This article contributes to the Friends of Europe’s Peace, Security and Defence programme and Ukraine Initiative. Its insights feed into the Jacques Delors Friends of Europe Foundation’s broader Spending Better initiative, which seeks to optimise defence spending, strengthen European institutions and capabilities, and enhance Europe-wide preparedness and societal resilience.
Working across digital transformation, innovation policy and global partnerships around Ukraine, I keep seeing the same pattern: the gap between how the country’s business environment is perceived from afarand what it actually produces when you engage with it directly. The partners, investors and governments who move beyond second-hand assumptionsand engage directlytend to arrive at conclusions that look almost nothing like what they expected, and they tend to become significantly more committed as a result. Few articulatethat transformationmore clearly than Andriy Fedoriv, founder and CEO of Fedoriv Group and Fedoriv Agency, whose perspective on Ukraine’s business environment is grounded in three decades of building businesses inside it.
Born in ice water
Ukrainian businesses developed their particular relationship with speed, resourcefulness and consequential decision-making because the market demanded it from the start. The path to scale required bootstrapping on cashflow, reinvesting almost everything they earned and operating with a tolerance for incomplete information and fast iteration that more well-capitalised environments simply never require. The result is a generation of owner-run companies that reached significant scale entirely on their own resources, businesses that are, in Fedoriv’s words, “crash-tested by default,” having operated through financial crises, revolutions and full-scale warwithout losing the ability to move fast, decide quickly and deliver results. Being born in ice water means treating uncertainty as a normal operating condition rather than a reason to pause.
That capacity shows up most visibly today in defence technology. Ukraine has the fastest innovation cycles in the world for battlefield technology, with iteration timelines compressing from years to weeks because the feedback loop between engineering and deployment is immediate. The engineering culture that Fedoriv identifies as one of Ukraine’s defining advantageson the battlefield is the same culture that built the country’s leading consumer companies and digital institutions. Four years ago, Western partners came to Ukraineexpecting to give advice and transfer proven models. Now, as Fedoriv puts it, they come hoping to acquire knowledge and technology.
One foreign client described the market this way: Ukraine is real America in the centre of Europe, specifically the America of the late nineteenth century, when the risk-reward equation looked like adventure rather than asset allocation, incumbents were few and builders could still define entire sectors from scratch. In almost every sector, the space to grow and the opportunities to build are larger than in any comparable economy. One example is Monobank: when Apple launched Apple Card, Monobank, one of Ukraine’s leading banks, had already been offering those features – and significantly more – to its users for three years.
A venture-friendly market
Ukraine is venture-friendly across multiple sectors in a way that few European markets can match. Payback periods of two years are not unusual, and returns over three to five years are considered long by local standards. Ukraine currently has approximately five times fewer entrepreneurs than the market needs, around 400,000 entrepreneurs compared with an estimated two million needed. For institutional investors who bring structure alongside capital, that gap is precisely where the opportunitylies.
The investors who are building real positions now have replaced second-hand information with direct observation, and they tend to be direct about what that shift produces. One German investor already active in Ukraine described the logic: by the time the war is over, it will be too late to start. The time to engage is now.
Building like a startup, not like an institution
Diia illustrates what this environment can produce at an institutional level. In six years, it helped take Ukraine from 102nd to 5th place globally in digital public services and now serves 24 million users. The product emerged from the Ministry of Digital Transformation, a ministry built from scratch as an IT company, with sprint rhythms, startup culture and a founding team that treated citizens as users who could walk away rather than as captives with no alternative. Its success was fundamentally about time to value: registering as a private entrepreneur went from fifty-four bureaucratic steps to fourteen.
The conditions that enable high-performing products are clear: a greenfield team given a hard problem, scarce resources and a clear existential target; genuine permission to fail in early iterations; and an obsession with how quickly a user reaches something genuinely useful. Governments that want to build at that level cannot copy the interface. They have to cultivate the same mix of urgency, freedom and accountability that made those products possible.
Culture is the real competitive advantage, Fedoriv argues.Features can be copied, but cultures cannot. This is as true for a challenger bank as it is for a ministry, and as true for any European institution or company looking to understand what Ukraine produces and why it travels well. The speed, the open market and the culture of building from scratch produce something harder to quantify: Ukraine, as Fedoriv puts it, makes you feel young.
For European partners still watching from a distance, the practical question is not whether Ukraine’s business environment is worth engaging with. It is how long they can afford to wait before the positions being built today become tomorrow’s established advantages. As Fedoriv puts it: “Don’t listen to propaganda, don’t listen to the news and don’t be afraid. Buy a ticket and come to Kyiv. You will be surprised with what you see.”
This article draws on insights from “FORWARD with Valeriya Ionan”, a podcast for decision-makers and builders. The full conversation with Andriy Fedoriv, founder and CEO of Fedoriv Group and Fedoriv Agency, that informed this article is available here.
The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.
