SPOTTED: At our Kyiv party announcing our coming expansion of Counteroffensive Pro to cover European defense tech/regulation, under a new banner, The Arsenal! (More on that soon!)
Perry Boyle, co-founder of MITS Capital;
Oles Khudoba, co-founder of Double Tap Investments Ltd;
Mykhailo Stukalo, COO at Nezlamni Fund;
Iryna Supruniuk, comms/bizdev director at Odd Systems and TheFourthLaw.ai;
Serhii Vysotskyi, deputy head of National Association of Ukraine’s Defense Industry;
Anastasiia Holumbiovska, communications at Ukrainian Council of Defence Industry;
Roman Steblivskyi, policy expert at the Economic Security Council of Ukraine;
Victor Shapovalov, CEO & Founder of ZMIYAR;
Serhii Markovskyi, independent advisor and manager;
Maria Gurska, PR manager at Brave Inventors accelerator.
BLUF: The Ukrainian military will soon get an influx of weapons manufactured in partner countries. Western partners will later be able to supply their own militaries with drones, missiles, or artillery systems produced by these Ukrainian companies. So far, joint projects with Denmark are in full swing, while work with Lithuania and Norway is following close behind.
For the first time, Russians attacked a Ukrainian warship with a naval drone. Russia’s Defense Ministry says the Simferopol sank after the attack. STAG is developing a sea drone that it says will carry interceptors to counter Russia’s kamikaze drones.
And the vast majority of private manufacturers are waiting for the lifting of export restrictions so they can enter new markets, according to the results of the Tech Force in UA and BRDO survey.
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THE BIG STORY: Ukraine’s strategy to increase overseas production
President Zelenskyy announced the ‘Build with Ukraine’ program back in June, laying out a plan to boost the country’s defense capabilities by establishing overseas enterprises to manufacture drones, missiles, and artillery systems for the Ukrainian military.
The program's participants include Denmark, Germany, the Netherlands, the United Kingdom, Lithuania, Canada, and Sweden.
The main requirements for partner countries are that the technologies produced under the program must not be transferred to Russia or its allies, and the country should either finance the Ukrainian defense sector or publicly state its intention to do so.
For Ukraine’s partners, it’s an opportunity to gain access to Ukrainian technologies that have been tested.
What the program will provide
Ukrainian manufacturers are expected to transfer their weapons production technology to foreign countries, but ownership rights will remain with Ukrainian companies.
A man works at a drone manufacturing facility for the Armed Forces of Ukraine on August 30, 2023, in Kyiv, Ukraine. Photo by Vitalii Nosach/Global Images Ukraine via Getty Images
Since Zelenskyy’s initial announcement, an agreement with Denmark was quickly signed. Denmark also allocated 67 million euros to kickstart production within the country. Manufacturing will be located there, but the products will be supplied to Ukraine.
Drones, deep-strike drones, and missile capabilities are among the pilot projects with Denmark, the Ukrainian Council of Defence Industry (UCDI) told Counteroffensive.Pro.
As part of an agreement announced on August 24, Denmark is also said to be helping to co-produce Ukraine’s 155mm Bohdana self-propelled howitzers, loitering munitions, drones, and electronic warfare systems.
Raybird-3 reconnaissance drone. Photo taken from Skyeton’s website.
Program implementation is at various stages in different countries.
London will finance the production of drones over a three-year period to meet the Ukrainian military's needs. After the war ends, both countries will be able to distribute UAV products according to their respective needs.
Lithuania has also gotten on board and has expressed interest in starting the production of naval drones, including the Magura V5 sea drone. It is expected to work on a one-to-one basis, with one drone to go to Lithuania for each one sent to Ukraine. Lithuania will cover the costs of both. A memorandum to that effect was signed with Ukrainian Defense Minister Denys Shmyhal just last week.
Progress has also been made on setting up projects with Norway, where talks are underway at the defense attaché level. The Nordic country has its eye on drones and counter-drone solutions, as well as ground drones, sea drones, and electronic warfare systems, Sigbjørn Albertsen, senior adviser for energy and miltech at the Norwegian-Ukrainian Chamber of Commerce, told Counteroffensive.Pro.
There is no publicly available information so far on the participation of other countries.
According to the UCDI, Western partners are primarily interested in:
all types of drones, from reconnaissance to deep-strike;
missiles;
artillery and ammunition.
Meanwhile, there are still several issues that will have to be addressed to ensure overseas production can be done smoothly, according to Oleg Tsilvik, acting head of the State Service for Export Control. He listed them as:
Final product pricing: production abroad will be more expensive due to local taxes and salaries;
Protecting against sabotage at production facilities;
Legislative barriers on the part of the partner countries;
Protecting intellectual property (IP).
“It remains unclear whether technology transfers should be included [into agreements] ... Who is responsible for their preservation?” Tsilvik said.
What needs to be done on Ukraine's side
The Verkhovna Rada recently approved in the second reading legislation to establish Defence City, a special economic regime for defense enterprises. This provides simplified conditions for overseas exports (Read about its pros and cons via the link.)
Simply put, ‘Build with Ukraine’ is a political program, while Defence City provides the regulatory basis that will enable it to work, Tsilvik explained. For now, the transfer of technologies abroad is still prohibited.
But that may soon change, as the legislation calls for Ukraine’s Defense Ministry to create relevant regulatory acts within a month, including those for establishing the Defence City registry, said Tsilvik, who added that he believes the all regulatory process may end up taking longer.
Ukraine’s MoD is in charge of coordinating the ‘Build with Ukraine’ program. For now, it’s unclear how a Ukrainian company can be part of the initiative given the questions surrounding technology transfer.
According to the UCDI, however, producers will definitely need to have codification (or certification of their products by the MoD), a clear structure of the intellectual property rights involved, and they also must be prepared for compliance with export control, sanction regimes, and ethical norms.
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BUSINESS LUNCH TOPICS: What our reporting shows!
Russian Innovation Tracker: Russia boasts first successful strike on a Ukrainian ship with a naval drone
For the first time ever, a Russian sea drone attacked a Ukrainian ship, the medium reconnaissance ship Simferopol. Two crew members were killed, with several others wounded or missing, according to the Ukrainian Navy.
The strike marks a significant shift in the war as Russia begins embracing a tactic that Ukraine first became known for.
More importantly, the emergence of Russian naval drones could pose a threat not only to military targets, but also to civilian cargo ships transporting grain, said one Ukrainian naval drone developer who spoke anonymously due to security concerns. Approximately 80 percent of Ukrainian exports travel through sea corridors.
Ukraine will also need to develop countermeasures to this new threat, with faster and more maneuverable AI-based naval drones among the possible solutions. They could be stationed in port areas to respond to threats quickly, the developer said.
Using aerial drones to strike naval targets can be difficult given the latter’s ability to maneuver. Additionally, a successful strike would require a direct hit, since anything short of that would simply end up in the water.
Russia’s military is exploring various ways to counter Ukrainian drones, and Ukraine is working to adopt effective tactics in response, one of which could include helicopters. Read our previous issue on how the role of choppers on the battlefield has changed.
However, the emergence of sea drones from Russia will most likely lead to the organization of complex operations using different classes of naval drones from both sides, Olexandr Mashchenko, CFO at STRUG, a maritime drones developer, told Counteroffensive.Pro.
Mashchenko said he believes it’s likely that the Russians installed Starlink on their naval drone, which they illegally purchased on the black market. As he saw it, the Russians wouldn’t have been able to afford to create a Starlink analog in such a short timeframe.
New drone carrier naval platform in the works
Ukrainian startup STAG is developing the STRUG MCC-4050, a naval drone that serves as a drone carrier. The platform is controlled via Starlink.
The idea is for the MCC-4050 to carry FPV drones with a 10-inch frame or bomber drones onboard. Separately, developers are working on a version for interceptor drones. The interceptors would intercept enemy drones as a component of naval air defense.
The stated range of the MCC-4050 is 250 km, which the company said can be increased to 500 km by installing larger fuel tanks.
Engineers are also developing universal containers that will enable the launch of almost any FPV drone without requiring reconfiguration of the container, Olexandr Mashchenko, Chief Financial Officer at STRUG, told Counteroffensive.Pro.
The aerial drone in the container is controlled via radio communication, since the naval drone will have a repeater. Several military units are already conducting training with STRUG, Mashchenko said, and the company will improve the final product based on their feedback.
97 percent of developers are eagerly waiting for export restrictions to be lifted
According to a survey (PDF) conducted jointly by Tech Force and the Better Regulation Delivery Office (BRDO), 97% of private manufacturers are looking forward to the lifting of export restrictions so that they can enter new markets.
Potential export markets. Photo provided by the Tech Force in UA
Manufacturers said they expect the following challenges for overseas exports:
certification and codification process – 69 percent;
preference for domestic producers – 59 percent;
preference for traditional weapon systems – 45 percent;
risk of product being copied – 41 percent;
competition – 7 percent.
Ukrainian orders/legislation we’re tracking:
By: Oksana Zabolotna
Simplifying procedures to decommission military property
Resolution of the Cabinet of Ministers of Ukraine dated August 15, 2025 № 993
Why it’s important:
The standardized procedures for decommissioning military property now include the Security Service of Ukraine (SBU) and the Administration of the State Guard of Ukraine (ASGU), in addition to the Armored Forces. This will allow the SBU and ASGU to receive the necessary weapons and equipment more quickly. Additionally, this will make it easier to decommission the equipment.
The value limit for property that can be written off without lengthy approvals has been raised to $42,000. This means commanders will be able to dispose of broken or outdated equipment more quickly.
The act of decommissioning will now be approved faster, and military property will no longer be assigned to military units, but instead transferred to them for use.
Proposals:
The list of bodies covered by the regulation on property write-off and eligible to receive weapons and military property has been expanded to include the SBU and the ASGU.
The maximum value threshold for property that can be written off by the head of military units has been increased to $42,000. If the value is higher than this, the equipment write-off can be done by commanders at a higher level, including the head of departments in the General Staff and the MoD, including the defense minister.
A single act of military property write-off must be submitted for approval to the commander of the military unit or the relevant official within 30 days;
Stage: Entered into force on August 15, 2025.
Initiator: Cabinet of Ministers of Ukraine.
What’s next: Implementation of the resolution.
ON THE MOVE: Professional movement, promotions and industry news.
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Misha Rudominski has resigned as CEO of Promin Aerospace, a rocket developer. He said he plans to focus more on the development of HIMERA, an encrypted communications maker.
Oleksandra Gladyshevska has taken on the role of CEO at Promin Aerospace. Previously, she served as a Chief Business Development Officer at Promin.
The supervisory board of the Kyiv Aviation Institute (KAI) has elected Kseniia Semenova as the new president of the university. Previously, she held the position of acting president. KAI teaches engineers and drone developers to meet the needs of miltech producers.
30 SECOND ELEVATOR PITCH:
VARTA DroneHunter is a universal counter-drone system for tactical-level defense, combining kinetic interception with autonomous mission execution. Their solutions integrate with FPV platforms and provide effective frontline protection against FPV drones, bombers, and reconnaissance UAVs. In separate cases, operators intercepted even Molniya kamikaze drones.
The company is currently developing the next-generation system — DOZOR AI, which features AI-based detection, target acquisition, and fully autonomous combat missions. This will make the system an ideal solution for short-range air defense.
“We’re building a system that stops enemy drones — affordably, effectively, and with minimal human involvement,” said Max Dybenko, project lead of VARTA DroneHunter.
An investment round of €300,000 is currently open. The funds will be used to scale up production, finalize the development of the DOZOR AI version, integrate with additional UAV platforms, and conduct field-testing under combat conditions.
MUST READS:
Russian drones are flying over U.S. weapons routes in Germany to collect intelligence for a possible sabotage campaign.
Russians attacked the production facility of Baykar Makina, a Turkish drone maker, in Kyiv.
Brave1 has launched a new grant program for developers of tactical ballistic missiles, air defense systems, and explosive materials. A single project can secure up to $3.6 million if it can bring a quick result on the frontline.
Polish manufacturer WB Group has launched a production line of FlyEye reconnaissance drones in Ukraine to fulfill demand from the battlefield.
Piranha Tech has presented a fully modular electronic warfare system, DF-M. It can be integrated into other radio-electronic systems and/or radio-electronic reconnaissance systems to work together, Anatolii Khrapchynskyi, deputy head of the company, told Counteroffensive.Pro.
DF-M (on a bipod). Photo provided by the company
Russia’s armored vehicle and tank producer Uralvagonzavod is using more than 260 machine tools made by Western companies, according to Ukraine’s Military Intelligence. Some of these were bought after the full-scale war by third parties.
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