Could Ukraine Be The Next Silicon Valley?
Even among the sordid histories of Eastern Europe, Ukraine is particularly tragic. In just the 20th century, it wasstarved by Stalin, decimated by Hitler, subjected to seventy years of incompetent Soviet rule, looted by its own government and, most recently, invaded by Putin.
Ukraines situation today remains desperate. The country is in dire financial straits, dependent on financial assistance from the IMF, US and EU. Crimea has been annexed, the eastern provinces of Donetsk and Luhansk are caught in a frozen conflict and its chief antagonist, Russia, controls its gas supply.
Yet still, Ukraine is not without promise. While much of its Soviet era industry lies dormant within the conflict zone, its tech industry is booming. I recently talked with Yevgen Sysoyev ofAVentures, a venture capital firm in Kyiv, and he thinks that we may be seeing the birth of a new Ukrainian renaissance. While that may sound crazy, he might very well be right.
What Makes A Tech Mecca?
Ever since Silicon Valley emerged as the center of the technology world in the seventies and eighties, others have tried to followed its lead. Most have failed, but a few, such as New York, Tel Aviv, and Austin have succeeded brilliantly. No one has unseated the Bay Area yet, but these places have built thriving technology startup scenes.
If youexamine todays startup hubs further, it becomes clear that they all have some things in common. Each, for instance, has strong universities turning out capable technology talent. They also have whatRichard Floridacalls theCreative Classa tolerant environment that promotes an active subculture of art galleries, music scenes and avant garde cafes.
Anybody familiar with the technology industry in Ukraine knows that Kyiv has these things in spades. It is already a thrivingoutsourcing center. Elance, the leading online freelance site,ranks Ukraineas the third best place in the world to find people with advanced skills. Kyiv is a fun place, with a thriving culture and, above all, is tolerant and inviting.
Yet there is a final element that Ukraine has been missing. Every great startup culture requires a catalyst, one breakout company that spawns the local financial and professional networks new firmsneed to thrive. Silicon Valley hadHewlett Packard, Tel-Aviv hadICQ, and New York hadDoubleclick. In Ukraine, theres no one, but that may soon change.
Ukraines Emerging Technology Ecosystem
AVentures Sysoyevestimatesthat the Ukrainian tech industry is worth about $5 billion and splits the market into four distinct sectors. The first, outsourcing, is the most developed and employs roughly 50,000 engineers across 500 firms. A small but growing contingent of global R&D centers set up by Samsung and other tech giants makes up the second sector.