Despite the war, 59 Ukrainian start-ups represented their country this year at Web Summit in Lisbon

​While the war rages in Ukraine, the country's tech entrepreneurs are trying to stay positive.

“I don’t think there’s something in the world that could kill our ability to win and ability to do work or anything,” Valery Krasovsky, CEO and co-founder of Sigma Software, told CNBC on the sidelines of the Web Summit tech conference in Lisbon.

Source. CNBC talked to representatives of Ukraine at the tech summit.

Sigma, which has 2,000 employees based in Ukraine, equipped its offices with diesel generators and Starlink internet terminals to allow employees to continue working amid russian shelling of critical energy infrastructure.

Sigma was one of 59 Ukrainian start-ups that took part in the tech conference. Ukraine had a notable presence at Web Summit, where it sought support from the global tech community to counter the russian invasion.

According to Mr. Krasovsky, in 2021, Ukraine had a small booth at Web Summit. This year, it had a much larger stand, lit up in yellow and blue. It was surrounded by floods of visitors, with Ukraine’s first lady Olena Zelenska accompanied by armed guards.

On the opening night, Ms. Zelenska made an impassioned speech calling on tech entrepreneurs and investors to aid her country.

“You are the force that moves the world,” Ms. Zelenska told a packed audience on Tuesday. Whereas russia uses technology for “terror,” the international community has “technologies that can help, but not destroy,” she added.

Rebuilding with technology

Ukrainian officials and entrepreneurs stated that technologies would be the key in rebuilding the country after the war.

According to the World Bank estimates, Ukraine’s gross domestic product will contract by 45% during the whole of 2022.

“People in Kyiv and some other cities are building, they’re making business, they’re still exporting,” Dmytro Shvets, CEO and co-founder of Ukrainian social media start-up Reface, told CNBC.

Mr. Shvets runs Reface remotely from London, where he lives with his wife and four-year-old daughter. Around half of his near-200 person team continue to work in Ukraine, and when the bombing starts, people use the basement as a shelter to hide.

According to Mr. Shvets, Reface has rented a hotel for 50 people in Western Ukraine with separate infrastructure for electricity so they can continue to work safely. He added that the company had tried to “organically” relocate workers to Portugal, but convincing them to leave had been difficult.

“People have houses, families in Ukraine,” he said.

In an interview with CNBC, Ukraine’s first lady said it was “impossible to underestimate” the role of technology in Ukraine.

“In this situation, it’s hard to talk about sustainability, technology, progress, since we’re just trying to hold on and live our lives as normal as possible,” Ms. Zelenska pointed out. “Still, we have lots of startups, and I hope that all the ideas presented at this summit can push us to victory.”

Ukraine’s IT industry brought in $2 billion of revenue in the first quarter of 2022, according to the National Bank of Ukraine, which is 28% more than last year despite the devastation caused by russia’s invasion.

The war has displaced millions of Ukrainians, including technology professionals. Many have joined roles overseas. Once the fighting ends, it is hoped that those workers will return.

Some companies are ramping up hiring in Ukraine in a bet that the country’s tech industry will emerge stronger after the war ends.

Two months ago, Lithuanian VPN software firm Nord Security opened an office in Lviv. According to CEO Tom Okman, the company plans to hire 100 people there.

“We think it’s time to build back Ukraine and we think the talent there is great,” Mr. Okman told CNBC.

He noted Ukraine is home to thousands of skilled software programmers and engineers. “Just think how many American companies have IT outsourcing in Ukraine,” he said.

Several founders of billion-dollar “unicorns” come from Ukraine, including Grammarly’s Max Lytvyn and Alex Shevchenko and GitLab’s Dmytro Zaporozhets. Google, Samsung and Amazon also have research and development centers in the country.

But there are challenges beyond the war facing Ukraine’s tech ecosystem. The country’s venture landscape is still emerging. According to Dealroom data, start-ups in the country attracted only $22 million so far this year.

“There are no big inflows in capital to support what we do,” Mr. Shvets said. 

“What we should do properly now is show more examples of entrepreneurship.”

He believes the Ukrainian government should look to assist local entrepreneurs with tax incentives and other pro-business initiatives.

There are signs that sentiment from tech investors to Ukraine is improving, though. Last month, Horizon Capital, a Kyiv-based VC firm, raised $125 million for a start-up fund aimed at supporting Ukrainian founders. 

SID Venture Partners, a venture fund set up by Sigma and fellow Ukrainian tech firms Ideasoft and Datrics, has so far invested in 10 start-ups with Ukrainian founders. It plans to raise an additional $50 to $60 million from institutional investors.