Ukraine’s Space Startups Recalibrate to Meet the Challenges of the War

The Ukrainian space tech startup scene was only taking its first breaths when the Russian army invaded Ukraine. The war may set its development back, but it could also give it a boost. The outcome will depend on the decisions of Ukraine’s future government, insiders agree.

In 2021, Dnipropetrovsk University rocket engineering professor Vitaliy Yemets was finally ready to take his invention into the real world. For two decades, Yemets had been developing a novel launcher technology — a polymer-based rocket that completely consumes itself in flight.

Akin to an upside-down candle, the rocket has a simpler design than conventional rockets and could be manufactured more cheaply, Yemets believes. All of this makes the technology ideal for building small launch vehicles.

Yemets partnered with Ukrainian entrepreneur Misha Rudominski. Together, they launched Promin Aerospace and began looking for funding. At first, all went swimmingly, Rudominski tells Via Satellite. The company closed its pre-seed investment round with ease, which allowed them to expand the team and take the technology through lab testing.

In February 2022, Promin was ready to open its seed round, looking for $3.5 million to cover first larger-scale experiments outside the lab. Investors were already lined up and things were looking good.

But then, Russian tanks crossed Ukraine’s borders, turning life in the Eastern European republic upside down. Ukraine, which had gained independence from Russia in 1991 after 70 years of oppression within the Soviet Union, was ready to put up a fight and surprised the world with the strength of its resistance. As missiles began to rain on Ukraine’s cities and the sound of sirens became a part of everyday life, international venture capitalists, who were previously interested in investing in the nation’s emerging tech scene, quickly got cold feet.

“The funny story is that on February 22, two days before the full-scale invasion, I sent out emails to the interested investors saying that we were going to be raising and asking about their commitment,” Rudominski says. “The invasion started and every single one of those investors said — ‘Pause for now, too much risk.’”

The Promin team took the setback in their stride and continued with their engineering work.

“We had to adapt to the situation and slow down a bit,” Rudominski says. “We had to make do with the money we had for a while, but it didn’t stop us.”

A Nascent Commercial Industry

Ukraine has a rich and long history in aerospace engineering, research, and technology development. Sergey Korolyev, the brain behind the early Soviet successes in the Cold War era space race, was born in Ukraine and studied in its capital Kyiv at the Sikorsky Kyiv Polytechnic Institute, named after another famous native, legendary helicopter designer Igor Sikorski.

The state-run Yuzhmash rocket factory in Dnipro, built during the Soviet era, is one of the largest rocket-manufacturing facilities in the world. Until recently, Yuzmash supplied first stages for Northrop Grumman’s Antares rocket, which launches the Cygnus resupply cargo ship to the International Space Station. The state-run enterprise has also made parts of Europe’s light-weight Vega rocket.

Over 16,000 people are employed in the state-run space enterprises managed by the State Space Agency of Ukraine, about as many as work for NASA. But the commercial space-tech startup scene was only just beginning to emerge when the war began, as the state was only taking the first steps to loosen its grip over the space industry.

“It was only in 2020 when legislation allowing private space companies to be registered in Ukraine finally passed through the parliament,” Volodymyr Usov, an entrepreneur and former chairman of the State Space Agency of Ukraine, tells Via Satellite. “So, it really has been only since 2020 when you can legally establish a private space enterprise in Ukraine. Around 10 or 20 have been established since then.”

Still, there were teething problems that needed to be solved. The space agency didn’t have a proper program in place for supporting startups through the early stages of their development, says Usov, and so, most struggled to get to the level where international investors could be interested.

Recalibrating for the War Effort

When the war broke out, the Ukrainian Startup Fund, which before the war provided pre-seed funding for a wide range of tech ideas, restricted its activity to only support military technology that could help the nation’s warriors in the battlefield, leaving space-tech developers high and dry.

At that time, some companies chose to shelve their space projects and refocused on technology that could contribute to the war effort.

Kyiv-based Lunar Research Services had developed a 3D-printable educational nanosatellite kit called MySat and was about to begin shipping its first products to backers on the crowdfunding site Kickstarter. Instead, the company’s engineers disassembled those kits to scavenge parts that could be used by the military, and apologized to its Kickstarter followers. The company then reprogrammed its 3D printers to make simple parts to upgrade machine guns and tank periscopes.

The team eventually spun out a completely new company that makes aerostats for the military, the company’s founder and CEO Dmytro Khmara tells Via Satellite. The aerostats can be fitted with cameras and deployed to monitor the developments on the front line. They can also serve as communication repeaters that extend the range of military drones.

Software developer Roman Malkevych, who led a team of engineers that in 2020 won NASA’s International Space Apps Challenge, also refocused his efforts to help the war effort. Despite the success in the challenge, the team was struggling to find funding for their Universal Space Connector for satellite refueling. Now they volunteer time for “improving and fixing military technology,” Malkevych says. Other early-stage startups have followed the same path.

“People have switched to completely different technologies,” Malkevych tells Via Satellite. “It’s not that they’re finding military uses for the ideas they had been developing before. They are doing completely different things.”

Through contributing to the war effort, these companies can access the state funding that is currently unavailable for other projects.

Going Abroad

Not everybody was willing to abandon their projects, though. Usov, who left his post at the space agency in 2021, is currently heading a company developing a rendezvous and docking system for in-orbit servicing satellites. The startup is called Kurs Orbital and it was founded barely one year before the war broke out.

It builds on the legacy of the Kurs docking and navigation system — a technology that enabled the Soviet-made Soyuz and Progress spacecraft to autonomously dock in orbit. Developed and built by Ukrainian engineers, the technology underlying the Kurs system became the property of Ukraine after the fall of the Soviet Union, but for more than two decades Ukraine continued supplying the system to Russia. The cooperation ended in 2014 when Russia invaded and annexed the formerly Ukrainian territory of Crimea. In the ensuing years, Usov and the engineering team behind Kurs looked for ideas to develop new products based on the Kurs heritage that could find their place in the global market.

“We decided to build a new-generation system to enable in-orbit servicing for small satellites, platforms that can extend the lifetime of communication satellites both in Geostationary Orbit [GEO] and Low-Earth Orbit [LEO],” Usov says. “We are working on a standalone rendezvous and docking module, which can be easily integrated with different spacecraft.”

The company saw a lot of demand for such technology, Usov says. Not just for in-orbit servicing missions, but for space debris removal and space station infrastructure systems as well.

Just like Promin Aerospace, Kurs Orbital was in the middle of fundraising before the Russian invasion, and its founders also saw previously interested investors run away.

Usov and his colleagues decided to take advantage of the interest in their technology in Europe and set up another office in Turin, Italy. Even before the war, Ukrainian tech entrepreneurs had a harder journey into the global market than those in other European states. Ukraine is not in the European Union and thus can’t benefit from its single market and free movement of people. Despite its impressive aerospace legacy, the country is nowhere near joining the European Space Agency (ESA) either.

“We are still a Ukrainian company and have a team in Kyiv, but we now also have a team in Italy, which enables us to move forward with collaborations with the ESA ecosystem,” Usov says. “I think that’s the only strategy Ukrainian teams can follow right now if they want to keep attracting resources.”

Kurs Orbital now has partnerships within programs managed by the ESA and the U.S. Defense Advanced Research Projects Agency (DARPA).

Rudominsky says that Promin Aerospace didn’t consider a move abroad as it has easier access to talent in its home city of Dnipro. He also thinks that investors are slowly overcoming their fears and are reconsidering the idea of investing into Ukrainian companies.

“We are back in the process of fundraising,” Rudominsky says. “We think that the markets are changing back to where they were before the full-scale invasion. The investors see the ongoing military support from their governments and the commitment to a full Ukrainian victory and want to go back in because when Ukraine wins, everybody is going to come and invest in Ukraine, and they don’t want to be left out.”

When the War Ends

For the Ukrainian tech sector, the end of the war will present the beginning of a new struggle. They will have to persuade the government to finish the reforms initiated before the Russian invasion.

Usov stresses the need for the State Space Agency of Ukraine to create a program that would provide funding to help early-stage space startups to get their technology ready for the big world. He wants the agency to follow NASA’s example and create opportunities for the companies to compete for government offers.

Ukraine-born entrepreneur and investor Andryi Dovbenko sees a big need for change in the conditions the Ukrainian government puts on companies that receive government funding. Right now, says Dovbenko, companies that receive state funding to develop technology for Ukraine’s military need to transfer their intellectual property rights to the state, which shuts down further commercial opportunities.

“They essentially become part of the state infrastructure,” Dovbenko says. “That may be important during the war but it’s a disaster for any company because afterwards you don’t have any potential. It undermines your future.”

Rudominsky says that even after the war, the companies that have sprung up during wartime will still need the state’s help to keep going.

“Historically, the Ukrainian government has not been a big client for space services,” Rudominsky says. “There is no big internal market for space-tech and because of that, it's sometimes hard for small companies to build themselves up enough so that they can go international. That’s something that needs to happen.”

Joining ESA and having free access to the European market are other items on Rudominsky’s post-war wish list. Usov, however, is skeptical that will happen any time soon as ESA doesn’t appear interested. Yet Usov agrees that political will on the side of the Ukrainian government will determine the former Soviet republic’s post-war future.

“We have people, they have knowledge, they have the motivation,” said Usov. “They just need to have tools to move forward quickly because in the world of technology development today, speed is the number one factor.”

Dovbenko believes the war has energized the tech sector and brought together experts from different fields with the shared purpose of defeating Russia. Dozens of garage startups have sprung up all over Ukraine building drones, aerostats, anti-drone systems and other technologies that can be immediately tried and tested in the battlefield and subsequently improved based on real-world data. This momentum, he hopes, will help rebuild Ukraine when the war is won.

“Ukraine is a country of engineers,” Dovbenko says. “We have a very strong legacy of engineers from the old era, and we are also very strong with software development. When the war started, people with these different skills started coming together and working together to help the war effort.”

There may be up to 10 times as many small tech companies now than before the war, Dovbenko estimates, many of them only beginning to contemplate the idea that their garage-based war effort could turn into a proper business in the future.

Malkevych agrees: “A lot of people are actually quite excited because they have an opportunity to build a lot of things. We see a lot of companies that were sort of forgotten that used to make military technology during the Soviet era coming back and building new things.”

Life in the tested country goes on. Just like Rudominsky’s investors, common Ukrainians are gaining confidence from the ongoing international support and keep putting their best foot forward in the hope of a better future. When the war ends, they will face a new set of challenges, but many hope the wartime momentum will help create a new, better Ukraine.

“If life gives you lemons, make juice from them,” Usov says. “Look at what happened with the Israeli startup ecosystem. The war acted like an additional impulse for them, and they now have a vibrant tech startup environment. It will depend on the conditions that we can create for those startups and those people after the war.” VS

Tereza Pultarova is a freelance space and science tech journalist based in the U.K., whose work has appeared in Via Satellite, Ars Technica, IFLScience, and Supercluster. She was formerly a senior reporter for Space.com.