UKRAINE Law and Practice Contributed by: Illya Tkachuk, Igor Krasovskiy and Inna Kostrytska, INTEGRITES
2.4 Venture Capital Both Ukrainian and foreign venture capital funds are rather active in Ukraine, although foreign funds still tend to dominate Series A and later rounds of financing. The government also participates in sponsor- ing the technology sector through the specially created Ukrainian Start-up Fund (see 2.3 Early- Stage Financing ). However, for the time being, its share in the market is rather insignificant. 2.5 Venture Capital Documentation Ukraine has not yet developed properly stand- ardised documentation for venture capital investments and is using National Venture Capi- tal Association (NVCA) or British Private Equity and Venture Capital Association (BVCA) tem- plates instead. At the same time, Ukrainian corporate regula- tions provide for a number of imperative pro- visions that should be considered in venture capital documents if the deal is structured at the Ukrainian level. 2.6 Change of Corporate Form or Migration Usually, a start-up remains in the form of a lim- ited liability company even during the advanced stages of its development. Indeed, owing to the undeveloped local market, Ukrainian technology companies seek financing outside Ukraine in most cases. As a result, at a certain stage of its development, a Ukrainian technology company begins to expand into foreign markets by cre- ating companies in different jurisdictions. This trend intensified in 2024, following war-related migration of the Ukrainian staff to other coun- tries.
additional funding opportunities for start-ups in Ukraine during the past year. Ukraine has not yet developed properly stand- ardised documentation for early-stage financing, so the set of documents used mostly depends on the templates used by the investor. The standard set may include the term sheet, investment and shareholders’ agreements, and the articles of association. After the war started, a number of sources of exceptional funding became available for start- ups. Specifically, Ukraine allocated up to USD67 million for the support and development of the IT sector. The funds will be administered by the Ukrainian Start-up Fund and used to support start-ups, which are the most vulnerable sector in the IT industry. In addition, the EC launched a EUR20 million support programme for the IT community in Ukraine. This will enable the support of at least 200 Ukrainian start-ups with grants of up to EUR60,000 each. Finally, a number of private companies and associations pledged their support to Ukrainian IT start-ups: • Google created a special fund that accumu- lated USD5 million of financial support and mentorship; • the 7Wings fund issues grants of USD50,000 to support Ukrainian start-ups that maintain their teams in Ukraine; and • the UA Founders marketplace was launched to connect Ukrainian start-ups with foreign donors.
415 CHAMBERS.COM
Powered by FlippingBook