Why Ukrainian Startups Have a Much Harder Time Entering Global Markets

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Approximately 100 million startups are launched worldwide annually, facing significant challenges and obstacles in their operations daily. Ukrainian startups are no exception.

In the fall of 2023, during the IT Arena, we interviewed over 100 startups and young businesses from various regions of Ukraine. The results of this survey indicate that 90% of respondents identify the following as their main problems:

• Lack of investment financial resources;
• Absence of qualified human capital;
• Insufficient development of a clear environment for cooperation among them.

Entrepreneurs and startup founders understand that launching a project in Ukraine will significantly hinder its establishment, development, and further growth. This is the main reason why new businesses try to establish themselves in Western markets.

The investment market of Ukraine and the infrastructure of this sector overall are in poor condition. The lack of really functioning investment funds and significant risks associated with current challenges limit the development opportunities for startups compared to countries like Estonia, United Kingdom, Germany, France, Singapore, Israel, and US.

The most painful issue for startups is the absence of a structured and effective investment ecosystem that would facilitate accelerated acceleration and cooperation among all market participants. Consequently, the implementation of various startup projects either fails or is significantly delayed. The constant shortage of investment resources and the substantial reduction in investment volumes, especially during periods of economic turbulence and financial-economic crises, necessitates a complete reconsideration of possible approaches to investing in Ukrainian startups.

Thus, the number of Ukrainian startups that achieve significant success and have the potential to enter global markets remains extremely small.

Addressing these issues (which can be considered as one complex problem) can ensure the creation of an effective environment — the very investment ecosystem that will guarantee synergistic cooperation among all participants in the financial and investment markets, as well as startups.

Liberalization of the legislative framework to support the establishment and ongoing operation of startups, significant tax reductions, provision of interest-free loans, as well as comprehensive state-level support by reducing bureaucratic procedures for startups and new businesses, can play a significant role in improving the investment environment.

Effective cooperation and communication in leading countries of the world significantly accelerate the establishment and subsequent stable development of startups and new businesses, helping them expand into international markets. Consequently, the creation of a new communication environment between startups, investors, and businesses will provide our country with significant opportunities for young enthusiasts who aspire to change the world for the better.

To further stimulate the startup ecosystem in Ukraine, it is necessary to create a favorable innovative communication environment. This will spur the emergence and development of new incubation centers, technology parks, and technopolises.

The INSTACS investment platform will create a new communication environment that unites startups, investors, and business experts on a single integrated platform. This environment will enable quick and efficient information exchange, facilitate access to investment resources, and promote cooperation among all market participants. As a result, startups will receive the necessary support, develop more rapidly, and enter international markets, thereby increasing their competitiveness and attractiveness to investors worldwide.

The INSTACS platform will facilitate the exchange of experiences and ideas among startup founders, investors, and business experts, allowing Ukrainian initiatives to receive not only financial but also comprehensive support at all stages of their development.

Thus, a comprehensive approach to developing the startup ecosystem will help Ukraine become the «New Silicon Valley» and the center of innovation in Eastern Europe.

Autors:

• Dmytro Maksymiv — Founder of the Instacs platform and CEO;
• Tetiana Miroshnyk — Business Analyst;
• Oleksii Uliianovskyi — Writer.

References:

1. Економічна правда, Коштів не вистачає, таланти тікають, але не все так погано. На чому тримається стартап-екосистема України
2. Maksymiv D. Ya. Formation of the financial mechanism for investment growth in Ukraine: dissertation ... PhD in Economics: 08.00.08 / (Ivan Franko National University of Lviv); Chernihiv, 2017. 254 p.