US investors raise $30 mln to fund Ukrainian startups
Over the next 5–10 years, the fund will invest in 15–20 early-stage startups founded by Ukrainian entrepreneurs or where Ukrainian refugees work, the Kyiv Independent reports.
What is the problem?
Many Ukrainian startups suffered losses from the war and now need to revise their business strategy, undermined by the global financial crisis. More than 90% of Ukrainian startups said they want financial support to continue their work and expand.
What is the solution?
New York's FF Venture Capital created a $30 million fund to support Ukrainian startups. It is reported that the Blue & Yellow Heritage fund is the first Western venture capital fund focused exclusively on the Ukrainian startup market.
"When the war broke out, we wanted to figure out how we could make the most difference in Ukraine and step in to fill the sudden drop of liquidity in the country," the fund's Ukrainian venture partner Denys Gurak said.
How does it work?
Over the next 5–10 years, the fund will invest in 15–20 early-stage startups founded by Ukrainian entrepreneurs or where Ukrainian refugees work. FF Venture Capital aims to raise another $20 million to bring its total support to $50 million.
Much of the funding for Ukrainian startups is now available in the form of grants from US tech giants such as Google and Amazon, as well as the Ukrainian state startup fund, which provides grants to military-technical startups.
After all, the Ukrainian tech industry is well immune to crises–times have not been easy for businesses in Ukraine. Yet, Ukrainian startups managed to get $832 million in funding in 2021 alone.
Does it work?
The company invested in Ukrainian technology startups. In 2019, ffVC invested in Kyiv-based startup Respeecher, which generates voices for games, movies, audiobooks, and podcasts. The Respeecher technology was used to reproduce the voice of a young Luke Skywalker in the latest episode of The Mandalorian, a spin-off series in the Star Wars universe.
"We realized we can offer a lot of value and funding to Ukrainian entrepreneurs when they need it most," Gurak said.
The fund doesn't plan to open a representative office in Ukraine; instead, it cooperates with local investors, such as Gurak, and with Ukraine's Ministry of Digital Transformation.
Many Ukrainian startups were not discouraged by the war and continued developing their business. They were helped by what experts and startups call "global thinking."
Most Ukrainian startups are registered in the USA and have offices worldwide. Every fifth Ukrainian startup considers the world market to be its primary market.
People outside of Ukraine may not even know that some famous startups such as Affirm, Grammarly, Revolut, and GitLab were founded by Ukrainians. Usually, their core team works in Ukraine.
"(In Ukraine), we see an opportunity to not only fill the current funding void but to continue to help talented teams grow and become large successful international companies," the company said in a statement.
Reference: FF Venture Capital was founded by British investors John Frankel and American Alex Katz in 2008 amid the global economic crisis. The fund focuses on startups working in financial technology, real estate technology, artificial intelligence, drones, and robotics. Over the next 12 years, the fund invested in 140 companies, earning $15 billion. His average investment is $700,000.