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A Ukrainian defense company does not fail diligence on the things a SaaS startup does. It fails on whether the product has been fielded or only demonstrated, whether the revenue is real orders or repackaged grants, whether the ownership chain is clean of any Russian nexus, and whether the company actually owns its IP. Here is the investor-side list — six domains to work before you wire, the war-risk register beneath them, and the two red lines that end a deal on their own.
Why diligence here is a different exercise
The mechanics of a raise are the same everywhere — the instrument, the exemption, the escrow are standard. What changes for a Ukrainian defense company is what you are actually checking. Four things pull the list away from an ordinary technology diligence.
- Fielded, not demonstrated. The claim that matters is whether the product has been used in combat, at what scale, and with what result — not a range video. A demonstration proves the thing can work once; a deployment record proves it does.
- Orders, not grants. Non-dilutive money — Brave1, state grants — is a signal, not revenue. The pipeline that prices the company is signed and repeat orders, usually with the state.
- The team is not a mobilization risk. Defense-tech companies hold critical-enterprise status and reserve their key people; founders are not being called up. Treat reservation as a strength to verify, and never price it as a risk.
- Export control governs what can move. Whether the product is dual-use or military decides how — and whether — it can be sold, licensed or taken abroad. That classification is part of the asset, not an afterthought.
The six domains to work before you wire
Everything an investor checks in a Ukrainian defense company falls into six domains. The interactive list below is the working version — tick what a company you are looking at can already show, and the score tells you how close it is to surviving a serious diligence. The full checklist is downloadable.
What to diligence before you wire — the six domains
The investor-side list, not the founder's. Tick what a company you are looking at can already show — the score is a self-assessment, not advice.
Too little is confirmed to price the risk. Start with the two red lines — the beneficial-ownership chain and the IP assignment — before anything else.
The table is the same list at a glance — the one thing that decides each domain.
| Structure & cap table | The foreign holding owns the OpCo, and it is what you buy into |
|---|---|
| Intellectual property | Assigned to the company, not personal to founders or contractors |
| Financials | Revenue is orders and deliveries, not grants or letters of intent |
| Sanctions & ownership | The full beneficial-ownership chain, clean of any Russian nexus |
| Combat record & contracts | Fielded, not demonstrated; a real state pipeline, not a market slide |
| Export & compliance | Classified, permitted, with key staff reserved |
Two of these are worth a closer look, because they are where good companies still fail a diligence. IP is the first: in a young company the code, designs and firmware are often written by founders and contractors and never formally assigned, so the company you fund does not own the thing you are funding. Ask for the assignment agreements, not assurances. The second is the ownership chain — not the visible shareholders, but the beneficial owners behind them, screened to the end.
- Beneficial-ownership chain
- The real people who ultimately own or control a company, traced through every intermediate holding, not just the names on the share register. In a defense deal it is screened to the end against the sanctions lists: a single Russian, Belarusian or sanctioned link anywhere in the chain — even a minority one — is disqualifying, so the chain is disclosed and documented as a precondition, not a formality.
The war-risk register
War risk does not sit in one domain — it runs under all of them, and it is diligenced as a register of specific, checkable items rather than a single line about “the situation.” What you are confirming is that the company has already engineered around it.
- Production is dispersed. Manufacturing split across sites, not a single hall that one strike removes; critical tooling duplicated.
- Continuity is planned. A documented plan for power, connectivity and relocation — and evidence it has held, because most operating companies have already been tested.
- Key-person risk is capped. The company does not stop if one founder is unreachable; knowledge and access are shared, and reservation covers the people the company cannot lose.
- IP and data are backed up abroad. Source, designs and the corporate record exist outside the country, usually at the holding, so the asset survives the operating site.
The red lines that end a deal on their own
Most diligence findings are gaps to close on a timeline. Two are not — they end the deal regardless of how good the rest looks.
- Any Russian nexus. A Russia, Belarus or sanctioned-party link anywhere in the ownership or supply chain — checked on the beneficial owners against the state sanctions register — is an absolute disqualifier. There is no grey zone and no threshold below which it is tolerable.
- Grey IP. IP the company cannot show it owns — personal to a founder, held by a contractor, or contaminated by open-source or export-controlled third-party code. It is the one gap that can survive a whole diligence unnoticed and void the value after close.
Two softer failures sit just behind them: grants dressed as revenue, and a demonstration dressed as a deployment. Neither kills a deal outright, but both change the price — and both are exactly what this list is built to surface early. For the founder-side view of the same picture, the legal-risk map lists what a company should fix before an investor arrives; whether the company is fundable at all is the subject of what makes a defense company investable.
Frequent questions
Published: 1 August 2026