Advantages and Difficulties of Establishing Startups in Ukraine

by Olha Povaliaieva
Tuesday, October 5, 2021
Advantages and Difficulties of Establishing Startups in Ukraine

Ukraine is in 34th place in the "Global Startup Ecosystem Index 2021" among 100 countries of the world and 11th among European countries

"The Ukrainian startup ecosystem is truly inspiring. The country has been going through economic difficulties for several years but still manages to create technology that is both scalable and global," said analysts at the Global Startup Ecosystem Index 2021.

As many as 6 cities of Ukraine were included in the 1000 most prosperous cities in the world for founding straps:

  • Lviv — 255th place;
  • Odesa 394;
  • Kharkiv 513;
  • Ternopil 787;
  • Dnipro 883.

"Some examples of companies originating in Ukraine are Grammarly, Reface, and Preply, all with massive global member bases."

Kyiv, the capital of Ukraine, has been marked by several victories at once:

  • Top 20 ranked cities — ranked 11 out of 20;
  • Software & Data Rankings — 19 out of 25;
  • Marketing & Sales Technology Rankings — 20 out of 25.

"The main reason for Ukraine's success is the talent of their developers, who are sought after by many foreign companies, either remotely or in local development centers. Although the cost of living in Ukraine is low by western standards, and foreign clients are well-paying developers, many give up on this easy cash and opt to build their startup. If this mentality continues, Ukraine is on the path to greater success and a leadership role in the global startup ecosystem." 

According to the Global Startup Ecosystem Index report, Ukraine has inherent factors that complicate the foundation of startups: a complex tax system, an overgrown bureaucracy, and, as a result, a lack of investment. In 2020, $571 million was invested in Ukrainian startups, but most assets were from abroad. Among other things, Ukraine is in danger of an "intellectual outflow" young talented Ukrainians are moving to countries with a more developed IT and startup environment, unable to develop in their native country.

"Considering the political situation in the country, the Ukrainian public sector may not have enough resources to support the local startup ecosystem actively, but it still enjoys the fruits of economic success; going forward, the government will have to continue improving infrastructure and quality of life to make sure its talented entrepreneurs do not leave the country, especially since Poland is opening its doors to Ukrainian immigration."

You will be interested