On November 12, AIN and KAMA held our first annual START conference connecting business and art in Kyiv. One of the panel discussions brought together a number of representatives from Ukrainian VC firms, including Horizon Capital, ZAS Ventures, SMOK Ventures, D3, and Vesna Capital. 

The panel was titled “Investing in Times of Uncertainty: Motivation and Recipes for Success” and brought forth a discussion about challenges and opportunities Ukrainian investors face when trying to support startups either in or outside Ukraine. AIN shares the key insights below.

Who participated in the discussion?

  • Elya Chiechienieva, partner at D3 Venture Capital Firm, an early-stage fund for defense tech startups;

  • Petro Sovyak-Krukovskyy, innovation director at Vesna Capital, an investment fund created by seasoned Ukrainian entrepreneurs;

  • Vasile Tofan, senior partner at Horizon Capital, a leading private equity firm in Emerging Europe;

  • Andrew Zinchuk, co-founder of ZAS ventures, a seed fund investing in SaaS & cloud infrastructure startups in Central & Eastern Europe that target the US market;

  • Oleksandr Yatsenko, principal at SMOK Ventures, a US venture capital fund investing $100,000 - $1 million in early stage software startups in Central & Eastern Europe.

  • Moderated by Yaroslav Azhnyuk, a Ukrainian serial entrepreneur, co-founder of PetCube and FuelFinance, founder of The Fourth Law.

Insights from the panel

Despite the current challenges including the war in Ukraine and geopolitical tensions worldwide, our panelists expressed constructive optimism about the future of the investment landscape in Ukraine. They believe that the crisis can be an opportunity to create new startups and attract investment if investors can see the potential of the Ukrainian market.

“We encouraged our investors to look beyond the headlines and see that you still can make good returns in Ukraine and have an impact. It’s both a chance to invest for returns and create a positive impact in a country that needs it,” Vasile Tofan, senior partner at Horizon Capital, said.

Specifics of fundraising compared to pre-war times

  • Vasile Tofan discussed raising funds during the full-scale invasion of Ukraine, stating that Horizon Capital primarily focuses on asset-light and people-invensive businesses.

  • The fund’s current strategy has proven insulated from macro risk, and encourages investors to look beyond headlines and see that they can still make good returns in Ukraine.

  • According to the panelists, Ukraine has companies that are strong on fundamentals, such as revenue growth and profitability, and are also exitable.

However, foreign investors are often reluctant to invest in Ukrainian projects due to the risks associated with the war. One key strategy to tackle this issue is the development of dual-use technologies, which can be applied to both civilian and military purposes.

A photo pf the panelists

The position of defense tech in the eyes of the investors

Ukrainian defense startups can quickly deliver and deploy their products due to the demand and consultation of their end user, which is primarily the Armed Forces of Ukraine. The startups can also test all their products in various locations, from laboratories to testing grounds.

  • However the total amount of defense tech investments still lacks a few digits, as the industry managed to raise just over $20 million in 2024. The panelists contribute the problem to the challenges with finding LPs for their VC funds.

  • There are many new funds raising money for defense tech because the existing funds cannot quickly change their strategy. They usually take their LPs money for 10 years under a specific strategy, and cannot change their investment focus during this period.

  • Furthermore, as pointed out by Oleksandr Yatsenko, there are specific problems within Ukraine, which add on to the current challenges. One of the examples is the risk of mobilization of technical staff and other essential employees, not just the key ones, which can obstruct the R&D processes in startups.

  • The other point — which caused a heated discussion — is the inability of Ukrainian founders and bizdevs to leave the country in order to attend various events worldwide. This, as stated by the panelists, further limits their possibilities of marketing and fundraising.

“Our main task is to show foreign investors that it is possible to invest in Ukraine, that it is possible to make money here, and develop technologies quickly,” Elya Chiechienieva, partner at D3, summarized.

Investment landscape in 2024

Our panelists concluded that those who raised funds during the crisis are investing in a healthy startup economy and are not overvalued. This makes it easier for startups to hire employees and perform even better later down the line.

Compared to 2021, the market is not overheated anymore, making it easier for new investors to come in. There are about 15 funds partially focused on Ukraine and its startups.

As the market becomes more complex, it will become easier for the venture capital investors to get more money for their Ukraine-focused funds. As the funds currently investing in this market, they should jump on this wave and work hard to help and build great startups.

About START Conference

START is an annual conference organized by AIN and Kyiv Academy of Media Art (KAMA) for everyone who seeks inspiration, new knowledge about creativity, practical business skills, evergreen ideas, and long-term collaborations. 

This year's conference was held in Kyiv, at the PARKOVY Convention and Exhibition Center, and featured more than 60 speakers: representatives of the government, business, technology, creative cluster, and the defense tech industry.

AIN advises our readers to check out the summary of another panel, called "How to launch a startup when everything is against you," where Ukrainian founders shared their experience on creating and developing startups in Ukraine.

Images by: Natella Bakhaeva