Ukraine looks to technology to help rebuild its economy amid Russia’s onslaught

LISBON, PORTUGAL — As the warfare successful Ukraine rages on, the country's exertion entrepreneurs are trying to enactment positive.

"I don't deliberation there's thing successful the satellite that could termination our quality to triumph and quality to bash enactment oregon anything," Valery Krasovsky, CEO and co-founder of Sigma Software, told CNBC connected the sidelines of the Web Summit tech league successful Lisbon.

Sigma, which has 2,000 employees based successful Ukraine, equipped its offices with diesel generators and Starlink net terminals to let employees to proceed moving amid Russian shelling of captious vigor infrastructure.

"Nothing could hap that would halt america delivering business, adjacent successful these conditions," helium added.

Sigma was 1 of 59 Ukrainian start-ups that attended the lawsuit past week. Ukraine had a notable beingness astatine Web Summit, wherever it sought enactment from the planetary tech assemblage to bolster its combat against Russia.

In 2021, Ukraine had a tiny booth astatine Web Summit, Krasovsky said. This year, it had a overmuch larger stand, lit up successful yellowish and blue. It was surrounded by floods of visitors, with Ukraine's archetypal woman Olena Zelenska — accompanied by equipped guards arsenic she passed done the venue — among them.

On the opening night, Zelenska made an impassioned code calling connected tech entrepreneurs and investors to assistance her country.

"You are the unit that moves the world," Zelenska, the woman of Ukrainian President Volodymyr Zelenskyy, told a packed assemblage Tuesday.

Whereas Russia uses exertion for "terror," the planetary assemblage has "technologies that tin help, not destroy," she added.

Russia has called its penetration a "special subject operation." To Ukraine, however, it is an unprovoked onshore drawback aimed astatine undermining its sovereignty.

Ukrainan officials and entrepreneurs said tech would beryllium cardinal successful helping the state rebuild aft Russia's invasion.

Moscow began its penetration of Ukraine successful February and the warfare has decimated the country's economy. Its gross home merchandise has shrunk by 30% truthful acold this year, according to figures from the system ministry.

The World Bank estimates that Ukraine's gross home merchandise volition declaration 45% during the full of 2022.

"People wrong Kyiv and immoderate different cities, they're building, they're making business, they're inactive exporting," Dima Shvets, CEO and co-founder of Ukrainian societal media startup Reface, told CNBC.

Shvets runs Reface remotely from London, wherever helium lives with his woman and their four-year-old daughter. Around fractional of his near-200 idiosyncratic squad proceed to enactment successful Ukraine. When the bombing starts, radical usage the basement of Reface's Ukraine outpost arsenic a structure to hide.

Reface has rented a edifice for 50 radical successful the Western portion of Ukraine with abstracted infrastructure for energy truthful they tin proceed to enactment safely, Shvets said. It has tried to "organically" relocate workers to Portugal, helium added — but convincing them to permission has been difficult.

"People person houses, families successful Ukraine," helium said.

In an interrogation with CNBC's Karen Tso, Ukraine's archetypal woman said it was "impossible to underestimate" the relation of exertion successful Ukraine.

"In this situation, it's hard to speech astir sustainability, technology, progress, since we're conscionable trying to clasp connected and unrecorded our lives arsenic mean arsenic possible," Zelenska said. "Still, we person tons of startups, and I anticipation that each the ideas presented astatine this acme tin propulsion america to victory."

As wintertime approaches, however, Ukraine volition request much than conscionable IT concern to spot it done the harsh months ahead.

There person been reports of wide powerfulness blackouts lasting respective hours crossed the country. Around 40% of Ukraine's vigor strategy has been destroyed, according to the government.

"Ukraine needs much weapons, much subject assistance," Zelenska said, calling specifically for aerial defence missiles.

Ukraine's IT manufacture brought successful $2 cardinal of gross successful the archetypal 4th of 2022, according to the National Bank of Ukraine, an summation of 28% year-on-year contempt the devastation caused by Russia's invasion.

The warfare has displaced millions of Ukrainians, including exertion professionals. Many person joined roles overseas. Once the warring ends, it is hoped that those workers volition return.

Some companies are ramping up hiring successful Ukraine successful a stake that the country's tech manufacture volition look stronger aft the warfare ends.

Two months ago, Lithuanian VPN bundle steadfast Nord Security opened an bureau successful the occidental Ukrainian metropolis of Lviv. The institution plans to prosecute 100 radical there, according to CEO Tom Okman.

"We deliberation it's clip to physique backmost Ukraine and we deliberation the endowment determination is great," Okman told CNBC.

He noted Ukraine is location to thousands of skilled bundle programmers and engineers. "Just deliberation however galore American companies person IT outsourcing" successful Ukraine, helium said.

Several founders of billion-dollar "unicorns" travel from Ukraine, including Grammarly's Max Lytvyn and Alex Shevchenko and GitLab's Dmitriy Zaporozhets. Google, Samsung and Amazon besides have probe and improvement centers successful the country.

But determination are challenges beyond the warfare facing Ukraine's tech ecosystem. The country's task scenery is inactive emerging. Startups successful the state attracted lone $22 cardinal truthful acold this year, according to Dealroom data.

"There are nary large inflows successful superior to enactment what we do," Reface's Shvets said. "What we should bash decently present is amusement much examples of entrepreneurship."

Shvets said the authorities successful Ukraine should look to assistance section entrepreneurs successful the state with taxation incentives and different pro-business initiatives.

There are signs that sentiment from tech investors to Ukraine is improving, though. Last month, Horizon Capital, a Kyiv-based VC firm, raised $125 cardinal for a startup money aimed astatine backing Ukrainian founders. 

SID Venture Partners, a task money acceptable up by Sigma and chap Ukrainian tech firms Ideasoft and Datrics, has truthful acold invested successful 10 startups with Ukrainian founders, Krasovsky said.

It plans to rise an further $50 to $60 cardinal from organization investors aft raising an archetypal $15 cardinal successful December 2021. "There's immense interest," Krasovsky said.