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Building futures: Ukraine's startup ecosystem today

According to a Gradus Research survey, 18% of Ukrainian startups launched their projects after the full-scale invasion began in February 2022. On one hand, starting new startups under current conditions seems like madness. However, it is actually the most opportune moment. Why this is the case, which directions are the most promising today, and how to develop a full-fledged startup ecosystem—these are the topics we discuss with the CEO of the Ukrainian innovative marketing agency idealers, Vadym Gordeev.

Why did the Ukrainian startup ecosystem experience such growth during the war? It's said that crises are the biggest accelerator of innovation and new opportunities. Unusual living conditions always lead to the need for new business models and businesses in general. The war and the pandemic radically changed human habits and the structure of Ukraine's economy. Those entrepreneurs who adapt to changes first will gain an advantage over their competitors.

Developing a full-fledged startup ecosystem is currently actively pursued by many Ukrainian state and non-state organizations, such as the Ministry of Digital Transformation, Ukrainian Startup Fund, Lviv IT Cluster, Kharkiv IT Cluster, Genesis, Technosystem, UVCA, Yep!. This includes reforming responsible institutions, implementing concepts for developing IP culture, and integrating the startup sector into an inseparable part of the economic strategy. For Ukrainians, this is a huge motivation—the achievement of victory and post-war reconstruction and development. Startups attract funds, technology, and specialists, not only to rebuild the country but also to take it to a fundamentally new level. After all, Ukraine is among the top ten countries with the most skilled IT professionals.

Why is Ukraine “betting” on the development of the startup ecosystem? Basically, startups and entrepreneurship are kind of catalysts for economic growth, not only at the local but also at the global level. 37 leading international market countries owe their economic success to startups. In 2021 alone, the volume of financing for various startups worldwide exceeded 600 billion dollars.

If we talk about the benefits for the general population, these are primarily jobs. And for the state— more taxes are paid to the budget. Additionally, the level of startup development can be seen as an indicator of integrity, social responsibility, and a culture of law observance in a particular country. After all, startups always involve investments from other countries.

What are the predictions for the industries that will be most prominent?

Military-tech. Projects in this area, which previously required 1.5–2 years to implement, are now accomplished in 2–3 months. This sphere in Ukraine proved its potential back in 2014, when the war began in Donbas. At that time, indispensable military programs like "Kropyva" and "Delta," drones "Valkyria" and "Leleka-100" were launched. In 2023-2024, about $100 million is spent daily in Ukraine on armaments, equipment, military infrastructure to cause maximum damage to the enemy. The work starts from developing drones to tactical medicine and recovery after injuries. Previously, President Zelensky announced that Ukraine plans to create one million drones for the military in 2024.

Green energy. From the first day of the war, Ukrainian energy facilities were targeted by Russian military forces. The energy system withstood hundreds of attacks and even survived its first-ever blackout. Overall, about 50% of the country's energy infrastructure was damaged. During 2023, about 500 MW of new solar generation and 200-300 MW of wind power will be built in Ukraine. Global warming and the need to rebuild Ukraine's energy infrastructure due to the consequences of the war open new opportunities for Ukrainian green energy producers.

Agricultural technologies. One of the few sectors of the Ukrainian economy with relatively stable growth rates. Although the agricultural sector also suffered during the war, including problems with the logistics and trade of grain, it remains attractive to investors.

Mental health. People in Ukraine increasingly need qualified psychological help because of the war and related stress.  That’s why there’s a need for the opportunity to use convenient apps and services instead of searching for qualified psychologists via word-of-mouth and friendly recommendations.

How should a newcomer develop a startup in this field in your opinion? When you have an understanding of which specific market and in which specific field you plan to launch a startup, it's time to proceed to prototyping and creating an MVP. It will allow you to receive feedback from users and understand what needs to be improved and corrected.

Unfortunately, startups cannot compete with mature companies because of their limited resources. Therefore, they are forced to come up with unique solutions like Growth Hacking. This is a marketing concept aimed at the most efficient use of all possibilities and knowledge, developing and launching a quick joint project. We implement the Growth Hacking approach in our agency's work with every project and achieve great results: by developing a communication strategy, branding, and a pitch deck for Effa startup, its ARR increased by 30%, and also, four months after providing services, the initial investment round was closed. Moreover, this was the name of our initiative for startups—a program for providing marketing support for startups that we conducted twice after the war began.

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