Opinion: Ukraine is becoming a global defence tech powerhouse

The ongoing full-scale conflict has fundamentally altered the focus of Ukraine’s technology industry. Cutting-edge military innovations and sophisticated defence solutions are no longer just vital for national security; they represent one of the most significant avenues for economic expansion. Ukrainian defence technologies undergo rigorous evaluation directly on the battlefield, facing extreme conditions. This unique testing environment validates their efficacy, drawing considerable attention from international allies, investors, and partners seeking to bolster their own defence capacities.

Witnessing Ukraine's vibrant tech ecosystem firsthand, I've observed the rapid pivot towards defence innovation and the growing global interest in our advancements.

The imperative to resist large-scale Russian aggression has ignited a rapid technological expansion within the defence tech domain. This surge has led to the emergence of hundreds of nascent startups, drawing significant interest from both domestic and international investors. Already, more than30 nationshave shown curiosity in Ukrainian defence innovations, highlighting robust export prospects for these domestically developed technologies.

Since the onset of the full-scale invasion in February 2022, Ukraine's drone sector has evolved dramatically, moving beyond grassroots volunteer efforts to become a highly organized and competitive industry. ADataDrivenreport indicates an astonishing increase in drone production, skyrocketing from5,000 units in 2022 to an anticipated 4,000,000 by the close of 2024– an800-fold expansion. Presently, Ukraine boasts over500 operational drone manufacturersand features more than1,000 distinct drone models, with just four companies dominating80% of the FPV drone market. In 2024, investments in the drone industry surpassed$60 million, with typical seed funding rounds falling between$1 million and $3 million.

Established in March 2023, the governmental defence technology clusterBrave1has catalogued over4,600 innovative solutionsfrom more than2,100 developers. Participants in this cluster are actively developing strike systems, unmanned aerial vehicles (UAVs), munitions, and sophisticated technologies for reconnaissance, cybersecurity, and demining. Brave1 has awarded over600 grants, amounting to more than $52.4 million, effectively functioning as the premier “angel investor” for Ukrainian defence advancements. Innovations fostered by Brave1, including trench electronic warfare systems, interceptor drones, and unmanned ground vehicles (UGVs) for logistics, are demonstrably influencing the conflict's progression. Furthermore, Brave1 assists inNATO-standard codification, real-world battlefield testing, and seamless integration into the Armed Forces.

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Joint research by theKyiv School of EconomicsandBrave1reveals a substantial increase in investments within Ukraine's defence tech sphere, escalating from$5 million in 2023 to $50 million in 2024. Concurrently, the average investment round expanded from$500,000 to $1-3 million. Notably, the sector boasts a25% profit margin, which is the highest worldwide – surpassing17% in NATO nations and 15% in the EU– thus highlighting the compelling economic appeal of Ukrainian defence technology.

Ukraine's swift ascent as a leading global defence technology powerhouse is a collaborative effort. Crucial innovations and promising startups require dedicated platforms to exhibit their solutions, engage with investors, and expand on an international scale. This is precisely whereIT Arena in Lviv– Ukraine’s most significant tech conference – becomes indispensable.

Scheduled fromSeptember 26 to 28this year, IT Arena is set to attract more than6,000 attendees from 30 countries. A core component of the event is theStartup Competition, recognized as the nation’s premier startup challenge and a central venue for showcasing pioneering innovation, particularly in defence technology. Many defence solutions featured at the conference were developed during the ongoing full-scale war, a direct response by Ukrainian innovators to pressing battlefield requirements. Acknowledging their importance, IT Arena established a specialized defence tech category, providing startups with an invaluable forum to display their initiatives, secure investment, and achieve global expansion.

Participants in the competition gain an unparalleled opportunity to engage with venture capital firms, angel investors, and international funders, facilitating the introduction of Ukraine’s battle-proven solutions to global markets.

For the third successive year, the2025 Startup Competitionwill feature two distinct tracks: a general category and a defence category, with the latter specifically encompassing defence technology and cybersecurity. The defence tech segment continues to be the most fiercely contested, drawing52 applications– a testament to the increasing emphasis on Ukraine's innovation driven by security needs. Overall, the competition received202 applicationsfrom both Ukrainian and international teams, representing diverse locations such as Warsaw, Berlin, Tallinn, Kaunas, Minnesota, Boston, Dundee, and Hong Kong.

Given its wide array of participants, the Startup Competition has also become a powerful magnet for investors. This year, its dedicated investment fund has achieved an unprecedented$12.5 million, presenting substantial growth opportunities for emerging companies.

During2024, participants successfully secured over$2 millionin funding, highlighting the event's efficacy in connecting Ukrainian innovators with international investors. A prime illustration isHard Cat Drones, a startup specializing in unmanned systems for river and maritime applications. Their kamikaze and reconnaissance drones, proven effective by the Armed Forces of Ukraine, garnered a strategic investment fromDouble Tap Investmentsfollowing their presentation atIT Arena 2024.

The competition attracts a varied group of investors, ranging from domestic funds to global venture capitalists, all keen to support Ukraine’s validated defence solutions. The typical startup valuation stands at$5 million, with teams generally seeking$600,000 in investmentto catalyze their expansion.

Ultimately, initiatives such as IT Arena’s Startup Competition underscore that Ukrainian technology is not merely addressing the immediate necessities of wartime; it is also poised to become a global frontrunner in defence innovation.

Stepan Veselovskyi is the Founder of IT Arena, Ukraine’s largest tech conference, and the CEO of Lviv IT Cluster, the country’s leading business association connecting prominent tech companies.

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