Ukrainian IT companies attracted about $1 billion in venture capital investments in 2022, mainly these were investments by foreign companies, while the activity of most Ukrainian companies from other sectors that invested in IT development before the war has dropped to zero, said Deputy Minister of Digital Transformation on IT Development Alexander Boryakov.
“I will not give a clear figure. I can guess up to $1 billion last year (the number of venture capital investments in IT) even in conditions of a full-scale war,” he said.
According to him, since the beginning of the war, the interest of venture capitalists in the sector has declined sharply, but activity resumed in the summer. In particular, Blue&Yellow Heritage Fund (the first venture fund of the American company Venture Capital to work with Ukrainian IT-projects – IFU) was founded for $50 million. Also several foreign funds ready to invest over $10 million each are known, added the deputy minister.
“I do not see people in Ukraine today who would allocate funds for this. Just imagine, before the war, the same DTEK, Metinvest had groups that were engaged in innovations and investments. However, I don’t think that against the background of how many facilities suffered because of the full-scale Russian invasion, these groups have funding. Kyivstar, Vodafone, Pinchuk’s group had similar projects. Now the majority of the projects are winding down”, – Mr. Boryakov said.
He added that about $15 million have been attracted as grants and donations. Approximately $0.5 million in grant support has been provided by partners from USAID CEP, WNISEF, GIST, EIT Raw materials and YEP. About $40 million from the beginning of full-scale war is estimated by Google, grants were also provided by Microsoft and Amazon.
The top three areas of interest to investors, according to Boryakov, include web3, mil-tech, and artificial intelligence.
The deputy minister did not make predictions about possible investments that could be allocated to the IT-sphere in Ukraine in 2023, noting that “much will depend on the situation with military action.”
“However, with the initiative that we launch (mil-tech startups), if done right, it is possible to attract even more funds (than in 2022),” he said.