Ukraine looks to technology to help rebuild its economy amid Russia’s onslaught

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  • Ukraine was a notable presence at the Webb summit, where it sought support from the global tech community to strengthen its fight against Russia.
  • Ukrainian officials and entrepreneurs said the technology would be crucial to helping the country rebuild after Russia’s invasion.
  • Some companies are hiring in Ukraine on the condition that the country’s tech industry will be strengthened after the war ends.
  • Venture capital firms are also raising millions of dollars to support Ukrainian tech entrepreneurs.

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Lisbon, Portugal — As the war in Ukraine continues, the country’s technology entrepreneurs are trying to stay positive.

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Valery Krasovsky, CEO and co-founder of Sigma Software, told CNBC on the sidelines of the Web Summit technical conference, “I don’t think there’s anything in the world that kills our ability to win and our ability to work or do anything.” could.” in Lisbon.

sigma, which has 2,000 employees Based in Ukraine, it equipped its offices with diesel generators and Starlink Internet terminals to allow employees to continue working amid Russian shelling of critical energy infrastructure.

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“There can be nothing that can stop us from delivering business even under these circumstances,” he said.

Sigma was one of 59 Ukrainian start-ups that took part in the event last week. Ukraine was a notable presence at the Webb summit, where it sought support from the global tech community to strengthen its fight against Russia.

In 2021, there was a small booth at the Web Summit in Ukraine, Krasovsky said. This year, it had a huge stand, illuminated in yellow and blue. It was surrounded by a flood of visitors, with Ukraine’s first lady Olena Zelenska – accompanied by armed guards as she passed the venue – among them.

On opening night, Zelenska gave a passionate speech calling on tech entrepreneurs and investors to help her country.

“You are the force that moves the world,” Zelenska, the wife of Ukrainian President Volodymyr Zelensky, told a packed audience on Tuesday.

While Russia uses technology for “terror,” the international community has “technologies that can help, not destroy,” she said.

Russia has called its offensive a “special military operation”. For Ukraine, however, it is an unprovoked land grab aimed at undermining its sovereignty.

rebuilding with technology

Ukrainian officials and entrepreneurs said the technology would be crucial to helping the country rebuild after Russia’s invasion.

Moscow launched its invasion of Ukraine in February, and the war devastated the country’s economy. Its GDP has declined by 30% so far this year, according to data from the Ministry of Economy.

The World Bank estimates that Ukraine’s GDP will shrink by 45% throughout 2022.

“People inside Kyiv and some other cities, they’re building, they’re doing business, they’re still exporting,” Dima Shvets, CEO and co-founder of Ukrainian social media startup Riface, told CNBC.

Whites runs Reface away from London, where he lives with his wife and their four-year-old daughter. About half of their approximately 200-person team continues to work in Ukraine. When the bombing begins, the people use the basement of the Ukraine outpost of Refes as a shelter to hide.

Shvets said Refes has rented a hotel for 50 people with separate infrastructure for electricity in the western part of Ukraine so that they can continue to work safely. They have tried to “settle” relocation workers to Portugal, he said – but it has been difficult to persuade them to leave.

“People have homes, families in Ukraine,” he said.

In an interview with CNBC’s Karen Tso, Ukraine’s First Lady said that the role of technology in Ukraine was “impossible to overestimate”.

“In this situation, it is difficult to talk about sustainability, technology, progress, because we are trying to keep and live our lives as normal as possible,” Zelenska said. “Nevertheless, we have a lot of startups, and I hope that all the ideas presented at this summit can push us to victory.”

However, as winter approaches, Ukraine will need more than just IT investments to see it through the difficult months ahead.

There have been reports of widespread power blackouts lasting several hours across the country. According to the government, about 40% of Ukraine’s energy system has been destroyed.

“Ukraine needs more weapons, more military support,” Zelenska said, specifically calling for air defense missiles.

capital is coming

Ukraine’s IT industry brought in $2 billion in revenue in the first quarter of 2022, a 28% year-on-year increase despite the devastation caused by Russia’s invasion, according to the National Bank of Ukraine.

The war has displaced millions of Ukrainians, including technology professionals. Many have joined roles overseas. Hopefully those laborers will return once the fighting is over.

Some companies are hiring in Ukraine on the condition that the country’s tech industry will be strengthened after the war ends.

Two months ago, Lithuanian VPN software firm Nord Security opened an office in the western Ukrainian city of Lviv. According to CEO Tom Oakman, the company plans to hire 100 people there.

“We think it’s time to build Ukraine back and we think the talent there is great,” Oakman told CNBC.

He said Ukraine is home to thousands of skilled software programmers and engineers. “Just imagine how many US companies have IT outsourcing to Ukraine”, he said.

Many of the founders of the billion-dollar “unicorn” come from Ukraine, including Grammarly’s Max Litvin and Alex Shevchenko and GitLab’s Dmitry Zaporozhets. Google, samsung And heroine There are also research and development centers in the country.

But Ukraine’s tech ecosystem faces challenges beyond war. The country’s enterprise landscape is still evolving. So far this year, startups in the country have attracted only $22 million, according to data from Dealroom.

“There’s no major inflow of capital to support what we do,” said ReFace’s Shvets. “What we must do right now is to show more examples of entrepreneurship.”

Shvets said the government in Ukraine should assist local entrepreneurs in the country with tax incentives and other pro-business initiatives.

There are signs that sentiment for Ukraine from tech investors is improving, however. Last month, Horizon Capital, a Kyiv-based VC firm, raised $125 million for a startup fund aimed at supporting Ukrainian founders.

SID Venture Partners, a venture fund founded by Sigma and fellow Ukrainian tech firms Ideasoft and Datrix, has so far invested in 10 startups with Ukrainian founders, Krasovsky said.

After raising an initial $15 million in December 2021, it plans to raise an additional $50 to $60 million from institutional investors. “There is great interest,” Krasovsky said.

Credit: www.cnbc.com /

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