The ongoing war conflict has prompted Ukrainian businesses to seek stability and growth by entering international markets, including the US. For some Ukrainian entrepreneurs, expanding into international markets is a necessity due to wartime conditions. For others, it is a strategic move to broaden their business footprint and scale up operations.
Geopolitical situation affecting Ukrainian business’ expansions
The Polish-Ukrainian Startup Bridge report reveals that most Ukrainian startups primarily serve local customers. However, 24% of respondents identify the United States as their main market, while 13% focus on Poland. This suggests a strategic shift toward expanding in the US rather than Europe.
Mergers and acquisitions are widely recognized as effective strategies for expansion, offering various benefits such as market entry, diversification, and enhanced capabilities.
“Shifting geopolitical dynamics and business resilience considerations prompt businesses to seek technology partners who are physically present and deeply integrated into the enterprise operations,” commented Valery Krasovsky, CEO and co-founder of Ukrainian Sigma Software Group.
In 2024, M&A activity remained a key part of the domestic market, making up 38.6% of total deal value and 53.1% of deal volume. The number of domestic deals held steady at 26, just one more than in 2023, reports the European Business Association.
Source: The Polish-Ukrainian Startup Bridge report, 2024
The challenging geopolitical and financial environment has also impacted the interest of foreign investors. Notably, the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) jointly invested $435 million in a merged Ukrainian telecom entity, marking the largest direct foreign investment since February 2022.
Ukrainian Sigma Software Group acquiring A Society Group
The last two months have been turbulent as the current decline in US-Ukraine relations since the White House summit between Trump and Zelenskyy happened rapidly. This will inevitably affect all sectors, raising concerns about the stability of business operations in the region.
Nevertheless, we see that M&A activities are continuing as usual. A recent example of mutual collaboration in the IT sector was the announcement that Ukrainian IT service provider Sigma Software Group had acquired US-based A Society Group, Inc. “This expansion is driven by the need for closer collaboration with our existing and potential clients, and we aim to prioritize and foster it throughout the transition process,” shared Sigma Software Group’s representatives for The Recursive.
Sigma Software Group has been a partner to North American businesses for over two decades, supporting both industry leaders like AOL, AT&T, and Motorola, as well as tech startups. The group established its first US office in 2014.
The Group noted its global footprint has long been a strategic priority, addressing the impact of geopolitical shifts on Ukrainian companies expanding abroad. “Although our company has Ukrainian roots, we’ve grown into a global business operating in 21 countries. Strengthening our presence in the US aligns with our long-term goal of staying close to our customers, offering onsite expertise while leveraging our remote R&D centers worldwide.”
When asked about potential acquisitions or partnerships in North America, the company remained open to future opportunities. “Synergy is at the core of our global strategy. We are always exploring new partnerships and collaborations,” shared company representatives.
Intellias acquiring C2 solutions to drive US expansion
Alongside Sigma Group, Ukrainian software firm Intellias has acquired C2 Solutions, a US-based tech services company, to accelerate its US expansion. The deal was sealed in Q1 of 2024.
Serving industries like mobility, retail, finance, and telecom, Intellias specializes in AI/ML, cloud, DevOps, IoT, and data analytics. The company operates across North America, Europe, the Middle East, and Asia, recently expanding into Poland, Croatia, Bulgaria, Portugal, Spain, India, and Colombia.
This follows Intellias’ 2022 acquisition of UK-based Digitally Inspired and ongoing partnerships with major brands like HERE Technologies, TomTom, and HelloFresh. “Strategic M&A plays a pivotal role in reaching the goal to support our clients around the world with technical expertise and deep industry knowledge as we continue to build on our track-record of robust organic growth,” Michael Puzrakov, co-founder and Executive Chair of Intellias, commented for AIN.
