Military-tech startups in Ukrainian Startup Fund to be singled out – Deputy Minister – Interfax-Ukraine

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18:21, 24.02.2023

3 min read

Military-tech startups will be singled out as a separate section within the Ukrainian Startup Fund (USF), which will increase their funding and advising support to create projects in accordance with NATO standards, Deputy Minister of Digital Transformation for IT Development Oleksandr Borniakov has said.

“The Startup Fund was handed over to us. Now, it has a brand (USF) that will remain and will continue working. However, an additional direction is being created in parallel, which will focus on military-tech startups. Soon, we will announce the details of its launch, it will be public,” Borniakov said in an interview with Interfax-Ukraine.

He said that the budget of the USF fund at the beginning of the full-scale war was UAH 300 million. Part of this amount was used to buy back war bonds, which will be redeemed in October, as a result of which the Fund will receive UAH 125 million. The rest of the funds are used to finance dual-use startups and the implementation of agreements already concluded under previous programs, as well as the Fund’s operational activities.

Ukrainian military-tech startups will claim commercial success even after the end of the war if they are built according to NATO standards, for which startups need to be provided with assistance, funding, and expertise, the Deputy Minister said.

According to him, new startups appear regularly, and most of them are now appearing in the field of military-tech. At the same time, the pace of funding and opportunities to attract it has decreased, Borniakov said. “This does not mean that there is no money at all or the situation is worse than before the war. And although many Ukrainian funds left the market at the same time, many funds from other countries, on the contrary, entered,” he said.

Borniakov said that before he began working at the Ministry, he himself invested in dozens of projects and participated in the development of initiatives related to angel funding.

In 2022, USF financed projects totaling UAH 47.4 million. At the same time, financing of projects under the dual-use program amounted to UAH 28 million. “Applications are accepted on an ongoing basis, the key industries are cybersecurity, health care, education, defense, and infrastructure restoration. Thus, the Fund continues issuing grants for military-tech and finance agreements concluded under previous programs,” Borniakov said.

He added that Fund managers are constantly working to find sources of non-state funding for USF. In the near future, in particular, a decision is expected on the European Union program for the provision of EUR 20 million for the development of startups, in which USF participates in the applications of three consortiums out of 11. “There is a chance that the decision will be positive and it is the application with the participation of the Ukrainian fund that will be approved,” Borniakov said, adding that there are also several funding initiatives from Estonia.

According to him, the creation of the Fund of Funds has been put on hold for the time being. In 2020, UAH 500 million was provided for the implementation of this initiative, there were plans to attract funding from the EIB, EBRD and other structures. “However, when the full-scale war began, this money was taken from us, and now the whole story is on pause again,” Borniakov said.

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