Ukraine Military History Institute
The slow road is certification, and it is supposed to be slow
Eveline Buchatskiy, managing partner of D3, describes the ordinary route for a foreign defence founder in Ukraine as a test of persistence. One test, then another, then another version and another version, until the product reaches the point where it can even be certified.
She does not offer that as a complaint. It is simply the long way round. Then she names the alternative, and she calls it the backdoor: military aid packages.
How the backdoor actually works
The sequence she describes is short, and none of it skips the hard part.
A founder comes to Ukraine enough times to have a product that works in combat, or at least on the testing range. They collect letters of request from the brigades they have been working with. They take those letters to their own country's embassy in Ukraine and talk to the military attachés. And the product goes into that country's military aid package.
The design of that route is worth noticing. The demand signal does not start in a procurement office in the founder's home capital. It starts with a fighting unit, in writing, and the home government's role is to pay for something a unit has already asked for.
Buchatskiy also ranks the two ways a contract can be signed. A founder can sign directly with Ukraine or go through an aid package, and she calls the aid package the faster route.
For American founders, the government half of the route is closed
The route is not equally open to everyone. Buchatskiy says it is not quite the case for the US, and Sam Cook's reply is short and comes with a laugh: "that ship has sailed."
Cook then adds the other half of the picture. European countries will still buy US equipment that works, which he finds amazing. So an American product is not shut out of the aid package route. What an American founder cannot count on, on this account, is Washington being the government that carries the letter.
Germany signs on performance
The example Buchatskiy gives is Germany. She says she is extremely grateful to it, and the reason is speed: Germany has been signing contracts very fast, based on performance and on what the military actually needs.
Her explanation is about outlook rather than budget. In her telling, Germany is looking at this long-term and without tunnel vision, treating it as broader than its own backyard procurement. The view she attributes to it is that "we have a war to win that's very consequential to the history of Europe."
That is the useful distinction. A buyer procuring for its own forces asks whether a product fits its own requirements. A buyer that treats the war as its own problem asks whether the product works where the war is being fought, and a brigade's letter answers that question directly.
An order of magnitude, against two years of lobbying
The payoff, Buchatskiy says, is in the size of what gets signed. Contracts won this way, directly or through an aid package, are on a different order of magnitude from what a founder can get back home.
Cook sets that against the American alternative. He knows American founders who have to make tough choices, and some try to do everything at once, including hiring a lobbyist. The reason is that it can take two years to get written into a National Defense Authorization Act and secure a budget. His question is why a founder with a limited amount of money, while a war is going on, would spend precious resources that way. He allows that a company with the money can do both.
The second return comes in the funding round
Buchatskiy's last point is that time spent in Ukraine pays back twice, and the second return is in equity financing.
A founder with that experience can go back to the smarter investors with evidence: the units they work with, the results, the logs and the videos, and, if it has reached procurement, the units actually using the product. Her version of the pitch is "I am the real deal" and "it actually works." From there, she says, a founder closes one round of financing, then another, then another.
She says she has examples in her own portfolio. Some are companies only two or three years old with revenues of around half a billion a year, funding of half a billion already, or both. She puts that down to perseverance and boldness, and singles out Perennial Autonomy as a company she can only applaud.
What to watch
- German contracts for Ukrainian-tested products. If Germany keeps signing quickly with companies that can point to brigade use, Buchatskiy's account of why it signs fast holds up.
- American products in European aid packages. Cook says European countries still buy US equipment that works. American products appearing in European aid packages would show the route stays open to US founders even with Washington out of it.
- Young companies at half a billion. Buchatskiy cites portfolio companies two or three years old with half a billion in revenue or funding. Disclosed contracts and rounds are where that claim can be checked.