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  • Writer's pictureDan Herman

Made with bravery - Ukrainian startups keep growing despite the war

Back in June (2022) I happened to run into a government official from Ukraine who was visiting Toronto for the Collision tech conference. Over coffee we joked that I should travel to Kyiv to film a documentary on the country's tech ecosystem... the ongoing war being only a small impediment. Fast forward to September and in the course of an email exchange, said-government-official noted that now would be a good time to visit. And so after reassuring my wife that things were indeed calm in the capital, my colleague Chase Kaiser and I flew to Poland for the first leg of our journey to Ukraine. From there we boarded a train that would eventually take us across the border into Western Ukraine and, thereafter, towards the capital, Kyiv. The full result of our travel can be seen here: Made with Bravery

And what follows is a short article on the war and the country's resilience tech ecosystem.

------ This Monday’s missile attacks on Kyiv shattered what was, for the past several months, a relative calm in Ukraine’s capital city. I was there the week before and had found that calm difficult to square with the ever-present risks that Monday’s attacks drove home. Yet despite those risks what I found was a city, and a country, defying the odds to try to get on with some form of normalcy. Parents walked their kids to school, the metro hummed with passengers and restaurants, while not bustling, did a brisk business. Yet amidst that calm, road blocks and military installations reroute traffic throughout the city, and air raid sirens shattered the brisk fall air, reminding everyone of the ever present risk that Monday’s attacks drove home.

As I met people throughout the city, largely startup founders, their investors and related stakeholders, I kept being asked what I think of their city at war. “It seems normal,” was the best I could find to describe it, acknowledging that a veneer of normalcy hides a tense and stressful existence for those in the city.

This is what makes the story of Ukraine’s startup ecosystem so fascinating. For despite the effects of the invasion, notably the wanton destruction of civilian infrastructure that is far too evident just miles from Kyiv, and a national gross domestic product that experts predict will shrink by between 30 and 50 percent, Ukraine’s tech sector has gone the other way. In fact, Ukraine’s IT sector grew by upwards of 27% in the first 6 months of 2022, after having grown 36% in 2021, and now represents nearly half of the country’s total exports.

Since the full-scale invasion began in February, much has been said, justifiably, about the global importance of Ukraine’s agricultural economy, Ukraine has also become Europe’s largest exporter of IT services thanks to a talent pool of nearly 300,000 IT professionals. And while outsourcing helped build the first wave of Ukrainian IT success, increasingly this talent is taking the experience and insights gained working for European, American and other tech firms and building homegrown startups. This second wave of Ukrainian tech expertise was composed of over 3,000 startups prior to February 2022, with global tech unicorns like Grammerly and Gitlab amongst them.

That this ecosystem was flourishing before February is one-thing, that it has continued to grow is certainly another. But after having spent a week interviewing people in the country’s tech ecosystem, I’m no longer surprised. For in interview after interview I found story after story of resilience and bravery. Of coders working in bomb shelters, of CEOs delivering supplies (notably sausages and cabbages in a Tesla) to occupied villages and in every case, of companies reorienting technology, processes and profits to help their country win. Simultaneously the Ukrainian Ministry of Digital Transformation called for volunteers to create what is a now a 1000 volunteer-strong cyber-warfare unit or IT Army that has repelled over 6000 digital threats to the country’s critical infrastructure. Talk about on the job training. After a few days in Kyiv, I made my way by train to Lviv, near the Polish border, where the country’s tech ecosystem gathered for the first time since the beginning of the full-scale invasion for an event called IT Arena. There too air raid sirens periodically brought what was otherwise an event brimming with optimism and energy to a pause as we all shuffled down to the bomb shelter below us. Yet throughout the two-day event what was evident was the world-class quality of dozens of startups pitching for cash prizes, as well as a growing alignment of this startup ecosystem with the needs of a country and government at war. Cyber, artificial intelligence, robotics, blockchain. They’re all building blocks both for Ukraine’s immediate wartime needs as well as for what’s next.

That future depends, evidently, on winning the war. And doing so will reveal the full extent of destruction - economic, social and physical - inflicted on the country. The subsequent task of rebuilding the country and its economy will be an arduous one. But as I learned while there, there’s no manual for the type of operational learning that Ukraine’s tech sector has experienced. And while it’s tough to be optimistic during a war, as I boarded my train in Lviv destined for Poland, I couldn’t help but think that the resilience I saw across the country’s tech sector is primed to be a powerful springboard for Ukraine’s economy into the future. If Canadian policy makers, investors and companies alike are smart, they’ll be first in line to help.

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