US investors raise $30 million to assist Ukraine-based startups amid Russian invasion

Amid the Russia-Ukraine war, a $30 million fund has been formed by the US' New York-based company FF Venture Capital to assist startups with Ukrainian roots. According to the Kyiv Independent report, the Blue & Yellow Heritage fund is considered to be the first Western venture capital fund that is solely dedicated to the Ukrainian startup industry. The fund would invest in 15-20 early-stage firms formed by Ukrainian entrepreneurs or hiring Ukrainian refugees over the course of the next five to ten years. FF Venture Capital hopes to raise an additional $20 million for that, bringing the total amount of assistance to $50 million. 

According to the Kyiv Independent report, this is a significant assistance for Ukraine's IT industry, which has been severely impacted by both the conflict and the current financial crisis. Over 90% of Ukrainian startups reportedly need financial assistance to continue their operations. 

Denys Gurak, the fund's Ukrainian venture partner, told the Kyiv Independent, “When the war broke out we wanted to figure out how we could make the most difference in Ukraine and step in to fill the sudden drop of liquidity in the country.”

Ukraine's startups can access grants from American tech companies

A large portion of the money for Ukrainian entrepreneurs is being made accessible in the form of grants from American tech behemoths like Google and Amazon, as well as from Ukraine's state-backed startup fund, which offers grants to companies developing military technology. 

Notably, the for-profit fund FF Venture Capital, sometimes known as ffVC, emphasises that it is not a charitable organisation. In exchange for shares, it offers investment with the expectation of profit. ffVC's founding partner, John Frankel, said, “It is not a charity. It's our way of contributing but also getting what we think will be a high return on capital," Pitchbook reported.  

Partner at ffVC Mariusz Adamski mentioned that the company intends to invest in 20 startups, including those that have shifted and companies that employ Ukrainian refugees, with amounts ranging from $500,000 to as much as $2.5 million. According to Adamski, "We are looking for businesses that already have the product 95% developed, and are looking for a catalyst in order to sell the product". 

As per PitchBook statistics, startups with their headquarters in Ukraine have only secured a small amount of venture capital financing, receiving more than $55 million across at least 60 deals since 2020. 

Furthermore, as per the Kyiv Independent report, investors are confident that startups would quickly resolve the issue despite the fact that many Ukrainian entrepreneurs sustained losses as a result of the conflict and had to change their business plans.  

(Image: AP)