A Russian-born Australian investor explains how Ukrainian startups he supports are adapting to survive

The devastation in Ukraine has put into sharp contrast the ridiculousness of the startup industry’s obsession with capital raising and marketing hype.

The military metaphors baked into our general business strategies become laughable at a time like this. This was explained best by senior lecturer at Harvard Business School, Frank V. Cespedes, in the Harvard Business Review back in 2014, when the US still had six more years in Iraq and Afghanistan:

“Wait for the element of surprise” becomes double the R&D budget; “take the right flank” becomes increase production capacity; “provide air cover” becomes globalise; and “charge!” is a motivational sales meeting.

It’s unsustainable, it’s silly. Building a successful business isn’t about money or hype, and is definitely not about ‘going into battle’.

In the interconnected world with permanent crisis conditions, building startups is about methodically assembling the foundations of a business that, if put under significant stress, can withstand it. 

I was born in the Russian city of Rostov-on-Don, about 70km from the Ukrainian border.

After studying applied mathematics and computer science at my hometown university and a lot of luck coming my way, I managed to move to Australia in 2006 with my wife. I was 29.

Becoming Australian

I’m Australian, and I full-heartedly condemn the so-called special operation of the Russian Federation, which is a full-on invasion of Ukraine.

Back in 2006 you needed an IELTS English Language Test score of 5.0 to get the independent skilled migration visa we received. I scored a 7.5. In hindsight, it wasn’t enough. It has been a steep learning curve, it never ends.

Back in Russia and Ukraine there was, well, everything. Family, friends, business contacts.

My wife and I didn’t know anyone when we moved to Australia, and it’s been the best decision of our lives.

When people ask me why we moved away from our homeland, we say: “You have to live there for 25 years to understand”. Now I don’t have to say a thing. 

Today I’m utterly devastated as Russia’s political elites take the lives of innocent people in Ukraine over their domestic political problems.

It’s beyond words.

 

Backing Ukraine startups

The experience of my family, friends and long-term business relationships in Ukraine are a real lesson for our industry when it comes to building something that can survive.

One startup I work with is called A.D.A.M. Bioprinting from Ukraine.

They’re talking to the Australia’s Therapeutic Goods Administration with the first 3D printed jaw bone being tested in Melbourne. ADAM’s production and R&D is Odesa, Putin’s next target.

We also work with the hyper-casual game development and publishing company Pam Pam Studio,

We invest in and work closely with them. Pam Pam’s base is in Chernihiv, a city that predates Moscow. Pam Pam is working from a bomb shelter to give full to millions of gamers across the globe.

We’re doing everything we can to try to get our people out of harm’s way so they can continue building their lives, while the madness goes on.

What’s been astounding is the informal support networks that have mobilised to get people out of harm’s way and protect what’s valuable to them.

These are the same informal networks that track a company’s journey from birth to success. I’m sure some reading this right now have WhatsApp groups and Telegram channels that track the entire journey of their company with its inner sanctum. We have those groups too, they’re precious.

 

The startup war playbook

What I can tell you from the startups we’re trying to help is there is a distinct playbook that’s emerged.

Like any crisis, this situation calls for a business risk assessment done with a calm head. However, this time around you need to drill down to the most foundational aspects of your business.

This crisis is challenging the very fundamental assumptions of people’s security, relationships, operations, IP and cash flow management.

Starting with the main priority of people’s security, you should know where each and every member of your team is, assess their safety, but don’t stop at it – offer them help that matters. 

Generally speaking, the east of Ukraine is dangerous and you need to get out.

You need details of how to do that and where to go. You need to take individual situations into account, family members, their health conditions, location and circumstances.

For example, in Ukraine, almost all males 18-60 years old are enlisted and prohibited from leaving the territory.

So there’s a discussion to be had about who stays behind and what support levels they need. It’s a logistical nightmare. You need to take care of the people and their families, first.

Then you need to focus on the business again. Whether to move business to Western Ukraine or stay where it is. Some areas are safer, relatively speaking. Look for a way to secure key components in your business. Speaking of STEM businesses, we’re talking IP, technical infrastructure and assets, source codes, hardware, software, their continuous interconnectivity, and security like you’ve never imagined.

Consider where your money is stored, which bank, review and assess each money-flow with the partners and suppliers.

It’s a given that some of that will be impacted by sanctions or consequent business decisions. Think who in your business has approval or exclusive privilege access to the critical elements of your business, and might be a single point of failure.

The chances of failure have skyrocketed in the last two weeks. You need to be practical about mitigations, but sensitive about individual concerns for the sake of the bigger community. 

It’s easier said than done, especially under extraordinary pressure and threat to your life. Hence, any form of support of the key decision-makers and founders is crucial for the success in crisis management. 

All of this mirrors the kind of smart decisions startups founders have to make everyday to sustain the health and wellbeing of their employees, while efficient operations of their businesses.

It’s inspiring, it can be done without a cap raise or marketing, but will go a long way for your next capital raising too.

• Den Burykin is a management consultant and STEM investor who lives in Sydney with his wife and three children.
• If you have friends or family in Ukraine that need assistance, contact him on db[at]fastlane-it.com