Every serious technology investor needs to put Ukraine House Davos top of their agenda at this year’s World Economic Forum. The axis of technology development is already shifting from Silicon Valley and Ukraine has a unique offering for investors. While remaining a low- cost environment, Ukraine is a global hub of innovation technology, served by almost 200,000 software developers in over 4,000 tech companies.
After the bursting of the initial dot-com bubble at the turn of the millennium, I was part of the brain drain leaving France for the United States, then the land of opportunity and tech entrepreneurs. Arriving to work in Ukraine less than six months ago, I am more stimulated by the opportunities and challenges here than when I arrived in Silicon Valley in 2004.
Two things surprised me when I took up my post at the tech hub, UNIT.City. I knew about the critical mass of Ukraine’s technical talent but I had not appreciated the maturity of companies working in the sector nor their global perspective and ambition. The realization that Ukraine is a cradle of next-generation technology innovation quickly replaced my perception of a skilled, low-cost outsourcing destination with a range of domestic-focused start-ups.
Ukraine knows it is not inevitable that next-generation technology will be dominated by the USA global tech giants. There is – and should be – an alternative to the Silicon Valley model: start-up, growth, sale to a tech giant and move the business – if not already there – to California. This old model has applied equally to start-ups whether in Rhode Island, London and Berlin and even Beijing.
Governments and business advocacy groups can encourage and fund tech hubs and start-ups, but there can be no long-term value if success leads to talent and business diaspora. Ukraine has a critical mass of talent to support the full-lifecycle of tech businesses. To avoid a diaspora, there are two obstacles that need to be addressed.
The first is access to capital to fund growth. This is an issue for all tech start-ups, even in Silicon Valley, but Ukraine suffers exceptional barriers arising from outdated reputational misconceptions. There has been a steady program of anti-corruption measures, economic reform, and growth of institutional capacity since the 2014 EuroMaidan Revolution that ended Viktor Yanukovych’s presidency, and now accelerated by the election of the 2019 election of President Volodymyr Zelensky and the start of a new government. Investors, while still needing to exercised caution and to carry out significant due diligence, can now be confident that title to their investments should be protected by the rule of law.
We have stand-out investment opportunities but we need more capital. We recognize the role of investment funds, such as Horizon Capital, in providing a steady source of funds and guidance for over 25 years. But Ukrainian tech needs to attract capital from a wider range of investors to reach its potential as a viable competitor to Silicon Valley.
We also need to build a complete innovation eco-system in Ukraine and ensure technical talent is complemented by an entrepreneurial mind-set and support infrastructure. This is the ambition of UNIT.City, Ukraine’s first innovation park, where tenants have access to a package of business development services, such as commercialization and fundraising advice, legal services, coaching, mentoring and accelerator programs, and prototyping laboratories. Here established companies, start-ups and outliers can collaborate, hone the quality of their products and services and ramp up their growth.
Ukraine has already proved a new model is possible: start-up, international growth and partnerships, and yet remaining fundamentally Ukrainian. Petcube has demonstrated that you can become the leading international business in a new sector, remain based in Ukraine and yet have a strategic partnership with Amazon.
And Ajax Systems, a global leader in wireless security, is proof that being based in Ukraine is no hindrance to export sales to over 75 countries generating 70 percent of revenues. The foundations of the team are world-class Ukrainian engineers and developers with the 500-person team and all its production based in Ukraine.
So, come to Ukraine House in Davos to learn about the opportunities for investment and meet some of the entrepreneurs and programmers who are building a different future.
Dominique Piotet is chief executive of UNIT.City.
