Uklon Co-Founders Vitalii Diatlenko, Sergii Smus, Victoria Dubrovska, and Dmytro Dubrovskyi ceased their operational management duties in August 2023 and created an investment fund to support Ukrainian defense tech companies.
Dmytro Dubrovskyi talked with the Editor-in-Chief of AIN.UA about how the fund will operate and where and how much they are planning to invest.
Images: the Uklon press center
Dmytro, not long before our conversation, you have released a statement about Uklon Co-Founders’ first big-check investment in a defense tech startup called Buntar Aerospace. Can you share some details of this deal with us?
We have invested $200,000 in a seed round. The startup produces vertical take-off and landing surveillance UAVs that can fly for 60 km and intelligence-mission planning and operating software that automates a UAV operator’s planning effort by 90%. They are currently being tested on a training ground and soon will be their first combat use.
If I am not mistaken, was it your first external investment as Uklon Co-Founders? Or did you mean Defense Tech?
We didn’t invest in external companies, but this year, we decided to open such a track and raise $2 million within our fund for defense tech development in Ukraine. The average check is $200,000 to $500,000. We are interested in startups during seed rounds. Now, we plan to get 8 to 10 companies in our portfolio.
Are you going to invest in non-military startups as well?
Not now. We have a clear goal at the moment.
Have you used private funds for this foundation, or did you also invite some external investors?
It was only private funds of co-founders from Uklon dividends. We invested in the foundation according to our company shares.
Buntar Aerospace was only the first company in our portfolio. Now, we consider another ten projects that passed due diligence.
What requirements do you have for defense tech startups? Do you prefer software or hardware projects? How important is having the BRAVE1 status?
Having the BRAVE1 status is very useful. We also expect that a startup will raise an intelligence component. So, it should not be limited to FPV assembly of Chinese parts supplied by the state or volunteers.
We look for unique tech advantages. That’s why we consider hardware plus software. We also appreciate when startup products have already passed a testing stage and are prepared for combat use so that we can receive feedback from military units. And the third point is secure sales.
In any case, we also study the project team. We check whether there is a legal structure, the financial statements are clear, etc. If not, we can consult them on optimizing these processes.
Do you participate in product development elsewhere than in consulting and financial support? Maybe you share your expertise in sales or development?
For sure, we can share our expertise. We might give a hand of help in marketing, sales, and back-end development. In addition, we have a long list of contacts, including deftech developers, military, and volunteers. We can aid with testing, getting feedback, and developing the product. However, we are investors in the first place, so finance is our primary contribution.
Do you seek advice from the Ministry of Defense or the General Staff regarding startups you would invest in?
We have no ties with higher military command, but we may always request feedback from some famous volunteer funds and formations involved in testing.
We have friends in the Ministry of Defense and Special Forces, too. So, a lot of feedback flows to us from different sources.
Let’s speak about Uklon. Recently, you have exited Azerbaijan. Did it change your expansion plans somehow? Which markets are you going to enter next?
In one way or another, the war influences our plans. Indeed, the joint co-founder’s investment in defense tech is of value from the perspective of emotions and national consciousness powered by a desire to invest in Ukraine’s victory. Expanding into new markets became a bit complicated for our product.
We don’t cancel any of our plans, but there is no need to rush. We are developing Uzbekistan and successfully pushing a Russian competitor from the stage there.
Indeed, we have left Azerbaijan due to a tense situation with unpredictable legislation changes. Our local partner also decided to cease investing in this country.
Recently, Uklon joined the Diia City special taxation mode, and it was relatively late compared to other product companies. How satisfied do you feel about it? What benefits and underwater stones do you see?
Actually, we like it very much. We also joined the Diia City United Association, which aims to preserve the rules of this unique space.
Can you comment on the consequences of the newest claims anonymous Telegram channels published against Uklon? Did you find out what and in whose interest has it been done?
Most likely, in the interest of exacting money. One day, we just decided not to dig deep into that kind of pretty typical media attacks, which became more and more usual, unfortunately. You can see both businesses and politicians attacked. Sometimes, such media activities are accompanied by law enforcement bodies’ actions. Now, we are focused on building a defense strategy for the event of new attacks.
Do you participate in side projects besides the Uklon ecosystem?
I am involved in the Defense Builder Accelerator as a mentor. We will share our experiences with startups so that they are ready to comply with our investor requirements.
Speaking of GR as one of the Diia City United Association’s functions, a member of which you are, what would be the most painful problems Ukrainian businesses face nowadays, in your opinion, as the ecosystem member? Is the government attentive to your concerns?
For instance, there are ongoing discussions about the necessity of employee reservation from the mobilization. In particular, Oleg Gorokhovsky, Co-Founder of monobank, posted on this topic on Facebook. What do you think about this?
For sure, employee reservation and a more transparent mobilization procedure are the things the businesses are lacking. There must be an option to reserve key employees at least to keep the company working. I like the concept of employee reservation by MP Dmytro Natalukha.
I understand that such a decision would be unpopular among our people, but our country really needs it. Hopefully, the government will act in favor of this instead of only raising taxes. It looks simple on the first look. However, many don’t see that the economy would shrink without employee reservation, and the businesses would not survive, especially by having to react to all those blackouts.
Should we meet again in a year; what news would you like to share with me? What strategic goals do you want to achieve?
I dream that Ukraine would be victorious then, and defense tech startups supported by us would grow into big companies and unicorns. The whole world saw the aggression of an autocracy and its imperial ambitions. So, NATO member states and other democracies have to invest more in the defense industry.
I also would like to speak with you about new markets Uklon entered as a truly international company.
