More at stake in Ukraine than meets the eye

On Feb 27, 2022

I had another topic planned for this Sunday, but by Thursday morning, when Russia launched its attack on Ukraine, this crisis had become too big to ignore. It scarcely needs to be said that those hit hardest are the people of Ukraine, and the greatest tragedy has been the loss of life they have suffered and may still suffer in the coming weeks.

Yet the shock and dismay felt from the invasion has been widespread. Many have friends and family who are gravely impacted. In the tech and venture capital industries there will be companies—with colleagues in the country—for whom the crisis has a personal dimension, PitchBook among them.

Like the pandemic that we are not yet fully recovered from, the latest international crisis has demonstrated how easy it is to take for granted what is “normal” and driven home just how interconnected we all are.

This article appeared as part of The Weekend Pitch newsletter. Subscribe to the newsletter here.

When it comes to the sheer volume of VC investment in European countries like the UK, France and Germany, Ukraine has always had a relatively modest amount of startup activity, so our coverage of the country has historically been light. But it would be a mistake to let that diminish Ukraine’s contribution to startup growth, not just in Europe, but across the globe.

Ukraine is a country full of highly educated tech professionals, and it has long been one of the world’s top destinations for IT outsourcing, with a talent pool of some 200,000 software developers, based on 2019 figures. According to PitchBook data, there are at least 158 Ukraine-headquartered companies that have received VC or angel backing, and almost 300 such companies with a secondary office in the country.

Furthermore, its deep talent pool has also created a diaspora of tech professionals that help drive innovation around the world, whether in London, Berlin, New York or San Francisco. Several successful startups and unicorns that have emerged in recent years have been the product of Ukrainian founders. Among them are Nasdaq-listed software company GitLab, online writing assistant Grammarly and B2B software company People.ai.

The ripple effects may continue to be huge outside Ukraine, and many of us have something at stake. For some startups, the short-term business impact has been mitigated. A number have planned ahead, moving staff and operations to safer areas or out of the country altogether. San Francisco-based Grammarly, which was founded in Ukraine, announced that it has temporarily shifted some of its Ukraine operations abroad as staff seek safety. Mac software developer MacPaw, which was founded and operates primarily in Kyiv, has said it will continue operations as well, due to its infrastructure being hosted on servers outside of Ukraine. It has also launched an emergency plan to ensure the safety of its staff.

But these contingencies are little consolation to the human cost we are facing. Many startups and tech companies have employees that are fleeing with their families and—as surreal as it sounds in 21st century Europe—some individuals will be stepping away from their desks to pick up guns and defend their homes.

There will be major long-term geopolitical and economic repercussions, too. The neighboring Baltic nations that sit near Russia’s border—Estonia, Lithuania and Latvia—will be watching events unfold with trepidation, wondering if their own security can be guaranteed. Like Ukraine, these countries have developed into significant centers of innovation, not least of them unicorn-rich Estonia, which has given birth to the likes of Skype, Wise and Bolt.

Sanctions being rolled out now aim to punish the Kremlin regime, but they will also potentially impact Russian startups that have no control over their government or any desire to see Ukraine attacked.

In a world where many of us live, work and collaborate in an international context, the idea that the actions of one man’s regime can be so disruptive and destructive feels like it belongs to another century—and in truth it should.

What will come in the next few weeks and months is impossible to predict. By the time this article is published, Kyiv may well have fallen and hundreds of people may die in the fighting. And yet, hope remains.

At the very least, these past few days have highlighted a global community that is united in both grief and resolve. It’s a community that also values the freedoms that have kindled remarkable innovation and progress in Europe and around the world—these are freedoms that will not be easily extinguished.