A Practical Guide to Investing in Ukraine's Defense Market

Most investment committees run Ukraine's defense sector through a single filter: country risk. That's the wrong level of analysis. Every deal has two separate layers — the operating environment the company sits in, and the company itself: its product, its order book, its cap table, its path to revenue. Collapse them into one number and every Ukrainian company looks the same. Separate them, and most of what actually decides whether a deal is fundable turns out to be about the company, not the country.

That's also why the useful diligence question isn't “is Ukraine safe” — it's “is this specific company's structure, IP and ownership clean.” That question is answerable, and it's the difference between a deal your committee can actually underwrite and one that stalls in the first meeting.

A risk that's insured and structured is a line item on a term sheet, not an unknown. And the presence of DFC / MIGA cover already does part of your diligence for you — these institutions don't underwrite assets they haven't scrutinized.

None of this is theoretical anymore. The government's own preferential-loan program for arms manufacturers just crossed 167 loan agreements and over UAH 10 billion disbursed — up from 162 agreements and UAH 9.8 billion in June — with 12 loans already fully repaid. That's the state's own capital following through, not just announcing. Here's what's actually changed between the first checks anyone wrote into this market and now.

None of this erases the operating challenges. It does mean the risk is finite, priced — and increasingly someone else's to hold if the deal is structured right.

A Ukrainian defense company is diligenced differently than a typical growth-stage tech company. The questions that matter are practical: has the product actually been used in the field, or only demonstrated? Is the revenue real, signed orders — or grants relabeled as sales? Is the ownership chain fully disclosed and clean? Does the company legally own its own IP?

Those four questions sit behind the six domains we run before a company reaches an investor's desk.

This checklist runs as an interactive self-score on our blog, with a downloadable version — link below in Good Reads.

So the target clears some of the six domains and not others. What now? None of the companies clearing committee today figured this out alone — there's now a working sequence.

Stage four is where most deals actually stall, so here's what our legal partner actually walks investors through. At seed stage, the mechanics are usually a SAFE or a convertible note — except a SAFE doesn't work under Ukrainian law, so a note is written against the Ukrainian entity with a clause that converts it into equity in the foreign holding once one exists, not the domestic company. Which jurisdiction that holding sits in follows the target market, not a default: the UK, Estonia and the US are the three that come up most. Forming the entity itself is fast, often three days; the real bottleneck is the bank account, which can take a month or more, because a payment provider that later discovers a company is dual-use rather than the generic “tech business” it registered as will simply decline the funds. IP has to be formally assigned into the holding before equity changes hands, structured so the transfer itself doesn't trip Ukraine's export-control regime on military and dual-use technology. And before any of that: full beneficial-ownership and sanctions screening on the investor's own side, not only the company's — treated as a precondition, not paperwork.

Every company we bring to an investor has already been through the six-domain check above — structure, IP, financials, ownership, combat record and export — before it reaches your desk.

If you want to see what's already cleared that bar, or want a second opinion on a deal you're already looking at, let's talk.

We're growing our legal bench for exactly the questions above, starting with a name worth knowing.

• What Returns Can You Expect in Ukrainian Defense-Tech? — the return math, not the pitch.
• The Due-Diligence Checklist for a Ukrainian Defense Company — the interactive six-domain self-score referenced above.
• The Cross-Border Holding, Explained — the structure that separates what you own from where it operates.

The investors already active in Ukraine's defense market didn't wait for a perfect risk picture — they moved once the structure, the numbers and the protections were clear. That clarity is what this newsletter is for.