Made in Ukraine: WSJ reveals how drone makers attract millions from the West

Ukraine, which has become a global leader in the use of drones in combat, is now attracting growing attention from foreign investors. Western funds are actively pouring money into Ukrainian defense-tech startups, helping them expand abroad and reach a new level of growth.

One example is venture firm Green Flag Ventures, founded in 2023 in Los Angeles and Kyiv, which has reported rising interest in its first 20 million dollar fund.

Co-founder Justin Zif noted that Ukrainian drone makers have proven their effectiveness and become less risky for investors after securing steady revenue and clients outside the country. Another major boost came after Kyiv allowed defense companies to export their products.

One of the most notable investments was a deal with Kyiv-based Swarmer, which raised 15 million dollars in September, including American capital. It is the largest investment in the sector since the start of the full-scale war.

The startup, which began in a garage, develops AI-powered software to coordinate swarm drone attacks. The company plans to use the funds to open offices in Warsaw and Austin, as well as to continue developing new technologies.

Meanwhile, US-based Ondas Capital announced plans to invest at least 150 million dollars in battle-tested technologies, primarily those developed in Ukraine.

At the same time, four European venture firms announced plans to invest a total of 100 million dollars. Interest in Ukraine's defense tech sector has multiplied, as shown by this year’s defense conference in Kyiv, which gathered around 5,000 investors and executives compared to 1,000 last year.

Despite risks linked to corruption history and market saturation, foreign money is already having a significant impact on the industry’s development.

In July, Teletactica, a company that produces drone-based communication systems, raised 1.5 million dollars, including investment from Green Flag. This funding allowed it to expand production for front-line needs and launch operations in Latvia and Estonia.

In addition, US-based MITS Capital merged four Ukrainian defense companies into a single structure, MITS Industries, registered in Denmark to simplify management and attract Scandinavian clients. Germany's Quantum Systems acquired a 10% stake in Kyiv-based drone maker Frontline to help scale its production.

Frontline, which started out in an abandoned building, now employs more than 100 people. Its main drone costs around 3,000 dollars — less than one-sixth the price of comparable Western models.

Ukrainian startups are offering cheaper and more efficient solutions, drawing attention not only from private funds but also from governments. The Pentagon has already signed contracts with several Ukrainian companies, while the United Kingdom and Denmark have entered into agreements to produce drones domestically using Ukrainian technology.

Currently, Ukraine has more than 300 drone manufacturers, with hundreds more emerging across Europe and the United States. Experts predict that the industry will undergo a major transformation after the war ends, but those companies able to maintain their leadership will have enormous growth potential.

Weapons production in Ukraine

President Volodymyr Zelenskyy said that Ukraine is preparing agreements for controlled weapons exports.

He emphasized that exporting certain types of armaments, which are in surplus, could provide Ukraine with additional funding to produce systems that remain in deficit.

According to Zelenskyy, the Armed Forces have already tested new Flamingo and Ruta missiles in combat. He also announced that new strikes on enemy targets are planned in the near future.

The president also reported that Ukraine has successfully used Neptune missiles and plans to regularly deploy its own ballistic missiles in the future.