“A lot of people here and around the world were angered by some of his messages,” says Pranskievichus, who lives in Kyiv. “But we see that Starlink continues to work. It was invaluable to most people and also to people on the front lines where there was no communication at all.”
An uncertain future
Let’s Enhance continues to grow despite the challenges faced by the founders and employees. One colleague left to fight on the front line, and the other signed up to work in military engineering, joining about 7,000 technicians who joined the ranks of the Armed Forces of Ukraine. A year ago, the enterprise employed 27 people; now he says there are more than 40.
But Let’s Enhance is in the minority. According to a 2022 report by TechUkraine, an organization that supports startups in the country, companies are feeling the heat of the war. While 43 percent of teams surveyed stayed the same size, 37 percent of founders say they’ve had to downsize. And more than 90 percent of Ukrainian startups noted that they would need additional financial support to survive the war.
Data from research firm PitchBook shows that early-stage startups in Ukraine raised a combined $17 million in seed or Series A funding in 2022, up from $14.1 million in 2021. This year, the volume of early-stage funding has already exceeded the figure in the last quarter of 2022. , including $1 million recently raised by Fuelfinance.
But despite the promising signs, the broader outlook for Ukrainian business is murkier. In September The Wall Street Journal reported that while Ukrainian companies in 2021 attracted a total of $832 million in venture capital and private equity, which typically invests larger amounts, one analyst estimated that the number of Ukrainian venture capital deals in 2022 was down by at least 50 percent .
Let’s Enhance’s last fundraising round was $3 million in October 2021, and its founders planned to stretch it through 2022 as they focused on the new product. They may try to attract more funding this year by taking on the macroeconomic headwinds, in addition to the instability of the war, which has slowed investment in startups.
Nevertheless, Shvets is optimistic about fundraising. Several funds have appeared in support of Ukrainian technology companies, both in the private sector and from governments. Last year, the European Commission promised to allocate 20 million euros (about 21 million dollars) to support technology companies in Ukraine. Some private investors are supported by the fact that many Ukrainian startups sell their software in the US.
“I would say the narrative has definitely changed from last year. When the war started, we were all shocked, and so were our investors,” says Shvets. “They asked: “What will happen to Ukraine?”. But we haven’t had any problems with the production and now I really feel like we have a lot of support.”
Dmitry Dontov, CEO and founder of data protection company Spin Technology, also says that investors seem comfortable continuing to work with startups with a large presence in Ukraine. Shortly after the invasion, the Donts, a Moldovan living in Silicon Valley, provided his Ukrainian R&D team with generators and set up a safe house for them in the village of Koncha-Zaspa, about 33 kilometers from Kyiv. He transferred a third of the staff to an office in Portugal.
“At first, investors were worried. They asked: “How many lines of code were written in the last month?” – says Dontov. “But over time, I think investors saw that we were taking all the steps necessary to maintain performance.”
Not all startups do so well. Alexander Kosovan, co-founder of MacPaw, also invests in other startups through a fund called SMRK. Just this week, he invested $1.5 million in a Ukrainian robotics startup. But Kosovan says at least two of the fund’s portfolio companies have closed over the past year.
One of them was Seadora Seafood, a Kyiv-based fish delivery startup founded in 2019. The company transported part of its cargo by air and could no longer operate in the airspace of Ukraine. Another casual wear startup is still running but struggling; As soon as the war started, says Kosovan, “the demand for such things was practically reduced to zero.”
In the context of war, the necessity becomes more accentuated. So are boundaries, and connections with colleagues, and glimpses of the future, even if they come in the form of a Zoom call by candlelight or the flash of reflective clothing on a dark city street.