27 Feb 2023 13:56

Ukrainian IT companies attract up to $1 bln of venture investments in 2022

MOSCOW. Feb 27 (Interfax) - Ukrainian IT companies attracted about $1 billion of venture investments in 2022, Ukrainian Deputy Minister of Digital Transformation for IT Development Alexander Bornyakov said in an interview with Ukrainian media outlets.

Those were mostly investments of foreign companies, whereas the activity of the majority of Ukrainian companies from other sectors, which used to invest in the IT development before the crisis, has dropped down to zero, he said.

"I cannot name the exact number, but my guess is that [the amount of venture investments in the IT sector] reached up to $1 billion last year," he said.

The interests of venture investors in the sector drastically decreased when the crisis began, but it actively resumed in the summer, he said. In particular, the Blue&Yellow Heritage Fund, the first venture fund of the Venture Capital company based in the U.S. for working with Ukrainian IT projects, worth $50 million was founded. It is also known that several foreign funds are ready to invest over $10 million each, he said.

"I don't see people in Ukraine ready to allocate funds for it today. Imagine, before the crisis, the very same DTEK and Metinvest had groups engaged in innovations and investments. The Kyivstar and Vodafone companies, Pinchuk's group had similar projects. And now the majority of projects are being scrapped," Bornyakov said.

He added that about $15 million were attracted as grants and donations. Partners from USAID CEP, WNISEF, GIST, EIT Raw materials, and YEP provided about $500,000 worth of grant assistance. Google has estimated its contribution since February 2022 at about $40 million, Microsoft and Amazon also provided grants in services.

According to Bornyakov, the top three tracks investors are interested in are Web3, military technologies, and artificial intelligence.

The deputy minister refrained from making forecasts of potential investments in Ukraine's IT sector in 2023, adding that many things would depend on the situation.

"However, we could attract even more funds [than in 2022] with the initiative we are launching [military technologies startups], if everything is done right," he said.