Foreign businesses and investors call Ukraine an inspiring country: Despite years of economic difficulties, it still manages “to create technology that is both scalable and global,” reads the annual global Startup Ecosystem report published in June 2021.
According to the report, Ukraine ranked 34th in the list of 100 startup-friendly countries — it lost five points compared to last year when it ranked 29th in the world.
Kyiv, Ukraine’s capital, is the go-to place for techies who want to found a startup, the report said. However, the city “had a rough year” in 2020 and lost 16 points in the global ranking. Now it ranks 48th in the world, followed by Detroit, Mexico City, and Dublin.
Apart from Kyiv, the list of 1,000 startup-friendly cities features five Ukrainian cities: Lviv that grew by an impressive 99 points and now ranks 255th, Odesa that dropped to 394th place, Kharkiv in 513th place, Ternopil — in 787th and Dnipro — in 883d place.
The reason why Ukraine is so popular among startups, according to the report, is that it has more than 200,000 talented developers highly sought after by many foreign companies. Big international businesses like Viber, Amazon and Samsung hire Ukrainian tech specialists to work for them remotely or from research and development centers in Ukraine. Life in Ukraine is affordable because the cost of living here is low by Western standards, while employees who work for foreign businesses are well-paid.
But many Ukrainians “give up on the easy cash,” the report said — and choose to build their own startup to attracts money and customers from abroad. Many people don’t even realize that world-popular services like grammar and spell checker Grammarly, mobile app Reface that swap faces in videos and images or the language-learning platform Preply have Ukrainian founders. If the number of successful Ukrainian startups like these continues to grow, Ukraine will become a leading country for tech businesses, the report said.
The life of a local startup in Ukraine isn’t easy. According to the report, it is difficult to establish a company in Ukraine due to complicated taxes and omnipresent bureaucracy. In addition, startups lack investments. As a result, there are only around 1,000-4,000 startups in Ukraine. In contrast, Israel, ranked third by the 2021 Startup Ecosystem report, has 9,000.
Although last year tech companies with Ukrainian roots attracted $571 million from investors, most of the money came from abroad. Ukraine has less than 40 investment funds, while Israel has hundreds.
Another problem for Ukrainian startups is the so-called ‘brain drain,’ when developers leave the country in search of the better place to grow a business. The report said that the state and private stakeholders need to keep their talented workforce in the country by building better infrastructure and improving the quality of life.
Ukraine needs to “make sure that its talented entrepreneurs do not leave the country, especially as Poland is opening its doors to Ukrainian immigration,” the report reads.
