Is the focus of internationally-oriented Ukrainian startups switching from the USA to the European Union? This could be an unexpected result of Russia’s war on Ukraine, which started in Feb. 2022.
Traditionally, the better part of globally-oriented Eastern European startups moved their headquarters and a substantial portion of their activities to the USA. California was their main destination, perceived as offering the best opportunities to attract funding and find partners.
A new trend is now emerging as considerable flows of Ukrainian refugees — around five million — have landed in Europe as a consequence of the Russian invasion. While the overwhelming majority of these refugees are women, as well as males under or above the draft age limit, a fraction of them are IT professionals, adding to those who were already established in Europe when the war broke out.
Thousands of tech entrepreneurs
As a result, tells us UVCA chairman Andriy Kolodyuk, “several thousands of tech entrepreneurs went to Europe,” and some 400 newly arrived Ukrainian startups are currently scattered across the continent. Their main destinations have been Poland, Portugal, Spain and Germany, he notes.
“Most Ukrainian startups have shifted their focus to Europe, both as a market and as a source of capital, due to the ongoing war. In addition, many employees of Ukrainian startups have moved to EU countries,” concurs Denis Dovgopoliy, a figure of the Ukrainian tech scene who established himself in Luxembourg a few years ago.
“Simultaneously, European governments, investors and other organizations launched support programs for Ukrainian startups,” he wrote in the Ukraine Innovation Guide, a publication released in early October by the non-profit UkrainePlatform.
Among these programs is a €20 million funding effort from the European Commission to help 200 Ukrainian high-tech startups develop in the EU. Expected to be launched this year, the program aims to “increase [their] capacity to identify European market needs and comply with the EU regulatory framework, enter new markets and interconnect with key innovation stakeholders and networks.”
Ukrainian startups in Luxembourg
While no specific cooperation between the two countries in the field of technology existed before the war, Luxembourg has now become “a gateway” for Ukrainian VCs and startups, according to the Ukraine Innovation Guide. The publication identifies “10 synergies between Ukraine and Luxembourg ecosystems.”
The Grand Duchy “has become a magnet for hundreds of Ukrainian startups,” claims Dovgopoliy, who cites “strategic location, the presence of European institutions, the establishment of venture funds and the existence of [a local] startup support ecosystem” among the reasons for this small country’s attractiveness.
While various local associations, government bodies and agencies are contributing to making Luxembourg attractive to Ukrainian startup founders, the country also benefits from its proximity to the European Innovation Council (EIC) and other innovation-related EU bodies.