The state-owned Ukrainian Startup Fund (USF) has provided grants worth around $5 million to 180 startups since December 2019, said Olexandr Bornyakov, deputy digital transformation minister, during the conference iForum 2021 on June 18.
According to him, USF became the largest angel investor in Ukraine and one of the biggest angel investors in Eastern Europe.
So far, USF has received more than 3,000 applications from startups. Each of the selected startups received up to $85,000 for development: $25,000 at the pre-seed round, when a startup was at the idea or prototype stage; $50,000 at the seed round for a minimum viable product; and $10,000 for acceleration.
Startups can receive grants if they are registered in Ukraine, although their founders can come from abroad. The fund has started to receive applications from citizens of Israel, Georgia, Italy, Brazil and Belarus, according to Bornyakov’s presentation.
“The Ukrainian Startup Fund is a comprehensive approach to the development of the startup ecosystem,” Bornyakov says.
USF began accepting grant applications on Dec. 2, 2019. It then pledged to invest around $10 million in Ukrainian startups in 2020, but it failed to fulfill its promise.
Experts assess the USF positively but there are some criticisms. Olga Afanasyeva, the head of Ukrainian Venture Capital and Private Equity Association, says that it would be better if the USF model were less dependent on the Ukrainian taxpayers. She suggests creating joint funding for this initiative, with only 5% in funding by the Ukrainian government and the rest provided by international organizations.
There are around 1,000-4,000 startups in Ukraine, while in Israel the number of startups has reached 9,000, and in Estonia – 2,000. Comparatively, each of these countries has populations of around 1 million people, while Ukraine’s is nearly 42 million citizens, said Bornyakov.
At the same time, Ukraine has less than 40 investment funds while in Israel, hundreds of investment firms operate.
However, despite economic difficulties and a lack of governmental support, Ukraine ranked 29th out of 100 startup-friendly countries, with Kyiv listed 8th among capitals in Europe and 32nd in the world, according to the global Startup Ecosystem report 2020.
