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London Tech Week

Brothers from Ukraine secure £15M funding to boost CEE startup scene

Ukrainian brothers raise £15M from UK investors to help startups in Ukraine and CEE

Despite the ongoing conflict in Ukraine, a new London-based venture capital firm is betting big on the untapped potential of tech startups in the region. 1991 Ventures, led by Ukrainian brothers Denis and Viktor Gursky, has secured a £15 million fund to empower mission-driven companies across Ukraine and Central Eastern Europe (CEE). 

This move is backed by prominent UK investors, Venrex and Samos Investments, known for their early support of successful startup programs like Seedcamp and Entrepreneur First.

The aforementioned funding will be used in other space and industry. However, earlier this month, we reported about Broswarm, a military tech startup which raised $100K to combat landmine crisis in Ukraine with drones. Moreover, late last year, former Space X engineer’s startup also secured $138M to navigate US recovery amid Ukraine’s missile arsenal impact.

Story of Ukrainian brothers Denis and Viktor Gursky’s 1991 Ventures

The Gursky brothers are no strangers to fostering innovation in the face of adversity. Their venture capital firm, 1991 Ventures, draws experience from their established ventures in Ukraine. SocialBoost, their Kyiv-based tech organisation, has provided a platform for tech development. 

More importantly, their brainchild, the 1991 Accelerator, boasts a remarkable track record. Since 2016, it has nurtured over 200 startups, demonstrating the region’s entrepreneurial spirit even amidst the current conflict.

The Gurskys’ commitment extends beyond the capital. In 2019, they established 1991 Mariupol, the first-ever technology startup centre in the eastern Ukrainian port city. This centre, launched with the presence of Ukrainian President Volodymyr Zelensky himself, became a symbol of hope and progress for the region. 

Unfortunately, Mariupol faced heavy destruction during the early months of the invasion, and the Russian military seized the centre after the team successfully relocated to safety. Despite this setback, the Gurskys’ dedication to fostering Ukrainian innovation remains unwavering.

1991 Ventures’ investment criteria

Denis Gursky, Founding Partner of 1991 Ventures, offers a deeper look at the firm’s specific criteria for selecting portfolio companies. He told TFN, “Portfolio companies must be based across Ukraine and Central Eastern Europe (CEE) and they must be mission-driven in their focus.” Gursky further said, “1991 Ventures is sector agnostic, but the startups we’re looking to invest in must have a clear innovative purpose of bettering society and the world around them.” Regardless of the sector, adherence to ESG practices is crucial, as 1991 Ventures aligns its investments with the UN’s Sustainable Development Goals.

Recognizing the vast young talent pool in Eastern Europe (over 65 million), 1991 Ventures seeks well-educated teams with at least one technical leader (CTO/engineer). They expect exceptional potential that surpasses the already impressive talent pool in the region, valuing both experience and ambition.

Moreover, the VC leverages its network to provide mentorship, connect startups to industry leaders, and bridge the gap between CEE startups and UK capital. This comprehensive support system helps portfolio companies accelerate growth, access resources, and secure further funding.

How will the funds be invested

The £15 million fund allows 1991 Ventures to invest in over 40 companies throughout the fund’s lifespan. Leveraging their expertise from running successful programs in Kyiv and now London, the Gurskys aim is to empower impactful businesses across various sectors. 

Their accelerator programs boast a 33% success rate in securing funding for mentored companies. Notable graduates include AXDRAFT, a document automation software company with a global presence, eTolls, a European toll payment app simplifying cross-border travel, and Osavul, a cybersecurity company employing cutting-edge AI to combat disinformation campaigns.

Denis Gursky, founding partner of 1991 Ventures, emphasises the untapped potential, saying, “There’s a wealth of untapped talent in Ukraine and Central and Eastern Europe. 1991 Ventures is dedicated to bringing these innovative startups to the global stage. We want to create a pipeline that connects these impactful businesses with the resources they need to thrive. When this region flourishes, the entire world benefits from the creativity emanating from Ukraine and the CEE.”

Moreover, despite regional challenges, 1991 Ventures targets founders with global ambitions and the adaptability to thrive in today’s complex world. “In 2024 it’s not about the region – the world is challenging,” says Denis Gursky, “but CEE founders are well-positioned due to their agility.”

What we think about the VC

1991 Ventures measure success by the real-world impact their investments create, including factors like “lives saved, sustainable outcomes, and improved connectivity,” as Denis Gursky explains. Their methodology has proven effective, with a 2021 assessment showing a 44x social return on investment.

The ongoing war in Ukraine presents a unique set of challenges. However, 1991 Ventures acknowledges the proactive risk mitigation strategies employed by Ukrainian founders. These strategies include team and business diversification, rigorous compliance with international client requirements, and robust safety measures. The software focus of their portfolio companies also provides an advantage, as these businesses are typically easier to structure in terms of capital and product development in the face of unforeseen circumstances.

Also, beyond the impressive number of startups nurtured through the 1991 Accelerator program (over 200 in 8 years), 1991 Ventures boasts a portfolio with demonstrably successful exits and positive developments. Document automation software company AXDRAFT, with offices in the US and Germany, exemplifies this success. After raising over $3 million in a Series A round, they achieved a successful exit.

The latest £15 million fund in the VC’s hand signifies a crucial turning point. It represents a vote of confidence in the resilience and ingenuity of Ukrainian and CEE startups. With the backing of experienced investors and a focus on fostering impactful businesses with global potential, 1991 Ventures is poised to play a vital role in enhancing the region’s tech ecosystem onto the global stage. This investment not only empowers startups but also serves as a beacon of hope, demonstrating that innovation can persevere even in the face of immense challenges.

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