Given the nation’s economic setbacks in recent years, some Ukrainian entrepreneurs have been seeking better places to develop their businesses, find new customers and reach new markets. For more many, those desires have led them to Poland.
According to Polish national daily newspaper Rzeczpospolita, more than 400,000 Ukrainians have moved to Poland over the last few years.
One of them is Andrey Horsev, the CEO of 908 Inc., a U.S. software developer and investment company that used to have most of its operations in Ukraine. Horsev and much of his team have migrated – about 30 employees of 908 Inc. moved to Poland last year.
Horsev told the Kyiv Post there were plenty of reasons to leave, but the main was the “negative information flow” all his workers were experiencing, as well as Ukraine’s corrupt law enforcement agencies and flawed laws.
“I noticed that my colleagues were discussing stressful news every single morning,” Horsev told the Kyiv Post in a Skype call.
And a crackdown last fall by law enforcement on pirated content, tax evasion and hacking at the country’s tech companies was “the last straw,” he said.
Many Ukrainian IT companies have complained that inspections in recent months by law enforcement either partially paralyzed their operations or stopped them completely. They said that the checks were mostly unjustified, and often based on anonymous tipoffs.
Some of the firms resisted and even won court cases against the law enforcement agencies, but Horsev decided that fighting back was useless.
So 908 Inc.’s staff left Dnipropetrovsk for Wroclaw, the largest city in western Poland, about 1,000 kilometers from Kyiv, in September.
The company had an office in Poland since 2008, so relocating wasn’t hard. The benefits of the move are already clear.
“The legislation in Ukraine makes it difficult to defend your intellectual property,” Horsev told the Kyiv Post. “In Poland we can do it properly, and work with some security. I’m not saying Poland has less bureaucracy or a completely different mentality. Yes, the roads are cool here, but the paperwork is still sometimes as murderous as it is in Ukraine.”
Easier in the EU
European investors encourage or require tech companies to set up shop in the European Union.
Jakub Probola, the head of hub:raum Krakow, an innovation hub that supports startups in Central and Eastern Europe, which itself was set up by Germany’s Deutsche Telekom Group, says moving a business to a country with stable legislation is just common sense.
“We ask entrepreneurs who come from a range of countries and who want to cooperate with us to establish a Polish entity,” Probola told the Kyiv Post. “Running a business in the European Union and having a company registered there definitely makes a lot of things easier.”
The CEO of 908 Inc. Andrey Horsev sits near the Golden Gate Bridge in San Francisco, California in July 2015. His U.S. tech company used to have its biggest office in Ukraine, but moved most of its staff to Poland in September 2015. (Photo credit: Igor Zilberg)
Ukrainian startup Ecoisme is one of those startups that moved to Poland. Before investing $100,000 into the startup, T-Venture, the early-stage venture arm of Deutsche Telekom, asked the Ukrainian company to establish a corporate body in Krakow, Poland.
“T-Venture wanted us to be mobile and able to get to any country fast,” Ecoisme CEO Ivan Pasichnyk told the Kyiv Post in an interview on Jan. 26. “If we were registered in Ukraine, imagine what it would be like having to apply for a visa for the UK or the U.S. – It would take ages.”
Hub:raum’s Probola agrees, saying that investors are more willing to back teams working in the same business environment.
Besides, “if a startup wants and plans to expand its business to lots of countries in Europe, it’s definitely a good idea to follow the rules provided by the EU,” Probola said. “In the future, when a company decides to enter new markets, they can do it immediately.”
Ukraine ‘rich’ in IT
908 Inc.’s Horsev still thinks that despite the turbulence in Ukraine, the country retains huge potential in its IT sector.
“It’s like there are large deposits of oil or gas in other countries, but in Ukraine there’s a rich deposit of IT guys,” he said.
He said skilled workers in Ukraine – programmers, computer engineers and outsourcers – provide a great foundation. That’s why he retains a human resources specialist in Dnipropetrovsk, who’s still hiring Ukrainians, but now for company’s Polish branch.
Horsev said he will return only when the Ukrainian government brings improvements.
“Don’t get me wrong, there’s no calamity in Ukraine,” Horsev said. “But there’s no improvement either.”
This story first appeared in the Kyiv Post, a syndication partner of Ukraine Digital News.