasyeva, Executive Director at Ukrainian Venture Capital and Private Equity Association (UVCA).

There are also a number of startups leveraging the buzzword-worthy Artificial Intelligence (AI) and blockchain. Chanty, an AI-powered business messenger, is one of Europe’s 20 hottest AI, enterprise, and SaaS startups according to Silicon Republic, while DMarket, a blockchain marketplace for gamers, has launched Ukraine’s largest ICO and raised $US25M.

“Ukraine is one of the 14 hotbeds of blockchain innovation according to the Blockchain Research Institute. In 2017, local companies raised US$160 million in ICO,” adds Olga. These homegrown successes clearly increase investors’ interest in Ukraine even further and inspire a strong sense of entrepreneurship in the local tech community as well.

“Over the last three years business angels have invested over $11 million in more than 40 Ukrainian pre-seed and seed startups,” says Tanya Romanyukha, Executive Director at UAngel, a Ukrainian business angels network. “Since 2015, six corporate acceleration programs have launched, and there are still a few more coming. This means that the B2B and the corporate world is interested in integrating startups, which in turn boosts the entrepreneurial spirit in Ukrainian tech professionals.

“Companies like Wix.com, DataRobot, PlayTech, PLARIUM, and SimilarWeb have already opened their R&D offices in Ukraine, and we’re constantly getting new requests coming from Israeli and US companies looking to engage Ukrainian tech workers, launch their R&D offices, or find new ways to disrupt corporate innovations through Ukrainian startups.”

It looks like Ukraine has all it takes to create the tech giants of tomorrow—strong tech education, a massive talent pool, and a thriving startup ecosystem.

 

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