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Why Ukraine is Europe's DefenceTech Lab · EU-Startups Podcast

• 0:00
  Speaker 0: You are now listening to the EU startups podcast.
• 0:13
  Speaker 1: Hello, and welcome to this episode of these stars podcast as always.
• 0:16
  Speaker 1: I'm your host did send Garcia the editor here at you.
• 0:19
  Speaker 1: start ups today.
• 0:20
  Speaker 1: chat with Andreas flood strong And i'm hoping i pronounced that correctly.
• 0:25
  Speaker 1: he might know him as The co-founder Of the tech development software company beetroot.
• 0:31
  Speaker 1: Now beat root is based out of sweden but it's also notable for having offices in ukraine.
• 0:36
  Speaker 1: It's just involvement with Ukraine and on a technological level, on a professional level that eventually pushed Andres into founding co-founding the VC firm Varangians.
• 0:50
  Speaker 1: Varangian is specifically known at least for my end because it has very specific focus on defense tech, on rearming Ukraine, on rearming Europe.
• 1:01
  Speaker 1: they don't draw this kind of line in sand.
• 1:05
  Speaker 1: also dual-use technologies, the way many VCs do that they say their specific focus is on dual use.
• 1:12
  Speaker 1: Meaning it also has a defense application as well.
• 1:25
  Speaker 1: we will be able to chat about that thesis as well, is how he sees the overall progress of Ukraine when it comes to war.
• 1:33
  Speaker 1: The way technology and innovation plays a hand in this process?
• 1:37
  Speaker 1: How Europe has interacted with Ukraine—the gaps and challenges at our left —and even where she sees their relationship between Europe and Ukraine five or ten years from
• 1:47
  Speaker 1: now?".
• 1:48
  Speaker 1: So I hope you're looking forward to that conversation!
• 1:51
  Speaker 1: Hello, Andras.
• 1:52
  Speaker 1: Welcome to the EU Starbs Podcasts.
• 1:54
  Speaker 1: It's a pleasure to have.
• 1:56
  Speaker 0: Thank you.
• 1:56
  Speaker 0: Great to be here
• 1:58
  Speaker 1: great, so I'm very much looking forward today's episode.
• 2:01
  Speaker 1: We generally don't actually have a lot of defense tech on here even if it's funding or investors or entrepreneurs.
• 2:10
  Speaker 1: i found that It's kind of closing its circle in terms Of what people can talk about?
• 2:16
  Speaker 1: About what they want to talk about.
• 2:17
  Speaker 1: So I am very much Looking forward to having chat with You Today because you are adjacent To all of it and you Are focused in On it from a part of what you do, so I'm very excited to have the chat today.
• 2:29
  Speaker 1: But before we get into it i've already given us sneak peek.
• 2:31
  Speaker 1: but if you could just give this maybe an intro as to who you are and uh would you do?
• 2:37
  Speaker 0: Great yeah!
• 2:38
  Speaker 0: So I am Andreas Swedish um...but I moved to Ukraine in two thousand twelve To start a company.
• 2:47
  Speaker 0: me and my co-founder Gustav.
• 2:48
  Speaker 0: We had an idea that we wanted to create The Tech Company And made the world a little bit better In different ways.
• 2:55
  Speaker 0: That was our romantic idea and we kind of fell in love with Ukraine, found a lot great people.
• 3:03
  Speaker 0: A lot potential but very few Western entrepreneurs.
• 3:08
  Speaker 0: so we dig right there.
• 3:10
  Speaker 0: as started Beetroot which is originally to large extent the software development house where we work with five hundred plus clients throughout years in twenty-five different countries building all kinds of software Until twenty-twenty two, not in defense tech.
• 3:29
  Speaker 0: That's something that has come later.
• 3:31
  Speaker 0: but we worked in edtech health tech green tech things that we perceived as making the world better and we still do.
• 3:41
  Speaker 0: And then when the war started or Russia started a war We started Peter Academy As originally an help for Ukrainians to become part of this sort of global tech economy, so we have educated around five percent of all active software developers in Ukraine.
• 4:03
  Speaker 0: We were spread out all over the country like nineteen locations before COVID.
• 4:08
  Speaker 0: nowadays it's online based and these days I mean they stood both this sort of civil tech side of Bitroot and Bitroot Academy.
• 4:17
  Speaker 0: there still very much ongoing but my focus right now is very heavily on the defense tech And that's something that has come gradually from twenty-twenty two and onwards.
• 4:29
  Speaker 0: So these days, Beetroot are supporting different companies in Europe than other places who sort of entering the Ukrainian defense tech market.
• 4:39
  Speaker 0: it could start from discovery finding partners The market understanding your place there to eventually building up your local R&D or even production.
• 4:52
  Speaker 0: Then the Academy is now very focused on educating for skills that are relevant to Ukrainian defense tech industry.
• 4:59
  Speaker 0: We will educate around one thousand people this year who are engineers in Ukraine's defense tech industries and last year we started a company called Varengens, where we're investing technologies which help Ukraine win the war.
• 5:19
  Speaker 0: as a number one priority and As the number two priority, we are also looking to build bridges And help us build up our European defense with these capabilities in companies.
• 5:35
  Speaker 0: Yeah
• 5:36
  Speaker 1: That's very good summary of what you do.
• 5:39
  Speaker 1: I think it paints a nice picture before getting into our engines out.
• 5:42
  Speaker 1: Think beetroot is a good place to start And I am kind of curious, because you draw so naturally the connection between beetroot Ukraine Berenjians and how it's all just one smooth Passover.
• 5:54
  Speaker 1: But maybe dig in a little bit more into that?
• 5:56
  Speaker 1: Because i don't think that is clear.
• 5:58
  Speaker 1: What was about?
• 5:59
  Speaker 1: beetroot got to thinking about technology innovation How could tie-in to Ukraine?
• 6:05
  Speaker 1: Eventually what became Ukraine war effort?
• 6:09
  Speaker 1: as you say Beetroots found in twenty twelve which before the whole conflict in Ukraine.
• 6:15
  Speaker 1: So how did that kind of evolve into what it is now?
• 6:20
  Speaker 0: We had a very romantic impact to vision and we have throughout years been focused on, I mean starting from being great place for work to developing local tech communities in mid-sized cities getting more women into tech to develop software which makes difference in different ways.
• 6:40
  Speaker 0: Until twenty-twenty two, we did not do anything in defense tech.
• 6:43
  Speaker 0: It was even as many Impact sustainability companies We had.
• 6:47
  Speaker 0: you know categories of things that don't like to work with the tobacco porn gambling and Defense Which is I guess wrong?
• 6:58
  Speaker 0: And then they became very clear.
• 7:02
  Speaker 0: When when you are a country this is attacked by your neighbor It comes naturally from the sense that, I mean if you put it bluntly Ukraine has a very strong tech sector and technology is Ukraine's best chance to win this war.
• 7:21
  Speaker 0: And obviously If your then running tech companies or part of that community its quite natural that you're starting.
• 7:31
  Speaker 0: think what our role in this?
• 7:34
  Speaker 0: I mean, our role we didn't see are also sort of starting our own defense tech product company but rather working as part of the ecosystem supporting both Ukrainian companies and army units directly.
• 7:52
  Speaker 0: That was kind how it started back in twenty-two when everything was very like grass roots based on so one to eventually realizing that being Swedish Ukrainian company with Sweden being a very strong tech nation and also a strong defense nation, but not very strong defense-tech nation yet.
• 8:18
  Speaker 0: So having that whole background of being in Ukraine for long time and having built up this network with those people who worked throughout the years starting to build things at this protecting Ukraine We're trying to sort of connect those dots in different ways.
• 8:36
  Speaker 0: And the good thing with being working on a... Those different angles is that they have great synergies with each other, Of course when we educate people for the industry That creates one level of network When it can be then utilized companies between Sweden and Ukraine.
• 9:00
  Speaker 0: And of course, when you invest to get another angle.
• 9:02
  Speaker 0: so all of these things.
• 9:04
  Speaker 0: So I usually say that they have a couple different jobs But there are all focused on one thing this day's and it is to help Ukraine To win the war and for Europe to build up our defense capabilities.
• 9:17
  Speaker 1: Okay The name itself of the VC Varangians has history too which I thought was kind of cute kind of.
• 9:26
  Speaker 1: your own PR came across my desk.
• 9:29
  Speaker 1: You want to explain that really quickly for the viewers?
• 9:31
  Speaker 0: Yeah, so maybe most people don't know but the Berenjens were specifically Swedish Vikings who are in Tivrus around a thousand years back and being a Swedish Ukrainian company.
• 9:48
  Speaker 0: you wanted sort-of connect historical dots.
• 9:50
  Speaker 0: But it's also another level which is Russia is really trying to erase or claim big parts of Ukrainian history as part of their original story.
• 10:06
  Speaker 0: So it goes with the Ivar engines that Russia's trying to use, the Ivor engines are a part of its origin.
• 10:12
  Speaker 0: and so saying we're the Iver Engines which is very strong Swedish-Ukrainian connection.
• 10:21
  Speaker 0: And then you need to name your company something.
• 10:51
  Speaker 0: as beetroot is the main ingredients of borscht, Ukrainian national dish.
• 10:55
  Speaker 0: It's like you can sort-of play around with this, we're all... Ingredients for these tasty soups.
• 11:02
  Speaker 1: Getting into I guess that work of rangins because it got the etymology down which We don't always get a good clear explanation on.
• 11:10
  Speaker 1: so i'm happy to give here.
• 11:12
  Speaker 1: but then The work of it As they said before That he came across our desk Because of the fund You raised and out was I've come in notes somewhere over ten million And that wasn't too long ago, so you're raising money.
• 11:25
  Speaker 1: You've already invested at least the time it was for companies.
• 11:28
  Speaker 1: I don't know if that's gone
• 11:30
  Speaker 0: out but six now six minutes.
• 11:33
  Speaker 1: So i want to kind of hear a little bit about The distinction before you between defense tech applications and dual use applications because actually your one Of the few funds That i have seen that draws A very strong line on defense tech that it says very much we invest in defense tech for the protection of Ukraine, for re-arming Europe and Sweden.
• 11:54
  Speaker 1: That kind of language actually isn't that common In most things I see is dual use And they try to angle at that way saying sure this could propel a rocket.
• 12:06
  Speaker 1: It can also fly an airplane.
• 12:09
  Speaker 1: They tried not be too hard on it But i found your material was clear on what it wants to do.
• 12:17
  Speaker 1: So how do you see that distinction?
• 12:19
  Speaker 0: And I mean, we all know why the ULU's expression is so popular because It's a way to be able to invest in defence tech without saying its clearly that right?
• 12:29
  Speaker 0: No!
• 12:29
  Speaker 0: We are a niche fund.
• 12:31
  Speaker 0: ten million euros Is not big in the fun world but it is significant In the Ukrainian defense tech context.
• 12:41
  Speaker 0: Our purpose with this fund Again, number one help Ukraine to win the war.
• 12:47
  Speaker 0: So dual use is not a criteria for us.
• 12:50
  Speaker 0: I mean we are perfectly happy and hundred percent sure that lot of technologies developed will be used rather application in future.
• 12:57
  Speaker 0: but For Us The reason on this fund existing Is for Ukraine To Win War And therefore We want to Be Very Clear with That and it has to very clear everyone who invests in our engines.
• 13:10
  Speaker 0: This is the Purpose Of This Fund.
• 13:14
  Speaker 0: Yeah.
• 13:16
  Speaker 0: I can maybe sort of broaden that, the whole... I think it's usually interesting how the fund... Again we have Beetroot Academy where deep into Ukrainian context and so on.
• 13:28
  Speaker 0: And honestly like two years ago i had not really thought about starting a fund.
• 13:34
  Speaker 0: The reason for doing that was.. I started publicly in mainly Swedish media say we have to have more European money into the Ukrainian defense sector.
• 13:46
  Speaker 0: It's like, first of all ridiculously little in the Ukrainian defence tech as a whole In terms for private money and very small percentage is actually european And even smaller Swedish obviously.
• 13:58
  Speaker 0: so I was out saying that um i was contacted by A number of swedish family officers who are Like okay We're ready.
• 14:05
  Speaker 0: how do you That?
• 14:08
  Speaker 0: Well companies to run and you know, I don't have fun experience.
• 14:13
  Speaker 0: And i'm not a military background or whatever.
• 14:15
  Speaker 0: but on the other hand... ...I happen to be very deep into this tech ecosystem.
• 14:20
  Speaker 0: so what we did there is teamed up with my two core co-founders Parlagir and Yunus Redin both with a strong military background.. ..and also Tech & Entrepreneurial yeah So both of them had been very engaged in Ukraine But from another A little bit another angle with power being working a lot to be lessons learned from Ukraine.
• 14:43
  Speaker 0: From the start of the full scale war, there are lots military contacts both on Swedish and Ukrainian side Of course And then Jonas being in the military Entrepreneurship an investor ecosystem for the last twenty years.
• 14:56
  Speaker 0: So he had been focused on this industry for the past twenty years and also been Working but with Ukraine.
• 15:01
  Speaker 0: so together we kind of create unique Yeah unique source for this.
• 15:09
  Speaker 0: But it's a little bit unusual that we all of us are doing these alongside other things, which is just a little uncommon when you run a fund.
• 15:20
  Speaker 0: but the positive thing with everything else they do is connecting into this ecosystem.
• 15:30
  Speaker 1: So then to play a little about The Devil's Advocate kind of to see this through the other side, because we're talking about dual use and you're explaining here your focus on defense second where that's coming from.
• 15:40
  Speaker 1: Is there ever any critique levied against?
• 15:44
  Speaker 1: You have saying local.
• 15:45
  Speaker 1: isn't it just a bit of war profiteering?
• 15:47
  Speaker 1: if If you're focusing saying We are going to be providing money to companies to technology That specifically for defense uses or use in active war zones How do you make the distinction of saying profit from it?
• 16:05
  Speaker 0: No, I mean every fund has a purpose of making money in the end right.
• 16:13
  Speaker 0: From our starting point which is maybe a little bit unusual and its similar to Bitroot's starting point but not in a defense context that are... The purpose for us as a company, for Varendians, it's winning the war!
• 16:26
  Speaker 0: The purpose of Bitroot was to create impact-changing lives building products.
• 16:33
  Speaker 0: Commercial tools are very efficient and it's heavily underused tool for the Ukrainian tech ecosystem.
• 16:43
  Speaker 0: So, its still a very underfunded space.
• 16:46
  Speaker 0: And good thing here is that there no contradiction.
• 16:50
  Speaker 0: This of course like high risk in investments In many different ways.
• 16:55
  Speaker 0: But putting priorities as one Ukraine win the war to Europe building up defense.
• 17:04
  Speaker 0: Three, making money.
• 17:06
  Speaker 0: If we fulfill our part of fulfilling priority one and two Number three is very likely to be successful.
• 17:15
  Speaker 0: So yeah I think i partly answered your question.
• 17:20
  Speaker 1: Sure so then if say the worn ukraine ends You know in tomorrow for whatever reason hopefully the right reason Let's say it ends.
• 17:31
  Speaker 1: Then what would Varangians purpose be after that?
• 17:35
  Speaker 1: Would it continue to defend an armed Europe or would they kind of see the funds and
• 17:42
  Speaker 0: so took a couple different things there.
• 17:44
  Speaker 0: I think first of all, unfortunately i don't believe in sort-of strong permanent end on the war In The Near Future And... I would love too but I think history and reality shows that this unless the so-called Russian Federation falls into pieces and disappears from the map, we're gonna have this threat for a long time to come.
• 18:17
  Speaker 0: That goes for Ukraine but it also goes for Europe especially in countries close to Russia like ourselves.
• 18:25
  Speaker 0: I don't know if i answered your question fully.
• 18:36
  Speaker 0: Ukraine and the need of strong European army is unfortunately going to be there for a foreseeable future.
• 18:45
  Speaker 0: And therefore we need to invest in this, yeah?
• 18:51
  Speaker 1: Yeah I mean i think you're right.
• 18:52
  Speaker 1: We are seeing that through here.
• 18:54
  Speaker 1: our coverage uh...I had a quick look actually at this past year see how things were kind of shaping up as per what we've looked at almost seven hundred million going to defense tech startups in twenty-twenty six and Almost three billion Going into Defense Tech dual use funds raising money for investing In these different sites.
• 19:19
  Speaker 1: So clearly there is Definitely enough activity go under enough interest.
• 19:23
  Speaker 1: you're not alone on it.
• 19:25
  Speaker 1: But then how?
• 19:27
  Speaker 1: so we could call this kind of a defense tech moment for Europe that Ukraine has kind of pushed us Into?
• 19:33
  Speaker 1: How do you see Ukraine's role in the future?
• 19:37
  Speaker 1: and all of that, right?
• 19:38
  Speaker 1: Because you talk about the innovation tech coming out of Ukraine.
• 19:42
  Speaker 1: Do see it as a good starting point to base the wider European push... What does that look like for
• 19:48
  Speaker 0: them?
• 19:49
  Speaker 0: You know I think one important number to add there is how much private capital has gone into Ukrainian defense tech.
• 19:57
  Speaker 0: because There's lot international support Of course the spending on the army But private money, and this is not an exact number now.
• 20:11
  Speaker 0: I'd say roughly from the start of the full-scale war into Ukrainian defense taxing it's one hundred fifty million euros.
• 20:18
  Speaker 0: So a big question for me here if we have enough funds or maybe there isn't but... The main thing is to disbalance because you had an ecosystem in Ukraine with two thousand five hundred companies.
• 20:30
  Speaker 0: most of them did not exist in twenty two.
• 20:36
  Speaker 0: More than half of what is used in the war, it's produced in Ukraine.
• 20:41
  Speaker 0: So there are hundreds maybe thousands of companies that have battle proven solutions But very little funding.
• 20:50
  Speaker 0: partly That is because if they do something useful They can immediately sell.
• 20:54
  Speaker 0: so we don't need a same type Of funding.
• 20:57
  Speaker 0: but on the other hand and I will not point out specific companies... ...but you just do some quick research you will find that there are plenty of companies in Europe and they have more funding than the whole Ukrainian defense tech scene together, but has not yet proven themselves on the battlefield.
• 21:21
  Speaker 0: So I think it's sort of a big question here why is that gap so big?
• 21:30
  Speaker 1: Is that then what you look for primarily when you're looking to invest in a company?
• 21:33
  Speaker 1: Because if invested in six, I imagine you've got your eye on others.
• 21:37
  Speaker 1: What's the criteria?
• 21:38
  Speaker 1: and is it battle tested as that kind of like an undisputable just has to be put into practice on the battlefield through.
• 21:45
  Speaker 1: really consider investing.
• 21:47
  Speaker 0: yeah For now It would say even better proven which doesn't have to mean but it's like at scale.
• 21:53
  Speaker 0: of course.
• 21:54
  Speaker 0: You know we have a couple of prototypes that worked in certain conditions.
• 21:57
  Speaker 0: so one we always look for end user feedback.
• 22:01
  Speaker 0: So this is the difference again, if you invest in most of not all but if you're investing most European Union defensive startup that you will not be able to call the end-user on the war zone and ask for direct feedback right?
• 22:13
  Speaker 0: And so that's one criteria.
• 22:17
  Speaker 0: what was the other question?
• 22:19
  Speaker 1: just What does it say?
• 22:20
  Speaker 1: I mean
• 22:21
  Speaker 0: yeah well Yeah i mean so yep We looked for...so The main criteria Is like..we tried To have our little little fun, and we try to think how can these euros be used most efficiently for supporting Ukraine's effort.
• 22:37
  Speaker 0: So of course that needs to be companies not only having a strong product today but who are able to develop quickly because whatever works today might not work in half-a year and it is constantly changing.
• 22:50
  Speaker 0: There are successful companies or those which are able.
• 22:57
  Speaker 0: Feedback, of course.
• 22:59
  Speaker 0: And then classical stuff like the team, majority of this and that... The main difference here is we are very heavy on the battlefield effect.
• 23:13
  Speaker 0: due diligence That's what they're looking most into
• 23:19
  Speaker 1: From which you've seen in Ukraine defense tech sector.
• 23:23
  Speaker 1: how much danger there losing out on this talent and technology that moves into maybe these larger companies you speak of, more funding than the entire country.
• 23:36
  Speaker 1: Is Ukraine experiencing a leading of its talents in professionals?
• 23:40
  Speaker 1: Or do feel they are very much dedicated to staying in the country developing a technology company providing jobs within the country... What does it look like?
• 23:51
  Speaker 0: It's good question.
• 23:52
  Speaker 0: I don't see Talent League.
• 23:55
  Speaker 0: There are risks for the border, and this is a little bit like controversial in Ukraine.
• 24:01
  Speaker 0: A question about the export right?
• 24:03
  Speaker 0: So as I see it... The Ukrainian defense sector actually not only to win the war but also an important instrument becoming truly independent Like having industry that can finance itself and the country rather than being eternally dependent on support from outside.
• 24:34
  Speaker 0: So I think that export question is important, it's sensitive but there are risks for industry if Ukraine doesn't manage to get those questions together.
• 24:45
  Speaker 0: There a lot of work going on in this, some progress challenging part.
• 24:54
  Speaker 0: I would maybe switch to question a little bit, but the risk is more on European side because there are still lots of equipment used in Ukraine around about fifty percent than Europe or US and outside of Ukraine.
• 25:17
  Speaker 0: But most comes from support packages that the different governments provide.
• 25:24
  Speaker 0: And there are exemptions of this as well, but to a large extent these companies who send things to Ukraine.
• 25:32
  Speaker 0: they don't have this sort of feedback loop set up in a similar way as the Ukrainian company.
• 25:36
  Speaker 0: so I think the big risk here on a European continent level is more us continuing preparing for the last war or whatever's continuing procuring big systems that might be taken out by something, the cost a fraction of all that rather than embracing the new reality basically.
• 26:03
  Speaker 0: So I think it's...I don't see like at risk as you say talent leak or so and need for collaborations.
• 26:16
  Speaker 0: Ukraine have different programs for this.
• 26:18
  Speaker 0: I mean, Bray one has these sort of testing Ukraine.
• 26:21
  Speaker 0: so Ukraine as a very actually open approach like come to us.
• 26:23
  Speaker 0: but there's still Very few international companies that are truly on the ground and That is needed.
• 26:32
  Speaker 0: So Another part of that i mean ukraine stands for i think conservatively at least ninety percent Of the european Drone production today.
• 26:44
  Speaker 0: And There are Like The biggest Players that didn't really exist before, like as one company produces several times more than the whole European industry together.
• 27:01
  Speaker 0: That doesn't necessarily mean Europe needs to sort of reinvent wheel and start from scratch with building our own industry.
• 27:10
  Speaker 0: so what makes sense here is a collaboration used by Ukrainian knowledge.
• 27:16
  Speaker 0: it's going be hard compete with that twenty four seven loop and unfortunately almost five years of full-scale war.
• 27:24
  Speaker 0: But what is needed for Ukraine, I think in Europe to combine this Ukrainian quick iteration loop would really mobilizing the European deep tech capabilities because things put together innovating iterating so on these things are moving very fast.
• 27:45
  Speaker 0: What is more challenging are things that takes a really long time to develop.
• 27:49
  Speaker 0: It could be new material, it can be something based on twenty years of research.
• 27:53
  Speaker 0: Of course Ukraine's very focused here and now in what will work for the next six or eighteen months.
• 28:03
  Speaker 0: Here we need to connect our system.
• 28:09
  Speaker 0: As for me Ukrainian is going to be key for European defence foreseeable future.
• 28:16
  Speaker 0: go as far saying, I don't really see right now how Europe could defend itself without Ukraine.
• 28:24
  Speaker 0: Because unfortunately the enemy on the other side which is Russia are also innovating and they're also scaling.
• 28:35
  Speaker 0: And while we are mobilizing more money We are taking certain important steps in the right direction is still increasing, the capability gap of modern warfare between Ukraine and rest of Europe.
• 28:52
  Speaker 0: And our enemy Russia is... ...increasing.
• 28:58
  Speaker 1: Okay so you've covered a lot things there actually.
• 29:01
  Speaker 1: But but you mentioned keyword that which was GAP.
• 29:04
  Speaker 1: That's kind of place someone to take this into as well.
• 29:07
  Speaker 1: Is what do think it left for this to mobilize in correct way?
• 29:12
  Speaker 1: You mention already feel theres enough funding around And there's clearly enough innovation and technology, people wanting to take things forward around.
• 29:21
  Speaker 1: So what is the missing ingredient?
• 29:23
  Speaker 1: Is it public interest in war or getting involved?
• 29:28
  Speaker 1: What are you missing?
• 29:31
  Speaker 0: It isn't a political will on top level at least in the Nordic countries.
• 29:38
  Speaker 0: I think The core thing that is missing how we deal with procurement.
• 29:49
  Speaker 0: So, and again I'm not going to sort of solve all questions in this conversation but what is really different when you work with the Ukrainian defense tech industry from where you worked with European companies?
• 30:03
  Speaker 0: Is that... Ukrainian companies?
• 30:06
  Speaker 0: they have a lot of potential clients on different routes for procurement.
• 30:13
  Speaker 0: You can sell through the centralized system But most small companies, they don't start that.
• 30:19
  Speaker 0: While in Europe you always go through the centralized system so... You can sell directly to the brigades and use the BrayOne marketplace which is like an Amazon ordering equipment online where it's delivered within days or weeks.
• 30:36
  Speaker 0: It also connected with the next level of E-point systems Where essentially you get points for creating enemy losses and those points are converted into buying equipment, so it's a gamification that is very far from the European system.
• 30:52
  Speaker 0: So to check... The point is like the defense tech market in Ukraine acts more like functional markets if you might say that way.
• 31:07
  Speaker 0: You don't have run after one big government contract to get started.
• 31:13
  Speaker 0: Most companies don't start that way, while in Europe and most countries this is your only potential buyer.
• 31:25
  Speaker 0: So when Ukraine created Brave One the Ukrainian National Innovation Fund as a base they didn't start it through... They started because old centralized procurement system was broken like all native countries, more or less.
• 31:45
  Speaker 0: And they did that not as part of the Ministry of Defense but just a part of ministry digitalization.
• 31:52
  Speaker 0: So sort starting from clean sheet and then combining grants partnerships investors networking.
• 31:59
  Speaker 0: so you find completely different dynamics in industry.
• 32:04
  Speaker 0: it's very decentralized.
• 32:06
  Speaker 0: I would probably argue there is no one in Ukraine who has full overview.
• 32:11
  Speaker 0: But Bray One is the one platform that's really supporting the ecosystem in many different ways.
• 32:20
  Speaker 0: That was created as a parallel structure of the original centralized old-school procurement system, which also being reformed.
• 32:30
  Speaker 0: so I think most... The US has the DIU system and BrayOne was partly inspired by it.
• 32:40
  Speaker 0: But most countries, as far I know and i'm not an expert in European work and procurement but what everyone keeps coming back to is that you sort of... And also as a investor.
• 32:51
  Speaker 0: You're investing any company That either gets the big contract from government or not While in Ukraine we have this constant iteration different clients.
• 33:04
  Speaker 0: So it's much more chaotic environment innovative, I would say.
• 33:11
  Speaker 0: And there is really no hindrance for European companies to join the Ukrainian market for real.
• 33:18
  Speaker 0: and i think that's another challenge that a lot of companies are... Of course you have been trained in this centralized system.
• 33:25
  Speaker 0: so even when you're going sort-of..I have a product it might be useful for Ukraine.
• 33:29
  Speaker 0: It's little bit like you expect your own government to sell it or make a deal which maybe works if its big important systems.
• 33:38
  Speaker 0: but That's not how you build a defense tech company in Ukraine.
• 33:45
  Speaker 0: And there are some good examples of few, but they're also good example of non-Ukrainian companies that have sort become part of the Ukrainian ecosystem in different ways and...
• 33:56
  Speaker 1: Okay well then to wrap this up because it will be my final question But just building on everything we've said so far.
• 34:03
  Speaker 1: The only real questions I think left is In your opinion Then Are We Moving In The Right Direction?
• 34:09
  Speaker 1: when it comes to strengthening the relationship with Ukraine, both on an innovation scale and a political-scale economic scale.
• 34:17
  Speaker 1: Is it moving in the right direction or are these difficulties and procurement lines hesitant?
• 34:24
  Speaker 1: When is that hindrance only going to pause our development of the country?
• 34:34
  Speaker 0: So we are definitely moving in the right direction.
• 34:36
  Speaker 0: I think that question is, Are you moving fast enough?
• 34:38
  Speaker 0: And then they answer no We're not even moving close to us as fast as we need and there Is a thing on how many different levels There's a sense of urgency.
• 34:46
  Speaker 0: There is A lot Of good people In their systems but there is a Lot of bureaucracy Holding us back and i'm talking now about European side.
• 34:59
  Speaker 0: And this is a challenge for Ukraine too, because even like Ukraine has built the fantastic ecosystem during full-scale war and so on.
• 35:09
  Speaker 0: But of course we also need to mobilize innovation in other European countries.
• 35:19
  Speaker 0: We really needed that to be able to do it.
• 35:23
  Speaker 0: So...we are moving in the right direction but not fast enough I am afraid not decreasing, but increasing.
• 35:33
  Speaker 1: And that's why Varangians is here to help out along?
• 35:37
  Speaker 0: Okay!
• 35:37
  Speaker 0: Trying to do our piece then.
• 35:39
  Speaker 1: Great well I'm sure we'll hear more about you at least from the You Start Up site will be closely watching and hopefully get there.
• 35:47
  Speaker 1: write some new announcements about a brand-new fund or any of your investments.
• 35:52
  Speaker 1: so until them thank you very much for coming on address.
• 35:54
  Speaker 1: it has been pleasure and hope to chat again soon.
• 35:58
  Speaker 0: Pleasures great to have you.
• 36:00
  Speaker 1: Thank you.