Following Ukraine’s Future Summit, a brand-new EU-Ukraine Business Forum took place in Brussels featuring Andriy Kolodyuk, Ertan Can, Orest Tokac, Michiel Scheffer, and Sven Roben. Here are the notes.

Let’s start with a big one: the private sector and SMEs, which are the backbone of the Ukrainian economy. On behalf of the European Commission, Orest believes that businesses require equity. They currently operate a portfolio of €2.2 billion, but this is just the beginning.

EU is rolling out the Ukraine Facility program with €7 bln of investments from European funds plus €9.3 bln blended financing in the forms of guarantees and grants. These are distributed through banks and partner financial institutions, however, Orest points out that the money could be used for equity investments also.

We should keep in mind that the European Commission can help first-movers, but never go into the venture alone. Partners are the key to creating a catalytic effect. That’s why the EU estimates the Ukraine Facility program to trigger an additional mobilization of up to €40 bln from other parties.

On top of that, the new programs are already in development. EU is analyzing strategic priorities for Ukraine and wants to focus more on undeveloped fields: the non-banking sector, PE, and VC. Here, the private sector is expected to make a move and proposals for institutional investors to enable fruitful collaborations.

While talking about institutional investors, Sven pointed out that although such money is viewed as slow, public investments are vital to boost private ones by building social, export infrastructure, energy, gas, electricity grids, etc. Moreover, they are working on delving into PE and VC space, too.

Unfortunately for now there are no big European institutional investors in Ukraine. The US, however, is already in the game with BlackRock in place.

Now the VC topic and the challenges in Ukraine. Ertan says the Ukrainian ecosystem lacks anchor private cheques. There are few LPs money and we need a lot of them. Creating new and strong funds is impossible without clear anchor mandates. A newly created Ukrainian Fund of Funds can be a solution to this by providing the first influx of capital and guarantees.

Is it possible to cooperate with institutional investors? Of course, more money means more mandates. Despite that the private sector has much more capital to offer, by blending them we can create a mutual impact.

Last but not least is deep tech. Michiel reports that EIC has €10B to deploy in deep tech projects inside EU states plus associated countries including Ukraine. Even though the EIC portfolio of Ukrainian startups is small, the possibilities are there to exploit. Besides that, EIC has put €20M into the Seed of Bravery program to help Ukrainian entrepreneurs. Dual-use products are still a red flag for many investors, as it’s difficult to regulate their potential areas of use.

In conclusion, Andriy stated that international financial institutions must prioritize investing in them through private equity funds because they have teams on the ground who proved investing efficiently during the war.

Also, the Ukrainian Fund of Funds is poised to play a significant market-making role as the primary institutional investor in more than 16 venture capital funds currently raising capital to back up tech entrepreneurs.