Despite economic difficulties and a lack of governmental support, Ukraine’s startups are thriving and the country is among the best places to grow a new, innovative business, a recent survey has concluded.
According to the global Startup Ecosystem report, in 2020, Ukraine ranked 29th out of 100 startup-friendly countries, with Kyiv listed 8th among capitals in Europe and 32nd in the world.
That means Ukraine has climbed two points in the ranking compared to last year and now places in the top 30 countries.
The study defines a startup as “any new business that applies an innovative technological solution.” To evaluate the ecosystem in which startups operate, the survey measures three main variables: the quantity of startups, their quality and the business environment in the country.
Quantity
In the quantity category, the study measures the number of startups that have originated from the country, as well as the number of local coworking spaces, startup events, and accelerators — programs that support young startups through financing and mentorship.
Ukraine scores 0.84 in terms of quantity, slightly less than many other countries. For example, in neighboring Poland, that number is 1.19. In Russia, it’s 1.94, in Hungary – 1.00 and in Romania – 0.97.
According to the research center StartupBlink, Ukraine has 462 startups, and the most popular are cashback-service LetyShops; desktop app Mobalytics, which helps to enhance performance in the League of Legends computer game, and the broadcasting service Livestream.
The research said that “brain drain” is the main risk for the country’s startup ecosystem.
Many foreign companies seek out Ukraine’s developers, and local IT specialists need incentives to stay in the country — “especially now that a visa to Europe is no longer needed and Poland is smartly opening its doors for Ukrainian immigration,” the study said.
Quality
The quality of startups is measured based upon their customer base, the number of monthly visits to their website or app and the presence of global coworking brands and mass startup events in their country.
Ukraine’s quality score is 2.18 – higher than in Austria, Poland, the Czech Republic, Italy and Belgium.
The study said that the main reason for Ukraine’s success in this area is the high quality of its developers.
If the current pace of innovations continues, the country can achieve an even larger leadership role in the global startup ecosystem, the study concluded.
Business environment in Ukraine
Ukraine’s business environment score is 2.04, the second-lowest in the top 30 countries. Only India scores lower.
The study said that the public sector in Ukraine is unable to actively support the local startup ecosystem.
Despite long-standing economic difficulties, “the country still manages to create technology that is scalable and global,” the research concludes.
Among the successful businesses that originated in Ukraine, the study mentions Grammarly, Gitlab, and Ahrefs, all of which have massive member bases.
European hub
According to the survey, Kyiv has a ranking that many European capitals can only dream of.
It places 8th in Europe after London, Berlin, Moscow, Paris, Amsterdam, Barcelona and Stockholm.
However, other Ukrainian cities with startup ecosystems — including Lviv, Odesa, Kharkiv and Ternopil — have fallen in the rating and currently rank between 350th and 730th place.
“The massive disparity between Kyiv and other Ukrainian cities is not sustainable in the long term,” the survey said.
