Ukrainian defense tech startup M-FLY, which makes laser guidance systems and civilian gimbals for UAVs, has raised $1.3 million from angel investors and four funds.
Resist.ua, MITS Capital and Freedom Fund joined in the round. Boris Shestopalov and other angel investors from Ukraine, Denmark, Grenada, the United States, as well as an Estonian miltech company also participated in the round.
In addition to the closed funding round, M-FLY received two grants from BRAVE1 in 2024: $25,000 and $50,000.
"The raised funds will be used to complete the development of a laser targeting device and semi-active guidance units. This solution is unique in its EW resistance and high accuracy (over 95% hit rate). In addition, M-FLY can be used for air defense systems," the startup commented to AIN.
Currently, M-FLY has the first iterations of its products, some of which are already being tested in the combat zone, and is actively preparing for mass production and sales.
The team is also planning a new round of funding that will allow them to build a fully autonomous product based on their existing ones. This will include the integration of a swarm management system and AI-based solutions.
AIN spoke with M-FLY founder and CEO Vladyslav, as well as the startup's COO and co-founder Yaroslav, about their laser guidance systems, fundraising challenges, and how to develop a deep-tech technology that no one believed in. The full interview is available below.
When and how was M-FLY founded? How did you manage to raise the first investments?
Vlad: When the war started, we immediately began volunteering. But over time, we realized that volunteering alone wasn’t enough — we needed to increase our efficiency and impact. That’s when I met our current advisor, a special services officer with extensive experience and an engineer by training who had studied various weapons systems. He started sharing ideas on how we could fight Russia in a non-traditional way.
The ideas varied, but it soon became apparent that communication systems, drones, and electronic warfare were the future. We knew we had to focus on this. We started working more closely with our advisor and gathered a team of volunteers to address the challenges of electronic warfare. We concluded that a laser targeting system could be the best solution. Initially, we worked on it as volunteers, and after about six months, we had a concept. But we realized that bringing such a device to life wasn’t possible through volunteering alone — we needed more resources and a professional approach.
I gave it my all — 120%. We had a strong team of volunteers from Ukraine and abroad, but our work remained stuck at the conceptual stage. I lacked the experience to structure everything properly. That’s when Yaroslav joined us. He had experience in attracting investment for different projects, and with his help, we transitioned from a volunteer initiative to a full-fledged startup. In September 2023, we opened our first office in Kyiv and began forming our core team, which at the time consisted of me, Slava, and two other people.
We moved forward and raised our first investment through a Friends and Family round. Initially, we used our own money, but we turned to friends and acquaintances when that ran out. That’s how we kept going.
At first, we thought $40,000 would be enough. We believed it was a two- to three-week project — we just wanted to help the army, assemble and deliver the system for free. Making money wasn’t even on our radar. But when we saw that it would take much longer than just a few weeks and that we needed closer to $140,000, we started raising additional funds.
It was tough. We were first-time startup founders, and no one believed such technology could be developed — especially not by a team with limited resources and no prior technical background in the field.
By December 2023, we were on the brink of bankruptcy. Then, on The World Day of the Poor (December 19), we received our first external investment — $5,000. It was just enough to keep us afloat for another month. Then, in January, a strategic investor came on board. It was an Estonian miltech company that had developed acoustic communication modules designed to detect the direction of approaching Shahed drones. They were pioneers in this technology. They saw our potential and our passion and believed in our vision.
With their investment, we quickly closed an interim funding round, which enabled us to develop our Minimum Viable Product (MVP). By April, we had what we thought was an MVP, but in reality, it was more of a Proof of Concept (POC). Still, it proved our idea could work. This was a turning point — up until then, scientists, engineers, and military experts had told us it was impossible to achieve this without large, expensive foreign systems.
By April, we had demonstrated that the technology could be built using civilian components and alternative laser types. With renewed energy and confidence, we pressed on — but then we hit another financial roadblock. Summer is a notoriously difficult time for fundraising, and by the end of June, we ran out of money again.
During those challenging summer months, some of Ukraine’s and possibly Europe’s top engineers joined us — stabilization specialists with rare and invaluable expertise. Previously, they had contributed as volunteers, but now they have become full-time team members, fully committed to making this technology a reality.
Images are provided by M-Fly
Yaroslav: That was a very real struggle. As Vlad mentioned, we had no money — literally just enough to keep the company running for four more days. And as soon as we integrated the new team, our expenses doubled overnight. 😅
Vlad: It was an intense period. By September, the surge in business activity put us under a lot of pressure, but we also saw growing interest in fundraising. We pushed hard and managed to raise more than we had initially planned. The only issue was that we had to structure the company as an Estonian-Ukrainian entity, which took time.
Then, we secured our first lead investors: Resist.UA and Borys Shestopalov, who helped kick off the round. Later, Freedom Fund, MITS, and another private investor joined in.
Now, we are refining our prototype, bringing it closer to a fully integrated product. Our customers are UAV manufacturers, and we are currently in the process of integrating our technology with several of them. We expect to make a full release by the end of Q2 2025 and start generating revenue.
In addition, in 2024, we were able to raise two grants from Brave1: $25,000 and $50,000.
What did you do before creating the startup? What experience did you have?
Vlad: Nothing particularly extraordinary in my case. During my student days, I tried to launch a few startups and even developed a clothing brand. However, I lacked the skills to implement it effectively. Later, I got involved in network business, where I spent four years before the full-scale invasion. I was building my career, managing a team of 40 people, and developing the business. When the war broke out, I knew I had to volunteer and help my country.
Yaroslav: I’ve always loved movies about startups; they inspired me, and I even started making small investments. In 2017, I wanted to buy Tesla shares, but it was impossible in Ukraine. I needed an individual license from the National Bank, but I was told that no one had received one since Ukraine’s independence. So, I switched from the stock market to crypto. Since then, I’ve made about 40 investments, 35 of which are profitable. After some successful short-term investments, I became interested in early-stage investments in crypto. I created a syndicate and invested in six projects, five of which turned out to be profitable. Later, I met Vlad, and we planned to build our crypto startup focused on tokenization of real-world assets (RWA). But we had to change our plans when the full-scale war broke out.
Vlad: Yes, Yaroslav and I got together even before the invasion started and had the idea to launch a blockchain startup. However, the full-scale war made us shift our focus.
Where does M-FLY currently operate, and where is its R&D office located?
Vlad: We have companies in both Ukraine and Estonia. The Estonian company is essential for attracting investments from Ukrainian and foreign investors. Our R&D center and office are based in Ukraine.
Tell us more about your technology. What exactly does M-FLY develop?
Yaroslav: M-FLY is a dual-use company that produces diptech products.
Gimbal render by M-Fly. Collage by AIN
Vlad: Our main product is a laser targeting system that consists of two blocks. The first is a high-precision platform with a laser inside, called designators, which allows you to illuminate targets with a laser. It’s a very sophisticated technology, and only a few companies worldwide are working on it, with 60% of them in the US. The second unit is a seeker module that detects the laser spot and flies toward it.
The targeting system is later integrated into ISR platforms, such as reconnaissance aircraft, bomber drones, ground robotic systems, or surface drones. The seeker is integrated into FPV drones, kamikaze drones, and free-fall bombs. In the future, we also aim to integrate the system into short-range missiles to develop air defense systems.
What key problems on the front line does your system solve?
Yaroslav: The first issue is accuracy. Out of 1.2 million drones, more than a million fail to hit their target.
Vlad: Yes, our goal is to increase the number of successful hits and reduce the impact of electronic warfare (EW). We aim to improve the efficiency of night missions and extend the lifespan of bomber drones.
How does your technology help counter electronic warfare?
Vlad: When an FPV drone is flying toward a target and an electronic warfare system is activated, it can’t reach its target due to interference. Our technology allows the munition to lock onto a laser spot from several kilometers away. Once the optical spot is captured, the seeker locks on and guides the munition to the target — without requiring any communication. No communication is required at all, which eliminates the need for an expensive EW-resistant communication system in the warhead. The system automatically identifies the target and directs the munition to destroy it.
Yaroslav: Our system allows ordinary reconnaissance drones to be turned into strike drones.
Vlad: In the future, this technology could be used to create a fully autonomous system for territory surveillance, identifying priority targets, and carrying out autonomous strikes. It would be based on AI and drone swarms. This AI-powered system would be able to locate, detect, and classify targets. Depending on the target type, it would select the appropriate munition and use a modulated laser signal for inter-drone communication, enabling precise strikes. This is the ultimate goal we aim to achieve.
Seeker render by M-Fly. Collage by AIN
What is the current stage of development?
Vlad: We have already tested all components separately and confirmed that all key system requirements have been met. The stabilization is accurate, and we recently confirmed the detection range of our laser and seeker at more than 3 km. These were the main aspects that needed testing before the final test. Now, we are fine-tuning the internal electronics. It’s a routine process that is taking slightly longer than we expected.
The next step is comprehensive testing. After that, we’ll integrate with our partners, and that’s already starting to happen. We’ll be working with about 30 companies in total, but we’re not disclosing their names at the moment.
You’ve already raised $1.3 million. How much do you want to secure in the next round, and what are your plans?
Vlad: It’s hard to say for sure, but I expect it to be around $3-5 million. The funds will go toward bringing certain parts of production in-house.
In the long run, we’re not looking to make money in Ukraine. We aim to support the army, refine the technology, and perfect it. Once the war is over, we plan to scale up for exports and global sales.
How do you assess the startup environment in Ukraine?
Yaroslav: Unfortunately, the startup ecosystem in Ukraine is still underdeveloped. Many people don’t fully understand how investment works or what terms like SAFE, valuation, or CLA mean. It’s possible to have a multi-million-dollar valuation without actually having a product. Our own fundraising journey was incredibly tough. But we want to prove that it’s possible to build innovative projects — no matter how challenging it is. Ukraine needs more startups, as well as more unicorns.
There are actually not that many funds available, but we want to inspire growth by showing that success is possible. We want to see more private investors and young startup founders emerging in Ukraine rather than leaving the country because raising funds here is difficult. Ukraine has a number of advantages, including world-class engineers and the ability to conduct rapid testing. In the US, getting something tested at a range can take anywhere from three to six months — here, it happens much faster.
That said, the Ukrainian defense tech sector has made huge strides in recent years. It’s now filled with incredible professionals who are driving innovation. Seeing their passion and excitement is truly inspiring. This progress has played a crucial role in bringing us to where we are today. Another major positive factor has been the growing impact of the Brave1 ecosystem.
