Ukraine’s Ministry of Digital Transformation plans to launch a new mechanism to channel domestic capital into the technology sector — Diia City Invest. The draft law, presented on February 18, aims to simplify the creation of venture funds investing in Diia City residents and primarily targets large traditional businesses that have accumulated substantial hryvnia liquidity due to currency restrictions.
Betting on “Excess” Liquidity
Following the National Bank’s introduction of currency restrictions in 2022, including a ban on dividend payments abroad, many large companies continued generating profits but were unable to repatriate funds. As a result, significant cash balances accumulated on corporate accounts.
“Within five to seven years, we expect the launch of 15–20 Ukrainian venture funds,” said Deputy Minister of Digital Transformation Nataliia Denykeieva.
The Ministry’s objective is to redirect accumulated liquidity away from passive assets (such as real estate and parking spaces) toward technology companies and innovation.
Who Has Accumulated the Largest Cash Reserves
Forbes Ukraine analyzed financial statements of major companies since 2021 using YouControl data to identify businesses with the largest growth in the “cash and cash equivalents” category.
The leader in accumulated cash is Kyivstar, with UAH 20.1 billion — more than double the next companies in the ranking.
- Kyivstar — UAH 20.1 billion
- Visa — UAH 9.9 billion
- MetLife — UAH 9.6 billion
- Philip Morris Ukraine
- JTI Ukraine
- British American Tobacco Ukraine
- Coca-Cola Beverages Ukraine
- Carlsberg Ukraine
- Lifecell
- Slots U.A — UAH 2.1 billion (the only company on the list with Ukrainian ownership)
- Nestlé Ukraine
Most companies on the list have foreign shareholders and operate in telecommunications, financial services, FMCG, tobacco, and consumer sectors.
Diia City Invest: What Is Proposed
The draft law provides for:
- a minimum fund size of 1,250 minimum wages (approximately UAH 10 million);
- a maximum size of up to €50 million;
- investments exclusively in Diia City residents (more than 3,400 companies).
Residents of the regime undergo audits and must meet several criteria: at least 90% of revenue from the digital economy, an average salary of at least €1,200, a minimum of nine specialists on staff, no tax arrears, and no ties to Russia.
According to Oleksii Dobronravov, Head of the Diia City project, the mechanism is intended to serve as an additional risk mitigation tool for investors.
Will There Be Demand?
Large businesses have so far responded cautiously to the initiative. Most companies declined to publicly assess the possibility of creating venture funds.
Some market participants believe demand will exist, but not on a mass scale — likely involving dozens of companies rather than hundreds.
At the same time, traditional businesses are already actively investing in IT through M&A transactions. Kyivstar, for example, during the full-scale war:
- acquired Tabletki.ua;
- purchased 97% of Uklon;
- increased its stake in Helsi to nearly 98%;
- is considering the acquisition of GigaCloud.
This model involves acquiring controlling stakes and integrating companies into a group structure, potentially reducing interest in establishing standalone venture funds.
Potential Barriers
Among the risks:
- reluctance to invest specifically in Ukrainian legal entities due to limited predictability of the legal environment;
- competition from alternative instruments (M&A, corporate investments);
- the draft law’s preliminary status, as it continues to be refined in the relevant parliamentary committee.
Some investors traditionally prefer jurisdictions with established legal frameworks, particularly English law.
Investment Takeaway
The Ministry’s initiative represents an attempt to build a domestic venture capital market based on the significant hryvnia liquidity accumulated by large businesses due to wartime restrictions.
If adopted and implemented, the mechanism could result in a new segment of local funds of up to €50 million each, serving as an alternative to external venture capital.
However, the scale of the initiative will depend on three factors:
- the final version of the draft law;
- the National Bank’s currency policy;
- the willingness of large businesses to shift from direct M&A toward structured venture investments.
For Ukraine’s tech sector, this could represent a new source of capital amid a global slowdown in VC funding.
