Playbook for Ukraine miltech to enter NATO markets

BLUF: To enter Western markets, Ukrainian manufacturers must undergo NATO certification through the Ukrainian MoD and navigate NCAGE and ISO 9001/MIL-STD processes.

Zelenskyy outlined plans to lift some export controls by the end of the year. 

Ukrainian banks aim to expand the state loan program for defense products, providing manufacturers with more opportunities.

And, Russia begins attacking moving targets with Shaheds, posing threats to Ukrainian logistics.

THE BIG STORY: How Ukrainian companies can find customers abroad

Ukraine’s move to a new export control regime will soon see the government provide more permits to export surplus weaponry to the U.S., the EU, the Middle East, and Africa. 

How to access those foreign markets raises a different set of questions entirely.

Chief among them: 

The European defense market is operating under peacetime conditions, with lengthy tenders and procurement cycles, even as Ukraine's technological cycle is evolving rapidly. 

This could potentially lead to a situation where European countries can purchase products that are already outdated for the Ukrainian battlefield, but are still valuable outside of the war.

The main challenges in finding foreign buyers

NATO countries have a codification system for defense procurement — the NATO Stock Number (NSN). Since 2019, Ukraine has held Tier 2 status, which allows it to independently assign NSN codes and submit them to the international catalog.

Ukraine’s Main Directorate for Life Cycle Support of Weapons and Military Equipment under the MoD is in charge of providing an NSN alongside its regular codification process. This requires testing the product on a military range to ensure that claimed specifications match reality.

For the defense company First Contact, it took almost three months to codify FC.K, a tactical electronic warfare system, to NATO standards, founder Valerii Borovyk told Counteroffensive.Pro. The entire process can take up to six months or even more, depending on the type of product, Borovyk said.

It helps to think early and often about a product’s competitive advantage. In order to be successfully purchased in Western markets, Ukrainian manufacturers need to be prepared to explain why their product is better than what NATO has been successfully using for 20–30 years, according to Steen Simonsen, co-founder of Envoy Technologies, a company specializing in finding customers abroad for Ukrainian tech.

“[NSN code] is not intended to address the applicability or suitability of a given product for the security requirements of any given country, so individual buyers will apply their own requirements, testing standards, procurement procedures,” Simonsen told Counteroffensive.Pro.

Marketing is crucial; a company’s marketing campaign must explain the innovation and whether it worked successfully on the battlefield. If a customer says they're ready to order 100 units, the next question becomes how production will be handled, said Simonsen.

Participation in global defense exhibitions is another way to promote a company’s products.

The National Association of Ukrainian Defense Industries and the Ukrainian Council of Defence Industry hold joint exhibitions. Some companies also participate independently – such as Kvertus, a maker of electronic warfare systems that participates in exhibitions to demonstrate their products to potential customers.

We spoke with a representative of another Ukrainian consulting agency that helps domestic companies break into foreign markets. He asked to remain anonymous, because of his company's policy on comments to the press.

He listed several crucial challenges:

The European defense industry is currently in the process of restarting and scaling up capacity. Their companies are actively investing in new developments and testing them in Ukraine. For example, Quantum Systems, STARK, and MYDEFENCE all have offices in Ukraine and are refining their products on the battlefield.

Ukrainian manufacturers in the same class will find it difficult to compete when it comes to tenders in these companies’ home countries of Germany and Denmark, where prospective customers are likely to favor domestic companies. 

Manufacturers will also need to obtain permission from the State Service for Export Control to supply products to customers (read our article on how Zelenskyy plans to reshape export control). 

An alternative option — the Build with Ukraine program, which aims to build Ukrainian tech outside of Ukraine — will still require an export permit but will better enable Ukrainian defense companies to establish themselves abroad. The program is expected to simplify logistics, though for the time being manufacturers taking part in this program will work in the interests of the Ukrainian army.

Manufacturers will have the best shot at success by finding local partners who are native speakers so they can clearly communicate about the product, said a representative of the second consulting agency.

How to participate in foreign tenders

Depending on the contract, the time from tender announcement to delivery can range from several months to a year. Technology transfer, joint production, logistics, contract modifications due to changing circumstances, and political restrictions may all be negotiated separately.

For government contracts, companies must obtain NATO Commercial and Government Entity (NCAGE) status, which along with the NSN gives the green light to participating in defense tenders. 

They also require ISO 9001 certification, which ensures compliance with certain quality standards for both working conditions and the final product. Military equipment has separate MIL-STD standards to ensure it meets certain specifications for reliability and quality.

One sensitive issue for all Ukrainian manufacturers is the use of Chinese components, which are often relied upon due to their affordability, limited alternatives, and quality of parts (read our article on how manufacturers are reducing their dependence on China). The U.S. and Europe, on the contrary, are often wary of relying on China. 

Ukrainian startups and their investors need to start thinking now about their strategy for when exports open up, so they don’t miss out on international opportunities.

BUSINESS LUNCH TOPICS: What our reporting shows!

Ukraine plans to open limited defense exports by the end of the year, the Ukrainian president has announced. Under a new program called ‘Zbroya’ (‘weapons’ in English), the state will allow the export of surplus weaponry, and these sales, in turn, will fund the production of products in need.

“Agreements have already been reached on opening export and import platforms in Europe, the United States, and the Middle East. The goal is to launch these platforms by the end of the year,” said Zelenskyy.

The Office of the President of Ukraine is working with the National Security and Defense Council of Ukraine and other government bodies to establish regulations and finalize the program.

Ukraine has set up a preferential lending program for defense companies. Manufacturers are eligible for loans of up to $2.4 million in working capital, and up to $12 million for investment in expanding/creating new production lines. 

The purpose of this is to permit banks to issue riskier loans. The government covers the difference between market interest rates and the five percent interest rate that producers ultimately receive.

In the first nine months of 2025, over 50 companies had already received loans totaling more than $65 million. However, over 70 percent of those related specifically to working capital, a representative of one of the banks participating in the program told Counteroffensive.Pro.

Larger loans for capital investments have been harder to find, as banks remain reluctant to provide financing in these areas due to the high risks associated with them. 

The term for such loans is usually up to five years, but concerns remain about insurance and the uncertain future surrounding military operations. Banks say they need additional guarantees from the state to invest in risky projects. Additionally, they primarily work with drone or EW manufacturers, and they would like to expand that list to include producers of other types of defense technology. The list is set by the MoD.

Five banks currently participate in the program: Ukreximbank, Oschadbank, MTB Bank, PUMB, and Bank Credit Dnipro. The total government funding for the program in 2025 is $12 million, and additional funding hasn’t been announced publicly. Read our detailed article about how this program works.

Russians have begun installing new guidance modules on Shahed drones. These modules enable the drone to lock onto a target selected by the operator and autonomously guide itself to the target without further operator intervention. 

Such modules work with both static and moving targets. Moving targets are more difficult for such systems, as they require a more complex guidance algorithm, Ruslan Borovskyi, CEO of Vitrolom, a drone maker, told Counteroffensive.Pro. 

Russians recently attacked a train in the Sumy region using Shaheds. In such cases, the drone can be equipped with a remote control and video streaming system, enabling it to be used in combined or fully manual mode, Borovskyi noted. 

Previously-observed guidance modules don’t calculate the target’s speed or direction, so they can’t predict where the target will move next. Instead, they only measure the distance between the drone and its current target position, meaning the operator must make constant manual corrections, especially when targeting moving objects, such as trains.

The Ukrainian military is capable of jamming control communications so that UAVs lose contact with their operators. However, this requires an increase in the number of electronic warfare (EW) systems. One possible solution is to equip trains with EW systems on a large scale, Borovskyi said. 

Ukrainian startup Dwarf Engineering has developed an operating system for manufacturers that enables them to integrate software into a Raspberry Pi module. This will reduce the time and money spent on development.

Each manufacturer writes its own software and searches for the necessary hardware. The solution from Dwarf Engineering should reduce this time and eliminate the need to create a “separate console for a separate game,” Vladyslav Piotrovskyi, CEO of Dwarf Engineering, told Counteroffensive.Pro.

The developed module can be compared to a game console; manufacturers will now only need to make the cartridge, while the console will be developed by Dwarf. The development is designed for business and will enable the integration of robotic systems, ranging from aerial to ground drones, by using their OS system.

Ukrainian orders/legislation we’re tracking: 

By: Oksana Zabolotna

Changes to the Defense Procurement Agency’s (DPA) use of funds for military procurement

Resolution of the Cabinet of Ministers of Ukraine №1116 of September 10, 2025

Why it’s important: These changes establish transparent procurement rules, and direct resources toward innovative projects, such as the ‘Army of Drones Bonus.’ Advance payment flexibility helps producers maintain stable production cycles, while strict financial controls and capped administrative expenses ensure transparency, accountability, and sustainable operations. 

Proposals:

Stage: Entered into force on September 11, 2025.

Initiator: The Cabinet of Ministers of Ukraine. 

What’s next: Implementation of the resolution.

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30 SECOND ELEVATOR PITCH:

Bravo Dynamics is a Ukrainian deep-tech startup developing Phantom, a next-generation resilient tactical communication system. Phantom addresses a key challenge in modern operations: today’s market offers only two extremes — expensive, bulky U.S. MANET systems, or cheap and unreliable Chinese options.

“Our devices combine Multiple Input Multiple Output and relay functionality in a single transceiver, and with our unique UI configurator, the network can be deployed within minutes. This enables drones, robots, and teams to stay connected where GPS and traditional systems fail. We are building a platform that can become the new standard for tactical communications in Europe and beyond,” said Bohdan, CEO of Bravo Dynamics.

Soon, the company will launch a new round of investments to expand R&D. Additionally, part of the budget will be allocated to training centers for military personnel.

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