This is the result of a new study prepared by the Polish-Ukrainian Startup Bridge team in collaboration with the Warsaw Stock Exchange and the Ukrainian Startup Fund.
Nearly all respondents note a decidedly negative impact of the war in the country on the ability to conduct business. Most startup leaders assess their current situation as poor. Twelve percent of companies that completed the survey reported that they had ceased operations as a result of the Russian invasion. Reasons for Company Closure
The reasons for startup closure in Ukraine are varied – four of the most common factors are cited, resulting in the need to discontinue or limit operations. For one-third of startups, the reason for discontinuation was a decline in sales of products and services in the Ukrainian market. For approximately one-quarter of the surveyed companies, the inability to travel abroad (which, in their case, was necessary to maintain operations) and the loss of capital that would have allowed the company to maintain financial liquidity were the decisive factors in discontinuing their operations.
Of all the surveyed companies, over half (56%) experienced the need to have at least one team member serve in the Ukrainian Armed Forces. This indicates the significant role of startups in actively defending the country against the Russian invasion.
Most companies operate globally (64% of respondents indicated the international nature of sales of services and products), focusing on both the Ukrainian market and abroad. Approximately 13% declared that they target their services and products exclusively at foreign markets, excluding local markets. This situation demonstrates the significant impact direct access to the global economy has on the survival of young, scalable enterprises.
Nearly half of the surveyed companies are located in Kyiv. The Lviv, Kharkiv, and Vinnytsia Oblasts are also important locations on the Ukrainian startup map. The high response rate from the Kharkiv region is particularly noteworthy, given its proximity to the front and the devastation of war.
The problems faced by Ukrainian startups impact markets far beyond the country’s borders and constitute an obstacle for all entities collaborating with them or purchasing their services and products. This stems from disruptions in the companies’ operations due to the loss of access to energy sources, telephone and internet communications, and the obvious operational challenges associated with these.
At the same time, for some of the surveyed companies, working for and collaborating with foreign clients offers a chance to survive the very difficult economic, political, and social situation in the country. Many companies see this as a key factor in their continued growth.
Among respondents who responded to the question about their plans to relocate their startups after the end of the war and Ukraine’s victory, the largest percentage indicated they planned to return to or remain in the Ukrainian market (43%). Nearly one-third of the sample intended to relocate their company to the European Union, with only 5% opting for the United States. Some companies were already outside Ukraine at the time of completing the survey (16%). This is particularly important for the future of Ukraine, which, according to the report’s authors, must be protected from the drain of key talent in rebuilding the post-war economy.
Resettlement Plans After the End of the War
“We leave in good memory all those who will not return to their projects, offices, and laboratories, to their families and friends. With their loss, innovative ideas, business challenges, and technological solutions will have to wait for new, talented and courageous successors. We pay tribute to all those who died fighting for Ukraine,” says Łukasz Wawak, head of the Polish-Ukrainian Startup Bridge.
The report’s first important mission is to continually remind people that many Ukrainian startups continue to operate domestically and internationally, working not only for their own development but also for Ukraine’s victory.
The second message is to encourage citizens of Poland and Europe to utilize the services of Ukrainian entrepreneurs, who still have the opportunity to send their products, solutions, and intellectual property worldwide. Every euro spent on the products of Ukrainian entrepreneurs is a small step towards Ukraine’s victory.
And finally, the most important message is that the war will end one day, and the world should do everything to ensure that Ukraine is not deprived of its greatest talents, especially entrepreneurs. Respect for Ukrainian intellectual heritage and society’s fight for freedom should be reflected in assistance in rebuilding and strengthening Ukrainian elites locally and in efforts to ensure that as much capital as possible flows back to Ukraine.
The full report can be downloaded HERE
