Nataly Veremeeva’s head snaps to the right as something explodes somewhere outside her window. Seconds pass, then she turns back to the Zoom call.
“You heard?” she asks, eyes flickering back and forth between the camera and the window. “It’s happening right now just outside of our window.”
The director of TechUkraine, the community championing the tech industry in Ukraine, is scared and tired. The low roar of detonations, scattered gunfire and constant sirens remind her of the Russian aggression. As if she needed any reminders.
“It’s a very tense situation,” Veremeeva tells Verdict.
Despite the war, she is still sitting in a sofa in her Kyiv flat. A black cat tiptoes on the backrest behind her, sneaks a glance out the window and jumps down beside Veremeeva, brushing itself against her before walking away off-screen. It is just another day since Veremeeva’s boyfriend woke her up on the morning of the 24th of February.
“‘It’s started,’ he said,” she recalls. “I stayed calm, just did my morning routines, and then we went outside. We saw traffic jams, people with suitcases, everybody was rushing [to get] out of the city. That was the first wave. People already understood what was going on. Crazy queues in the supermarket. Everywhere, people were nervous, calling each other and just really trying to get out.”
At the same time, among the panic, she was in awe of how much people cared for each other, helped one another, looked out for each other by providing food or support. Several of Veremeeva’s friends are volunteering to give aid where they can. To her, it’s that neighbourly spirit that Ukrainians are known for.
The tech community is no different. Since the Russian invasion of Ukraine started, the people in the nation’s tech industry have redirected their skills and solutions to help solve the logistics around humanitarian aid, get information out to the world about the atrocities of war, raise money for charities, and to ensure there’s something left to rebuild once the fighting is over. Some have even joined Ukraine’s volunteer cyber army to fight back against disinformation and cyberattacks.
Vereema says she keeps herself busy by helping to coordinate these efforts. Essentially, she has been continuing the work she’s been doing for TechUkraine, which is to connect people to help the Ukraine tech community grow.
“I’m just trying to keep myself in the working mode because we can’t just lay down,” she says. “It is just in our spirit, this determination. So I’m continuing to work and share our insights with the rest of the world so, hopefully, everybody understands what’s going on here. Because we need this support from the world.”
Ukraine: A good place to hire tech workers
Ukraine’s small but growing tech industry has a long history. Back in the 1950s, Ukraine was the birthplace of the Soviet Union’s first electronic computer, MESM. Some writers have described it as the first electronic computer in continental Europe, despite both the German Z4 and the Swedish BARK predating it. Despite this history, however, Ukraine is not a massive manufacturer of electronic equipment.
“Ukraine is not a significant vendor,” Emir Halilovic, principal analyst at research firm GlobalData, tells Verdict. “Or, let’s put it this way, Ukraine is not a seat of any of the important companies that manufacture and sell electronics, telecommunications equipment, computer equipment, and so on and so on. They don’t produce any semiconductors in any significant volumes.”
Ukraine is a significant factor in the global production of semiconductors nonetheless, due to the fact that it produces half the world’s neon gas, which is vital in the production of microchips. The conflict thus threatens to exacerbate the global chip shortage that has haunted the world since early in the pandemic.
And the lack of semiconductor production in Ukraine certainly doesn’t mean that it has no tech sector. Even following Russia’s invasion of the Crimean peninsula in 2014, the nation’s tech industry has been able to grow, especially in outsourced IT services. Over 100 Fortune 500 companies outsource to Ukraine, according to Ukraine’s Office of Foreign Affairs. The list of companies outsourcing or having offices in Ukraine includes online shopping giant Amazon, creator platform developer Adobe, iPhone maker Apple, neobank Revolut, software business SAP SE and development platform Wix.
In 2019, 4% of Ukraine’s GDP was attributed to the IT industry. Its IT export volume increased 36% to $6.8bn in 2021, up from $5bn in 2020 and $4.2bn in 2019, according to a report from IT Ukraine Association, a trade group.
Depending on who you ask, Ukraine has between 150,000 and 200,000 software engineers working in the country.
Patrik Arnesson, CEO and founder of Swedish NFT incubator Ikonia, is one of the entrepreneurs who have set up offices in Ukraine to tap into the country’s affordable talent pools.
“I visited different places,” he tells Verdict. “You know, the usual suspects: San Francisco, Berlin, Barcelona and so on, but what I saw in Ukraine when I started the data team there was that their work ethic was out of this world. They really wanted to work. In the Western world you need to explain to people why they need to work, why it’s nice to have a job, but there they’re really grateful for having a job.”
Arnesson adds that he fell so in love with Ukraine that he moved there, dividing his time between Kyiv and his home in Spain.
However, it’s not just foreign companies that hold up the Ukraine’s tech community: the nation has a small but growing pool of domestic startups too. Tech entrepreneurs in Ukraine have, more importantly, caught the eyes of investors. In total, 126 tech startups have raised VC funding in Ukraine since the start of last year, according to Pitchbook.
“So there were more and more startups coming [and] more investors were searching and scouting for them,” Veremeeva tells Verdict from embattled Kyiv.
Notable examples include the country’s first decacorn Grammarly, which achieved a $13bn valuation on the back of a $200m investment round in April 2021, and Reface, the deepfake face-swapping app. Since launching in 2020, Reface has been downloaded over 180 million times. Following the invasion, Reface has leveraged its reach by launching a campaign to dispel fake news and to inform its audience about the war, including its two million users in Russia. Other examples of Ukrainian technology companies include Gitlab, Jooble, CleanMyMac and InvisibleCRM.
The Ukraine government has also played its part in supporting the industry. In 2019, it launched a $17m seed fund to help early-stage startups get funding. The same year, the government also established the Ministry of Digital Transformation of Ukraine to further the digitalisation of the country.
TechUkraine had also made headway on its own. Before the invasion, the organisation was due to launch the Ukraine chapter of Tech Emerging Europe Advocates, part of the Global Tech Advocates community, on February 28. The event has now been postponed and the launch site has been repurposed to raise support for Ukraine.
“It really felt like this was only the beginning,” Veremeeva says.
How Russia’s attack threatens Ukraine’s tech scene
Russia’s large-scale assault on Ukraine in the early hours of February 24 didn’t come out of nowhere. Vladimir Putin’s regime had slowly escalated the conflict in 2021 by building up its military along the Ukrainian border. Kremlin mouthpieces repeatedly denied that an invasion was in the works, instead blaming the military buildup on rising tensions from the West.
However, tech businesses grew increasingly concerned for the safety of their employees and started to look for ways to get them out of the country.
“We offered [our people] to relocate them to [the EU] before things went really bad,” Arnesson says.
While that was a simple thing to arrange for Ikonia employees who were EU citizens, Ukrainian staff members couldn’t enjoy the same freedom of movement across the bloc. Instead Arnesson and his team started to move people to the city of Lviv in western Ukraine to get away from the looming threat of the Russian invasion.
At the same time, the Ikonia team tried to arrange work visas for the people left behind. However, the process took too long and on February 24 the invasion started.
“I just started to cry,” Arnesson says, remembering his reaction when he heard the news. “Because for me it’s like war in my own country. I’ve spent more time in Ukraine than in Sweden. It’s very unreal.”
Now, 20 of his employees are stuck in a war zone, hiding in bomb shelters in Kyiv and doing what they can to help refugees.
“Because most of them are men, they can’t leave now because of army requirements,” Arnesson says, referring to the military conscription of men between the age of 18 and 60 to help fight back against Russia.
Like thousands of people in the Ukrainian tech community, he’s now watching the war unfold, worrying about the safety of his staff.
The people outside
On the day of the invasion, Daria Artanovskaya’s parents were woken from sleep by the sound of explosions.
“My mum called me early in the morning and she was crying,” Artanovskaya tells Verdict. “My father was also crying and that was horrible. My father is strong. He goes to the gym every day, so he’s strong. He’s been a musician all his life, not military, and he was crying. That was terrible and terrifying to hear.”
Over the past week, she has been in constant contact with her family to hear how they are holding up. Artanovskaya has been living with her husband in Egypt for several years, working for internet of things provider IoTeX. Now, her employer has given her time to help her loved ones, the budding technology community and her home country by trying to raise awareness about the war.
Still, concern for her family is eating into her waking hours. She is particularly worried about her younger brother and his pregnant wife.
“She should give birth any day now,” Artanovskaya says. “We’re waiting, but it’s very difficult. His building has been bombed and they have lost all their documents to the hospital. Now they don’t know what to do. Some girls with big power, who deserve all the best wishes, they have given birth to their children in the subway because most people from the biggest cities, they hide deeply in the underground and even then, they give life to new people, to the next generation of Ukrainians.”
Looking for a way to get her family out, she is now waiting to receive refugee status from the United Nations in Egypt. The status would enable her to get her family to join her and her husband. However, the stress and fear have already affected her body.
“My normal weight is 45 kilos. Now I’m below 40 kilos,” she says as she voices the same concerns that so many expatriate Ukrainians are feeling.
The tech community is responding to the threat
Like Artanovskaya, the tech community outside of Ukraine has not been idle. Tech companies are attempting to help where they can.
SpaceX CEO Elon Musk has pledged to provide Ukraine with access to Starlink, his global network of low-orbit broadband satellites. The first lorry of “pizza box” ground receivers needed to connect with the satellites arrived in Ukraine this week. Even if Russian troops surround cities and cut their surface links to the outside, the small and simple-to-use Starlink terminals will enable local networks to connect to the global internet.
Home-rental platform Airbnb has pledged to offer 100,000 Ukrainian refugees free housing, partnering with resettlement agencies across the world.
Microsoft has said it is working closely with the Ukrainian government to help shield it from Russian cyberattacks and to stymie the flood of Kremlin-backed misinformation campaigns. The Redmond-headquartered company also said it would offer humanitarian help via the Red Cross and “multiple UN agencies”.
Apple’s CEO Tim Cook has issued a statement saying that he is “deeply concerned with the situation in Ukraine,” pledging to support its teams in the country and to offer humanitarian help.
Apple has also joined fellow tech giant Google in limiting their services in Russia, joining the corporate backlash against Putin’s regime that has also seen companies like Shell, Nike and Volvo suspend delivery of their services in Russia.
Cryptocurrency exchange Binance has donated $10m to aid humanitarian efforts and has pledged to freeze the accounts of Russian clients targeted by sanctions. The freeze comes after Ukraine’s vice prime minister, Mykhailo Fedorov, called on major digital currency platforms to block transactions among all Russian users, adding to the financial sanctions Russia already faces.
Binance CEO and founder Changpeng Zhao has, however, refused to put in place a blanket ban against all Russian transactions, potentially creating a way to bypass sanctions.
Revolut has also teamed up with the Red Cross to raise money to aid Ukrainian relief efforts and Ikonia has created a piece of digital artwork named Stand With Ukraine to raise money for different charities. So far it has raised $25,000.
Can Ukraine’s tech industry survive?
The sanctions will hurt Russia, but will the support from the rest of the world be enough to save Ukraine’s tech industry? The answer is not simple.
“[In the] hypothetical situation where hostilities would cease [and] active military operations on Ukrainian territory would stop, it would be relatively easy for Ukraine – with aid from the west and Western companies and governments – to reestablish its technological infrastructure, both on the telecommunications and the enterprise side,” says GlobalData’s Halilovic.
In contrast with Russia, Ukraine hasn’t faced any sanctions. Goodwill from the West could go a long way, Halilovic says, but warns that the longer the fighting goes on the, worse the prospects for the country’s tech sector will be.
“Any prolonged situation is going to be problematic,” he says.
The longer the war drags on, the likelier the risk grows that Ukraine’s tech infrastructure will be damaged beyond repair. Kyiv and Ukraine’s second biggest city, Kharkiv, are home to the nation’s booming IT sector. The unrelenting bombardment of these cities could risk damaging vital infrastructure – such as data centres – extensively.
Nevertheless, the people of Ukraine’s tech sector are bullish about their future.
“If they manage to get out of this, the country will be stronger than ever,” Arnesson says.
Back in her flat in Kyiv, Veremeeva is doing everything she can to ensure the tech industry in Ukraine is ready to snap back into action and to continue to grow once the fighting stops. Next, she plans to answer more emails from the international tech community, check updated content and links, and to share information about the war with the rest of the world, hoping for more support.
“I’m not planning to die,” she says.
If you and your business want to help the people of Ukraine during these terrible times, you can find information on how to do so here.
GlobalData is the parent company of Verdict and its sister publications.