Following jubilant scenes in the liberated city of Kherson last Friday, the war in Ukraine is almost into its 10th month. With many places now vacated by Russian forces still lacking basic utilities, it goes without saying there's been implications for Ukrainian VC activity.
VCs cognisant of the sheer struggle to defend Ukraine from Russian aggression have been responding in recent months. US VC ffVC debuted a specialised fund for Ukraine's founders and businesses in September.
The country's workforce has more tech graduates than many European peers. Figures show Ukrainian IT and software ranks fourth globally in terms of the talent pool, with 166,000 professionals estimated in this sector.
Yet in 2021, VC funding was already down year/on/year at €5.7 million, from €21.1 million in the year-before period (source).
GR Capital, a pan-European VC with full-time offices in Berlin and Kyiv, has long been a big name in Ukraine's VC community.
The firm just announced the €30 million first close of its second VC fund, GR Capital Fund II. GR Capital says the war caused the raise to be postponed and downsized, as most of the LPs have Ukrainian exposure.
A final close, targeting €100 million, is not expected until Q2 2023.
The investment team is led by managing partner Max Fillipov, who recounts GR Capital's origins six years ago in Ukraine as a "little-known investment company".
GR Capital will usually write cheques up to a ceiling of €5 million to €10 million per company, targeting fintech, mobility, proptech, health tech and future of work sectors.
The firm now has above €200 million in assets-under-management, with the funds mainly stemming from Ukrainian and East European LPs, mainly successful entrepreneurs. Increasingly, it's reaching out to other European investors too.
In GR Capital's investment concept, these LPs are encourage to back western European tech investments, targeting growth-stage rounds typically at B or C-stage, and syndicating with top-tier lead investors.
GR Capital's roots in Ukraine then help portfolio companies translate their business models to work in east European markets, bringing best practices for business development into each locale.
The second fund has already made a total of four investments; in UK-based B2B SaaS platform Attest, German enterprise buy-now-pay-later credit provider Billie; French remote workforce management SaaS platform Workmotion; and another buy-now-pay-later provider in France called Alma.
Highlights from the inaugural vintage include German digital freight forwarding service Sennder, which currently offers logistics routes for humanitarian aid, and insurtech startup wefox, now trading in five European markets.