How to prepare for arms exports. A checklist for founders of Defense Tech startups
A window of opportunity is slowly opening for Ukrainian Defense Tech companies. As Ukraine prepares to lift restrictions on arms exports, the long-locked-down market will finally be able to expand beyond its borders. This will mean different budgets, rules of the game, and product requirements. How can you ensure you’re ready to enter Ukrainian technologies into the European and US markets?
We spoke with Deborah Fairlamb, Partner at Green Flag Ventures, and Tichomir Jenkut, Partner at Presto Tech Horizons, about the key steps, risks, and practices that Ukrainian manufacturers and startups should consider now.
Ukrainian Defense Tech is growing faster than the country can buy
First, the context: A full-scale war has caused one of the fastest growths in the defense technology sector worldwide. Ukrainian defense tech companies have unique advantages, including motivation to support the military, access to real-time feedback from the battlefield, and the ability to swiftly test their solutions in combat conditions.
Due to the high demand for drones, software, air defense solutions, and electronic warfare systems, many startups begin selling technology almost immediately after being created. This allows them to demonstrate high growth rates and attract the attention of Ukrainian and international investors.
However, a startup’s social mission does not change the fundamental fact that a business must be profitable. The domestic market is developing rapidly, but its size is limited. Currently, the Ukrainian army is the only buyer, yet the number of manufacturers is increasing. Consequently, many companies have already reached the ceiling of their production and sales capacity; they can produce more than the state can purchase.
According to the Ukrainian Council of Armaments Manufacturers, the industry has significant capacity reserves and could provide stable supplies to both the Armed Forces of Ukraine and its partners under the forecasted load. According to Technological Forces of Ukraine estimates, controlled exports could close financial gaps and provide up to half a billion in budget revenues, while giving the market an additional $1.5–$2.5 billion per year.
That is why the decision to launch the process of lifting restrictions on arms exports is vitally important for the industry. The weapons program announced by Ukraine’s president in October provides for the controlled entry of Ukrainian technologies into foreign markets. Thus far, 94.4% of ukrainian manufacturers have declared their readiness to export. The first deliveries to friendly countries in Europe and the U.S. are scheduled to begin in November 2025. Priority exports include naval drones, anti-tank missile systems, certain classes of UAVs, and electronic warfare/electronic protection systems. Meanwhile, the government is working with over 25 companies through the Build with Ukraine and Build in Ukraine initiatives.
How to Prepare for Arms Exports: A Checklist for Startups
First, decide who to sell to: governments or defense corporations
Before entering the export market, Ukrainian defense technology companies and startups must choose their primary buyer: the state or private defense corporations. This choice determines the pitch, the pace of sales, and the product requirements.
Corporations such as Palantir, Anduril, and Thales Group are faster due to less bureaucracy, more flexible processes, and quicker feedback from end users. However, the level of competition is higher here, and large companies often remain loyal to their current partners, making it difficult to enter this niche.
Governments provide access to large budgets and long-term programs. However, they have significantly slower procurement cycles, complex certification requirements, and are dependent on the political situation.
Research your customers and calculate the potential ROI
Before entering a new market, startups must know who they want to sell to and clearly understand their customers. This includes their organizational structure, budget cycles, procurement processes, current contracts, and their main pain points.
It is also important to assess the “window” for sales, including when customers are upgrading their systems, which products they need, and the potential ROI they could receive by purchasing your technology.
Start with smaller companies and markets that are most interested in your product
To enter the B2B market, startups should focus on small- to medium-sized defense companies first. These companies are more flexible, make decisions faster, and have shorter testing cycles for new technologies. Ukrainian developers can get their first quick “pilots” and prove the value of their product in such companies.
“Ukrainians have the ultimate access to testing and developing products. The understanding of the market and technologies is much better with Ukrainians.The presence of Ukrainian teams is vital for the success of startups, both from the customer and investor sides,” says Tichomir.
The same principle applies to country selection. Investors advise to start with smaller markets, especially those that border Russia and have a high level of interest in defense innovation: Estonia, Latvia, Lithuania, Finland, and Poland. These countries have shorter bureaucratic cycles, faster technology testing programs, and a greater willingness to work with new solutions.
Focus on business cases, not investor pitches
Investors may be interested in your idea or vision for the product. However, that’s not enough for a buyer. They need real cases, specific application scenarios, and clear business logic for implementation.
Prepare a presentation that clearly demonstrates the following:
- the potential ROI for the customer;
- how much the customer can save with your product;
- the effectiveness of the technology;
- the main advantages over competitors;
- provide examples of how the product can be used for the customer’s specific tasks.
When pitching a product, emphasize the client’s business goals rather than your ideas, vision, or market potential.
“We’ve seen many times that startups, especially in the economy, try to solve a couple of problems at the same time, and it dilutes the message for both the investors and the customers. It’s better to focus on one really specific problem and capability,” says Tichomir.
According to experts, a sales pitch in the defense tech sector should include the following:
- A one-page document that briefly explains the technology and its value.
- A short, 1–2 minute video demonstration of the product with real footage of the system in operation.
- Several use cases, or 3–5 examples of specific tasks that the product solves.
- A cost-benefit model with clear figures on savings and potential ROI.
- Concise technical documentation (three to five pages) for engineering teams.
- Confirmed TRL level and list of tests performed.
- Data on which tests the technology has passed.
- A brief product roadmap for the next 6–12 months.
- Information about certifications and compliance, as well as plans to obtain them.
- Contact information for technical, business, and legal representatives.
Start building relationships with the defense sector now
She explains that, in Europe and the U.S., the defense technology market is based not only on product characteristics, but also on trust and reputation. For this reason, long-term contracts are important for military structures and key decision-makers.
“The defense market in Europe is relationship-driven. Even though Ukraine has superior technology, it’s not always the best technology that gets picked by governments. Building relationships with end users and customers early on in the European market is essential. Even though the sales cycles are long, being visible early on helps to secure contracts down the line,” says Tichomir.
Maintain constant contact with investors, partners, and individuals who can represent you in target countries. Providing regular updates on product progress and results achieved increases visibility and improves the chances of winning contracts, even in long sales cycles.
Familiarize yourself with the regulatory requirements of EU and NATO countries
Companies planning to enter foreign markets need a deep understanding of the specific countries’ regulatory requirements. In most cases, Ukrainian manufacturers will have to undergo the same certifications as local defense companies, including NATO certifications, which greatly simplify sales to government agencies.
“NATO certification is crucial. If you get NATO numbers, it becomes much easier to present to governments. Strong IP protection is essential, especially when talking with brands. Also, be aware that each European country has its own regulations, so it’s important to start with smaller, advanced countries in the defense market, such as Estonia, Latvia, Poland, and Finland,” says Tichomir.
“Defense tech is not like fintech, where you can automatically go global. Startups need to think about where their biggest market is going to be. For example, if you’re in the United States, you may face ITAR export restrictions. In Europe, there’s more flexibility within NATO nations, so research upfront is crucial to understand the market you want to sell to,” says Deborah.
The success of your sales and the ease with which you receive approvals depend on the technology you are developing. Some jurisdictions have strict export regulations. For example, the US ITAR requires a separate government permit for the export of products related to national security.
Investors advise working with local lawyers from the beginning to properly build the legal structure of exports and avoid mistakes. Well-organized technical, legal, and financial documentation is also critical for earning the trust of European and American partners.
Your product must be at least TRL 6–7
Most defense corporations will not consider startups without a working prototype. The minimum threshold is TRL 6, which means the technology has been demonstrated under conditions similar to real-world conditions. Ideally, your product will be at TRL 7 and ready for a pilot launch and stable testing.
Green Flag Ventures does not consider startups with a Technology Readiness Level (TRL) lower than 7.
“The key advice is to aim for a TRL (Technology Readiness Level) of 7 at a minimum. This means the product is already ready to scale,” explains Deborah Fairlamb.
She says that this threshold immediately eliminates most of the investment risks associated with immature processes or an underdeveloped product.
Understand the market and analyze local competitors
This may seem obvious, but it’s still important. Before entering another market, clearly assess whether your product is needed there and who occupies this niche. For example, if you come to Anduril with your own drones, you will most likely be rejected because they already have their own solutions and do not plan to replace them.
It is important to identify your product’s key advantages compared to those already on the market:
- How technologically secure your product is.
- How reliable is it in use?
- What is the price-quality ratio?
- What is its competitive advantage?
For instance, the sales potential of high-tech drone systems in Europe currently exceeds that of small arms and anti-missile defense systems. The reason is simple: there are many more drones in Ukraine due to the growing demand and use resulting from active hostilities. The situation in Europe is obviously different.
According to Tikhomir Yenkut, drone systems currently have the greatest export potential to Europe.
“Drones are the number one area. The expertise in Ukraine is incredible. In addition, decentralized warfare—using radars, sensors, and small solutions instead of large fighter jets or tanks—is an area where Ukrainian solutions are superior. Smaller, decentralized solutions will win over the European market.”
It’s also important to remember that it’s more profitable and beneficial for governments and companies within a country to purchase local solutions because it strengthens the economy.
“In Europe, nationalism and protectionism plays a big role. Each country wants to buy their own solutions, so even though a Ukrainian product might be superior, countries often prioritize their own national solutions. Persuading them to buy better foreign technology is a long-term process,” says Tichomir.
Nevertheless, many Ukrainian solutions have already received high ratings on European markets.
“I believe the lift of export bans will drastically change the landscape. Ukrainian technology is superior, and once the restrictions are lifted, there will be demand for these products, especially in neighboring countries,” says Deborah.
How Will the Lifting of Export Restrictions Affect Ukraine, the EU, and the US Markets?
Once the restrictions are lifted, Ukrainian defense technologies will have real access to the global market. These technologies have three key advantages: efficiency, affordability, and proven effectiveness in combat conditions. The West is realizing that Ukrainian solutions are often more flexible, faster to produce, and more cost-effective than their cumbersome Western counterparts, particularly in the segment of drone and UAV countermeasure systems.
Tikhomir Yenkut believes Ukraine has a good chance of becoming a world leader in unmanned systems and decentralized warfare technologies because the country has accumulated the most combat experience and technological progress in these areas.
“I see strong growth potential. Ukrainian companies are not just looking to sell to the highest bidder — they’re focused on continuing to help defend Ukraine while also making a foothold in other international markets, particularly NATO-friendly countries. As the demand for Ukrainian defense tech grows, I believe these companies will thrive,” says Deborah.
According to the investor, many Ukrainian startups are already making rapid progress. Companies such as Swarmer and Himera are attracting the attention of foreign investors and could potentially expand abroad through direct sales or acquisitions by larger corporations in the future.
The removal of export restrictions could strengthen Ukraine’s role in the global defense market, establishing it as a key supplier of modern technologies to NATO partners.
Powered by WPeMatico
https://en.ain.ua/2025/11/21/how-to-prepare-for-arms-exports-checklist/