Ukrainian PE & VC Summit 2025: Macroeconomic Outlook for Ukraine Panel Highlights

The final panel of the 2nd Ukrainian PE & VC Summit is all about the defence sector. The heartbreaking truth is brought to you by Tetiana Honcharenko, Denys Gurak, Stanislaw Kastory, Deborah Fairlamb, and Mateusz Zawistowski. Let’s find out what is going on in this much-discussed topic.

For decades, the defence market has remained concentrated around big players, so-called defence primes. After 2022, a tendency for decentralisation has appeared, but purchase procedures remain administratively, which don’t benefit from startups' proposals, like quick deployment and adoption. This issue can be exploited by hostiles.

The question remains if the market continues the consolidation, or a space will be created for startups to grow.

Even after all the shifts in LPs and other respected parties’ perceptions, the defence market remains in the dark, while geopolitics and war in Ukraine have created a convoluted mirror and rather false optimism that doesn’t translate to actions.

For VCs, there is not much interest in investing directly in Ukrainian companies because of export restrictions and other concerns, such as IP, structure, and companies’ stability.

Furthermore, the defence sector's total addressable market itself is quite small, while the ecosystem is not sustainable for investors to be considered worthy. To resolve this, there must be a counterpart for the World Bank in defence, with a mandate to be the underwriter of this whole market.

Unfortunately, the hard truth is that the defence industry is all about money, and that’s not going to change. There are few guarantees for military contracts, hence many potential manufacturers avoid this field. The companies look for at least 8–10 years of money flow, which is nowhere to be found.

While talking about private capital, most of it comes from Ukrainians themselves. Ukraine has historically been a component manufacturer and R&D centre, which can boost European supply chain resilience by offsetting the need to place orders outside the EU.

In Ukraine, the defence tech companies are put into one of the two deal pipelines. The first one is about non-investable entrepreneurs who work with the Ukrainian Ministry of Defence and use the official procurement system. After the war ends, the majority of them are going to be acquired or simply shut down, as they are unable to scale outside of Ukraine.

But there is also a second pipeline of strong dual-use tech companies that are fast, adaptable and can make money even after war concludes. They are the focus of investors.

Interesting notes: Some consider that the defence tech market started in 2017 with the appearance of Anduril Industries, which showcased the importance of sophisticated software for military needs.

Also, to win the war, Ukraine should double down on drone production, especially on AI-enabled swarms. From the speakers' knowledge, such tech might be operational already in 2026.

The second Ukrainian PE & VC Summit was organised by UVCA in joint efforts with the Polish Private Equity & Venture Capital Association (PSIK), ICU Ventures, Google for Startups Warsaw and Rymarz Zdort Maruta. Technical partner — DreamX.