“Ukraine impresses the world with the ability to create modern technological weapons in the most extreme conditions. Dzerless (especially reconnaissance and shock), radio electronic fighting systems (HRB/RER), artificial intelligence -based solutions, autonomous terrestrial and marine platforms are not theoretical developments, but operating systems tested in real battles.”, – WRITE: www.pravda.com.ua
Ukrainian Defense-Tech companies had to give an example of how war can be a catalyst for innovation.
Interest in this is increasing. In 2024, private investment in the sphere of defense technologies in Ukraine increased more than ten times-from $ 5-6.7 million in 2023 to about $ 50 million. This means that, despite the risks, private capital begins to see not only the front need, but also the prospect of development, which also confirm the successful cases of raising international money, such as $ 3 million for OSAVUL from the German 42CAP or $ 2.7 million for Swarmer. The forecast for 2025 is even more ambitious: over $ 100 million. There are more and more active funds on the market (more than 10), including Nezlamni, D3, Freedom Fund VC, Smrk, Resist.ua, which specialize in Defense-Tech. Brave1 has more than two thousand projects in the state accelerator. And this is only the tip of the iceberg.
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The potential is, zooming inhibits But despite these positive signals, we see a deeper paradox in the Ukrainian Council. Even the most successful Ukrainian teams that have created “combat” technologies still have limited opportunities to attract the great investment necessary for scaling. Investors are really interested in investors. But it is mostly focused on the early stages of the development of projects-the stages of Seed and Pre-Seed. The average check is € 125-500 thousand, often no more. But the capital that would allow the product to be brought to the level of large-scale production, certification, export (the so-called Growth Funding, which is provided by PE-funds) is practically absent. This is not just a problem with companies. This is a system problem.
The Ukrainian Defense-Tech today is, relatively speaking, Battle-Proven. But investors are looking for not only technology that works. They are looking for a business that is able to grow, report, scale. And it is here that we face the biggest challenge: only a small part of companies can simultaneously demonstrate a high-tech product and be completely ready for investment-to be investor-realy.
Why “Battle-Proven” Not always “Investor-Ready”? Why? According to the DID analytical report, about 90% of teams do not have ready business models or scaling strategies. The answers cover both internal and external factors.
External barriers are obvious: outdated legislation (such as joint venture institutions “2012), which does not take into account the peculiarities of the defense industry, restriction of export UAV benefits under Law No. 3123-IX).
Companies are often the lack of system financial reporting, a clear business plan and a product card, a team experience with investors, an indefinite business focus and a key customer, resistance to external recommendations. Many are focused solely on technology, ignoring market requirements: marketing, logistics, proper legal structure and jurisdiction, ultimately, strategic vision, including diversification plans to the international market.
Instead, a modern investor is a player who needs a balance. It is important for him to know that the product not only works, but has prerequisites for sustainable development (including R&D potential), a market niche, a scaling team. The company should be clear: who makes the decision in it how it earns, how much has already invested, what plans for the next 12 and 36 months. This means not only to have a presentation, but to be prepared for Due Diligence, for an external audit, to partnership.
And today, such players in the Ukrainian defense industry are units that can satisfy the criteria that are close to the Series A round (with a standard check of $ 10 million).
Path to “Investor-Ready”: Joint Responsibility of Business and State But the situation is not hopeless. On the contrary – we have a unique window window. In order for the defense industry in Ukraine to become a driver of the economy, only one step is needed – a systemic institutional transformation.
The state should create a confidence infrastructure: to introduce a special legal regime for defense investors, to create a support center-a conditional Defense-Tech Investor Office (Dtio), which would help with licensing, certification, export control, NATO standards.
State co -determination mechanisms (with possible state participation up to 30% in rounds) and investment guarantee, as Denmark, (where the model, provides a guarantee of up to 70% of the investment amount for up to 7 years) should be launched. To create conditions under which the international investor will know: it is safe to invest, there is support here, there are rules of the game. It is also important to institutionalize the attraction of investments with private funds with higher capital, possibly through funds with state participation or guarantees.
In parallel – the business should be grown. Leave the approach “We made a drone – give money.” And go to “We have production, team, plan and vision that will happen to this product for a year, three and five.” You need to do “homework”: to carry out an independent assessment of readiness, to develop a script business model, to provide transparency for Due Diligence, to invest in communication and to work on diversification (DUAL-US). Because even the best weapon will not turn into a strong industry without capital. And capital does not come where there is no structure, trust and predictability.
Ukrainian weapons have every chance of becoming what Israel has become an ecosystem of decisions that form global security. We already have what is not in others: real combat experience, engineering creativity, flexibility, adaptability. Now we have to turn it into an economy. For export. At the institution.
This task is common. Both the industry, investors, and the state should act in synchronous. Because Battle-Proven is only half the way. Now it’s time to become Investor-Ready.
Igor Fedirko
A column is a material that reflects the author’s point of view. The text of the column does not claim the objectivity and comprehensive coverage of the topic that rises in it. The editorial board of “Ukrainian Truth” is not responsible for the accuracy and interpretation of the information provided and plays only the role of the carrier. The point of view of the UP editorial board may not coincide with the point of view of the author of the column.