The Ukrainian Startup Fund (USF) has begun accepting grant applications from local tech startups, Ukraine’s Cabinet of Ministers announced on Dec. 2.
The state-owned fund will provide selected startups with grants ranging from $25,000 to $75,000 to boost development. The fund’s total budget is $18 million.
Launched by the Cabinet of Ministers, the USF provides pre-seed and seed funding for Ukrainian tech firms, meaning that the money will go to fund early-stage startups that only have prototypes of future products and need capital to develop their products further.
Every startup has to have an element of tech and can be on the periphery of other industries and IT, including adtech, fintech, internet of things and big data. The startups also have to be registered in Ukraine with at least 50% Ukrainian ownership.
The mission is to “help Ukrainian entrepreneurs create successful companies,” according to the fund’s website.
A selection panel of independent investment experts will choose grant recipients and determine the size of each grant, according to the fund’s website.
The Finance Ministry under current Minister Oksana Markarova is overseeing the development of the fund and reports to the secretary of the Cabinet of Ministers.
Ukraine’s Prime Minister Oleksyi Honcharuk, presenting the official launch of the fund at a Dec. 2 press briefing, said the government hopes to invest up to $10 million by 2021.
“By the end of this year, we will give out the first $1.6 million to business projects that will be selected,” Honcharuk said. “The next stage is to give away $2.5 million a quarter. That is almost $10 million in total for 2020.”
On its first day, the fund already received 12 applications.
The first startup pitches will be presented to the tender by the end of 2019. After the fund distributes a grant, it will provide follow-up training and business development support, including help attracting more investments.
Olga Afanasyeva, the head of Ukrainian Venture Capital and Private Equity Association (UVCA), some members of which are advising the Startup Fund, told the Kyiv Post she admires the “strong advisory board” at the fund, praising the fact it consists of true professionals.
However, she says there are minor questions to be resolved. For example, one of the main requirements for a startup is that the company has to be a part of the local information technology sector and to “dream big.”
“(While the idea of tech startups) is to do business not only in Ukraine but also to aim at a global level of success,” Afanasyeva said.
Afanasyeva also insisted on the creation of joint funding for this initiative, with only 5% in funding by the Ukrainian government and the rest provided by international organizations. That way, the model would be more sustainable and less dependent on the Ukrainian taxpayers, as it is now.
Back in November 2018, Ukraine’s Cabinet of Ministers approved the fund with a more modest budget of $1.8 million, which has increased by 10 times in the last year.
