How does Google support Ukrainian startups? Interview with Michal Kramarz, Head of Google for Startups in CEE

During the war, Ukrainian startups are constantly adapting to new challenges, focusing their efforts not only on defense technologies, but also on cyber security, health care, and artificial intelligence. Such initiatives as the Google For Startups Ukraine Support Fund often help young companies not only finance their ideas, but also teach them how to scale their solutions to the international market, supporting Ukraine's economy in crisis conditions.

After the IT Arena in Lviv, the head of the English Office of AIN had a conversation with Michal Kramarzh, the head of Google for Startups in Central and Eastern Europe. We talked about the second cohort of 24 Ukrainian startups that received funding, about the peculiarities of the Ukrainian and Eastern European startup ecosystems, as well as about Google's plans and expectations in the region.

First of all, I wanted to talk about the Google for Startups Ukraine Support Fund. Why is it important for the Ukrainian ecosystem?

When we started working on the initiative, we sought to assess its importance for the Ukrainian ecosystem. But when the full-scale invasion began in 2022, we began to think more about how to support entrepreneurs in the long term. That is why we decided to create the Google Support Fund for startups in Ukraine. In just a few months, we received about 1,700 applications, while there are about 4,000 active startups in Ukraine. In addition, we noted a very high quality of startups.

When some of the startups met with Sundar Pichai [CEO of Google — ed.] in Warsaw, we asked what they needed besides funding, and one of the main things was the need to communicate that they were continuing operations and servicing customers despite the war. So we wanted to basically support founders in a way that, OK, you are getting funded. But on top of it, you are getting all the communications, support, opportunities to speak at different events or initiatives, and show that you are continuing your operations. And, on top of it, there's the Google Cloud credits, leadership, growth, training sessions, and things that are helping grow the business.

But all in all, it's all about the community. One thing that's super important to us is that founders participate in the group and stay connected after receiving funding. Now we’re seeing that with the second fund, the first cohort is still engaged. And even on the IT Arena we had founders from the first program participating. So it's super important that even despite the war, people can collaborate, and we can act as a connection between both cohorts, moderating the community.

This first cohort of nine startups was announced earlier in 2024. What is your experience working with them?

We announced the second fund in February during Sundar’s meeting with President Zelenskyi, but we wanted to deploy the first fund as soon as possible. That's why the first cohort was a lot smaller than the second cohort. But we also wanted to use the opportunity of the London Tech Week, where we announced the cohort, in order to, as I was saying, showcase the founders to the broader community beyond Ukraine.

Since we received 1,700 applications, we decided to merge the first cohort of nine startups with the second in terms of the program schedule. So the founders from the first cohort haven't yet received the very specific programming part, meaning the workshops and mentorships. So far they have only received the funds and opportunities to engage in several events, such as I/O Connect in Berlin or IT Arena in Lviv. And actually, in a few weeks [after IT Arena — ed.] we will meet both the first and the second cohort, a total of 33 startups, at the Google campus in Warsaw.

Since we’re talking about this additional programming on top of the received funds, can you share what the startups will go through?

We try to divide the programming into two parts. The first part is in-person meetings and the second is online workshops. In terms of the latter, the online workshops will be ongoing, covering various topics from product through marketing to leadership.

We also assess the needs of the founders, gather them together, and build on those needs to provide better support with AI or cloud services. These upcoming workshops will focus around B2B Sales, AI, Leadership, Fundraising/Investor relations. 

Moving forward to bigger topics. You have years of experience working with the Ukrainian and greater CEE ecosystem. What trends do you, or Google in general, observe in the Ukrainian ecosystem that differ it from others?

I can tell you the examples between the first fund and the second fund applications. There’s a difference of a few years between the first and second fund applications. At the beginning, I would say that Ukrainian startups were quite similar to those in Poland and Central Eastern Europe. They were very broad [had a very broad-focus — ed.].

Now, two years after the war's escalation, we see a big trend in terms of cybersecurity and, of course, AI [Artificial Intelligence — ed.]. In general, defense-related solutions are becoming prominent, but the amount of applications from healthcare startups is also growing, especially in the psychological support niche. Now we see not only cybersecurity solutions and drones, but also a defined emphasis on health and well being followed by marketing and analytical tools.

In the second cohort we recently announced, 6 out of 24 startups are in cybersecurity, and 4 are in healthcare and well being sectors. The remaining group includes marketing tech, productivity, and logistics startups. So — everything that is connected with healthcare and with defense. These are the key areas of difference.

As we all know, Ukraine is currently undergoing many challenges due to Russia’s war. But what influence does it have on Europe?

I can compare, for example, what has happened to Poland in recent years. Of course, there's been a big inflow of capital in Poland for the last couple of years, especially public money, because the public support for the venture capital market and the ability to invest into startups has increased. But at the same time, due to the war and the general economic situation in Europe, it has become more challenging. For example, Poland had its European Union funds blocked for a specific period of time. 

So venture capital market became a bit more cautious. But at the same time, you know, if there are good products, there will always be investors.

It's enough to capture even a small percentage or fraction of the market. But if you go to an investor saying, okay, I'm currently reaching 0.1% of the market, while the addressable market is X billion. And if you give me the money, I will reach out to this many people. And I already have proof that a fraction of it is there — then it’s a persuasive discussion. But if it's just a paper discussion — an idea for technology serving millions — and there are no customers or proof, it's a harder situation.

How would you describe the evolution of the Eastern European ecosystem for the last couple of years and further?

Here in Poland and in Ukraine we've always been strong in the IT technology sector. And this doesn't change. Of course, there's the ‘AI’ word now. It demands accelerating development and learning new skills. But at the same time, I think that this region has a huge potential in terms of building great products. The things we need to do are going international, scaling the products, and securing capital.

But as I said, if there is a good product, there are investors interested in buying or investing in it. I would focus more on the quality of the product, growth plans, and scaling the business.

Talking about scaling, do Polish and Ukrainian founders’ approach growth differently?

I wouldn't say it's different. A paradoxical positive aspect when comparing Poland and Ukraine is that Poland is in the EU, while Ukraine is not. There are pros and cons to both sides. 

One of the pros on the European Union side for Poland, for example, is that when you are entering another market within the EU, it's easier in terms of legislation and regulations. Of course, there are differences because there are local laws and business relations. But in general, from Poland, you have the open market of 27 countries. However, the same regulations can limit you in many areas, because the EU is highly regulated and limiting in many fields.

If you take a look from Ukraine, it's harder to enter such a market as the EU because you're entering from outside. But at the same time, Ukraine has fewer regulations, which makes it easier to experiment with new ideas and test out new solutions. So I think that the bond between Polish and Ukrainian ecosystems should be natural. Meaning, you can test your solutions in Ukraine and scale through Poland to the entire EU.

Despite language differences, the EU market has substantial capital and a large customer base. However, we should remember that the European Union has 500 million people, but globally there are 8 billion. It doesn't have to be only the EU.

I hear this in many talks with investors. They often suggest that the main goal for most Ukrainian and Polish startups is always to sell straight to America and instantly go big.

You know, the startup world started in the US originally. Later, it quickly advanced to Israel, Europe, and even South America, and then, eventually, to our region.

I think Ukraine has seven unicorns, Poland also has a couple, like Eleven Labs and DocPlanner. But the potential is much greater. However, for the potential to grow, these companies need to go international from the early stages. Your valuation is driven by your addressable market, so if you're focused only on the local market, your valuation will remain small. 

So for an investor, even if they can invest a lot of money, the ROI (return on investment) might still be low. But if you're going international and targeting a global audience, even capturing a small fraction of your total addressable market is better for the investor. This increases the return on investment, allowing for more funding, which gives the company more resources for development and faster growth.

But I think both Ukraine and Poland have a significant population, and maybe that's why so many startups have a good start here and are able to quickly grow bigger.

Yes. Despite the war, both Ukraine and Poland are good markets to test solutions. A market of 40 million people is still a big market. It's not that big in terms of a global scale, but it's good enough for testing.

When we say go global, it doesn't mean your first customer has to be in Peru or Chile. It means build a company with the mindset that your addressable market is global., and then find a path to get there. There are examples of companies that started as typically Polish or Ukrainian and later scaled globally. It's about the type of the approach, how you take it, how fast you want to go there, and what steps have to be taken. And a good approach often involves reverse engineering.

What's more important than starting immediately on the international market is having a plan to get there. Of course, plans can change, so if you have a plan A, you should also have plans B, C, and D. But having this North Star where you want to get creates a bigger probability of success in the mid-end.

Let's move on to the event in discussion, IT Arena. It’s one of the biggest media conferences in Europe and the biggest in Ukraine. On September 27, the second cohort was announced, 24 startups are to receive $100,000 from Google. What are your thoughts on the companies you awarded?

I can speak only highly and positively about them. One example of a company we've selected is Let's Data, which had been with our acceleration program earlier, and already had an opportunity to meet Sundar Pichai during the cybersecurity conference in Munich. And those founders are amazing. They are very much motivated. They think globally. They want to scale their solutions. They are already generating revenue, but with our support, we can help them unlock additional tools.

Read more about the 2nd cohort of Ukrainian startups to receive up to $100k equity-free grants from Google for Startups, here.

In general, I think the companies selected in this cohort show a clear trend toward AI, with many of them operating in that field. But the group of companies is quite diverse, and the common factor is that investing in startups means investing in people. I'm super proud of the group we selected because even before being announced, they were asking how they could engage, help, or speak on stage. Unfortunately, we had 45 minutes, which meant we could only briefly introduce them and announce their participation, but it still showed their motivation. 

The motivation is evident when founders ask how they can use every opportunity, such as being on stage, to showcase their work. It's important for founders to recognize that while you can develop technology quietly, behind the scenes, visibility is crucial. While some companies succeed quietly, much of a company's success often relies on the founder being the heart and soul, seizing every opportunity. 

Soon, we will be taking some of the founders, not only from Ukraine but from our global programs, to Slush in Helsinki. And I can say that we had a limited number of tickets, but the interest was much higher than expected.

In the list of startups, there were a few ones AIN reported on, which have already raised funds or launched successful products. What are your thoughts on that?

You know, the case is, the first fund was highly focused on helping in tough situations. For example, VanOnGo, which we supported earlier, was already a relatively big company. However, one of their logistics warehouses was bombed, so we decided to help because they were doing amazing things for the people of Ukraine, delivering goods for free despite being affected themselves.

Now it's also a lot more about how we can jointly help rebuild the Ukrainian economy. Given the level of destruction for example in Donbass, Ukraine will need to rebuild parts of its economy. Ukraine is still strong in food production, despite being probably the most mined country in the world right now. And such companies like Ailand Systems, which we selected earlier, help with demining, which also supports food production. If food production improves, it aids overall development. 

Similarly, mental health companies addressing trauma and stress can help people recover faster As people recover, they can contribute to the economy. The same goes for cybersecurity. Marketplaces and companies offering Software as a Service will create jobs and marketing opportunities for others. So with the second fund, our approach is focused on long-term support for Ukraine's economic growth. Of course, $10 million won't create a huge change, but if that helps 100 companies, those companies can hire hundreds or thousands of people.

The next question is one our readers are probably most interested in: What are your expectations for the next wave of startups?

We received 1,700 applications and have probably reviewed about half of them so far. Honestly, it's because of the volume of applications and the time it takes. From the applications we've reviewed, there are startups that already qualify for the program, but we wanted to learn more about them, gather additional information, and observe how they perform over the next few months to see if they achieve the things they mentioned. 

The next part includes applications we haven't received yet, as they are still coming in. That's why we decided to reopen the applications in batches once we announced the next cohort. So we're reopening applications because we announced the second cohort. If your startup applied earlier and hasn't been contacted, you can reapply if anything has changed. 

Based on the quality of the startups we've seen, I expect that we'll definitely be able to help the group we promised, as there's real potential in the applications we received.

Regarding the support for up to 100 startups, what are Google’s long-term plans for this initiative? Do you have any announcements, plans for new initiatives or launches?

For the next several months, our focus as Google for Startups will be on the Ukrainian support fund. Because again, there are still many applications and great companies, and we plan to continue deploying funds to the startups. 

One important thing for readers to know is that if your startup hasn't been contacted by us, it doesn't mean you've been declined. You’re still in the game — we're still reviewing applications.