Which Ukrainian defense tech niches are most attractive for investors?

At the end of 2023, the Ukrainian defense industry was estimated at $3B. In 2024, this figure may increase to more than $5B; a notable part of this total is the defense tech segment. Domestic manufacturers’ market share is expected to grow by 5% every year and may reach 65% by 2027.

The state remains the main growth driver for Ukrainian defense tech: the Brave1 defense cluster received ₴1.5B in grant support for startups this year. However, private capital is not far behind: this year, five more funds were added to the D3 and Green Flag Ventures accelerators, which invest specifically in defense tech. They are most interested in UAVs, electronic intelligence and warfare, robotics, AI, cyber security, and demining.

Investors are generally ready to consider any technology with solid growth potential, the ability to scale, and a clear export strategy. For general-purpose funds, dual-purpose products can be attractive. However, many investment funds currently do not invest in defense tech due to an insufficient understanding of the market, investor restrictions, and a lack of exports.