Russia's ongoing war in Ukraine has accelerated the development of defense technologies, with Ukrainian startups increasingly focusing on solutions that address specific battlefield needs. Among the investors backing these efforts is Double Tap Investments, a Ukrainian seed-stage investment firm deploying private Nordic capital into defence technology.
The firm focuses on early-stage R&D teams developing technologies ranging from autonomous systems and drones to thermal imaging, rockets, and missiles.
In a conversation during Engaged Investments Conference with Petr Šíma of DEPO Ventures, Oles Khudoba, co-founder of Double Tap Investments, discusses the firm's origins, the challenges of investing in pure defense technologies, opportunities for international cooperation, and where Ukrainian startups can make the biggest impact.
Petr Šíma: Double Tap is now part of the defense ecosystem, but it started in a completely different way, correct?
Oles Khudoba: Correct, yes. Before that, I was involved in different initiatives, including the Brave1 ecosystem. I think that when Brave1 started, it marked an important moment for our ecosystem.
We originally thought that every country could benefit from this kind of system. But Ukraine has become something of a testing ground for everyone.
Long story short, investing in defense wasn't originally my choice. It happened because of the war. My background is actually in classical finance and asset management.
Petr Šíma: So you invest purely in defense?
Oles Khudoba: Yes, exactly. Our original idea was to invest exclusively in Ukrainian defence companies, not dual-use technologies.
Of course, there are all these discussions about legal structures, dual-use applications, and other considerations. But our focus is much more directly on defense.
Petr Šíma: I also invest in defense, but I invest in dual-use technologies as well. From a business perspective, it makes more sense because single-use companies can have a really difficult time.
The companies you invest in are probably delivering exclusively to Ukraine right now. Are they also delivering elsewhere?
Oles Khudoba: It's really difficult. And I want to make one more comment about dual-use technologies from a business perspective.
If you're looking at traction, revenue, and commercial opportunities, of course it's much smarter to invest in dual-use technologies or companies that can serve civilian markets.
But from the perspective of the war, it's different. My colleagues from Finland also see things differently because they share a 1,340-kilometre border with Russia.
It's good that many investors are now looking at dual-use technologies, but we also don't necessarily want our defense companies to shift towards delivering civilian products when we still urgently need military capabilities. We're trying to create an investment approach that reflects those needs.
Petr Šíma: But I don't really see much dual-use activity among Ukrainian startups. I mostly see pure defence technologies.
Oles Khudoba: Yes, that's true.
Petr Šíma: From my perspective, even within defense, there can be different applications. For example, a technology might be developed for artillery but also be useful for the air force.
Ukraine is different because of how the brigades operate and how the procurement system works. I would even say it's more advanced in some respects.
When I was last in Kyiv, at the Invest in Bravery Summit, I noticed a huge change in the mentality of Ukrainian startups. Companies like Airlogix and others are becoming much more confident. They know they have something the rest of the world doesn't have.
That's why I think exports should also be on your mind. I see significant export potential in many Ukrainian startups developing impressive technologies.
Oles Khudoba: I agree. I think the export potential could easily double their production capabilities.
But when we talk about international cooperation, I think we need to distinguish between different models. For example, there's cooperation with Germany involving companies like Airlogix, where the focus is on joint R&D and developing something new.
Then there are partnerships involving companies such as Quantum Systems and Frontline, where the arrangement is different. It's more about production and assembly in Germany.
There are also licensing arrangements. These are all possible approaches, but the export market still doesn't have enough deals, and many of the agreements remain relatively small.
Petr Šíma: You have Finnish investors in your fund (Jan-Erik Saarinen, ed. note). Do you have a structure for connecting Ukrainian technologies and startups with the Finnish industrial ecosystem?
Oles Khudoba: Absolutely. We also support product development. For example, we help companies from Finland and other countries test their products in Ukraine and receive relevant feedback from military units.
We work directly with end users on both sides, so it's not just about investment. We can also provide consulting on technological processes and product development.
We're currently looking at integrating technologies from other industries. For example, we're working with an automotive company that has around 600 engineers. They develop very sophisticated systems for automotive brands.
Some of their software could also be used in unmanned ground vehicles, UAVs, and other defense applications. We're exploring how to make those connections.
Petr Šíma: That's interesting. You've mentioned that you have five investments you can talk about. What exactly are you looking for when making an investment?
Are you looking for specific technologies that can be deployed immediately, or are you willing to invest in technologies that still need significant development?
Oles Khudoba: Again, our main goal is to address the needs of the front line. We're looking for teams capable of developing technologies that solve real problems.
Even after almost three years of development, some projects are still not finished. For example, we're working on small drones, and the product is still under development because it's a relatively new technology.
The market isn't particularly large yet, but we continue investing because we believe the technology is important.
As an investment company, we're more flexible. For us, strong engineers and capable founders are essential. We also see people coming from major international companies such as Amazon and Uber and applying their experience to defense technology.
For example, there are founders from companies like Petcube, which became very successful and was part of Y-Combinator. Petcube originally developed pet cameras and treat dispensers. Now, some of the people behind these kinds of businesses are working on defense technologies, including autonomy and thermal imaging. The scale of what some of these teams are producing is remarkable.
Petr Šíma: Based on what you're seeing in Ukraine, which areas of battlefield technology do you think startups can genuinely transform, and where are their limitations? For example, developing ballistic missiles might be beyond the capabilities of most startups. Where do you see the biggest potential for startups to make a real impact on the battlefield?
Oles Khudoba: Startups are extremely flexible, and they can adapt and update their technologies very quickly. Almost everyone in our ecosystem has relatives or friends serving in the military right now. That creates a very direct connection between the people developing technologies and the people using them.
I work with unmanned systems, including ground vehicles, and we've seen how quickly requirements can change. Right now, I see enormous potential in autonomy, software solutions, drones, and other unmanned systems.
Unfortunately, private companies are often moving faster than government programmes. I still believe that government support for Ukrainian startups isn't sufficient. We have certain prioritized technology verticals, which is good, but those priorities aren't always updated quickly enough to reflect what's actually needed on the battlefield.
It's difficult to say that startups can only operate in certain areas.
Of course, artillery and other large military systems require substantial resources. But we're increasingly seeing small teams take on projects that previously would have seemed impossible.
Some companies started in garages and are now developing production lines and sophisticated systems. Ultimately, it's a matter of time, money, and having the right R&D team.
One of the biggest challenges we're facing is a shortage of engineers. If you're a good engineer and want a competitive salary, Ukraine is an interesting place to be right now.
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