Updated 8 October 2026. Author: Peter Bilyk, Head of Technology and Investment and AI, Juscutum.

This checklist is for general information and is not legal advice. Rules in this area change frequently, so confirm current requirements before acting.

An investor in a Ukrainian defence tech company usually checks more than the product and the market. The sector overlaps with national security, export control, sanctions, state procurement and reputational risk, so the due diligence is wider and the answers are harder to fix after signing. This checklist lists what an investor typically asks for in eight areas, and what usually raises a flag. It is also useful for founders who want to prepare a data room before the first conversation. For the legal framework behind it, see the Ukraine Defence Tech: Legal Guide for Investors.

1. Ownership, control and beneficial owners

The investor starts with who really controls the business and whether any conflict is hidden.

Ask for:

• The group structure chart, from the company up to the ultimate beneficial owners.
• Registration documents, the charter and all corporate decisions on shares, capital and management.
• Disclosure of related parties and affiliated companies.
• Evidence that no owner or counterparty is connected with the aggressor state.

Red flags:

• Roles and shares agreed "verbally" and not recorded.
• A structure that cannot be explained on one page.
• Ownership that changed shortly before the deal without a documented reason.

2. Founders, options and governance

A technology company is worth what its team is worth. A conflict between founders is one of the most common reasons a deal stalls.

Ask for:

• The founders' agreement and any shareholders' agreement.
• Option and vesting programmes, with the documents that granted each option.
• Rules on decision-making, deadlock and the entry and exit of investors.

Red flags:

• No founders' agreement, or one that does not reflect reality.
• Options promised without a legal framework.
• One founder who holds the key technology personally.

3. Technology and the chain of IP rights

For most defence tech companies the main value is the technology: software, algorithms, drawings, technical documentation and know-how. The investor needs an unbroken chain of rights to each of them.

Ask for:

• An IP and asset register with owners and registration status.
• Employment and contractor agreements with a written transfer of property rights, including agreements with sole proprietors and outside teams.
• The list of third-party and open-source components and their licences.
• Licence agreements, and the IP holding structure if the company separates IP from operations.
• Confidentiality agreements and the access rules for source code and drawings.

Red flags:

• A product built by contractors without a written transfer of rights.
• Components under restrictive licences.
• A non-disclosure agreement that exists, but with no real access control behind it.
• Patent or foreign filing plans made without a dual-use check.

4. State contracts and procurement

If the company supplies the Defence Forces, the investor reads the contracts as carefully as the technology.

Ask for:

• Proof of the product's status: codification, and verification as a supplier by the Defence Procurement Agency.
• State contracts with acceptance acts and evidence of performance.
• The penalty, acceptance, advance payment, force majeure and intellectual property clauses of each contract.
• Correspondence on changes to technical requirements, with the approvals.
• Any open claims, disputes or suspended orders.

Red flags:

• Contract terms that give the state rights to the technology without a conscious decision.
• Unused advance payments with no clear plan for their use or return.
• Technical requirements changed orally.

5. Export control and sanctions

This area is often decisive. A strong technology may still fail the check if the company cannot show control over its export and sanctions perimeter.

Ask for:

• The classification of each product and technology under the military and dual-use control lists, and the reasoning.
• The export history: permits, applications and refusals.
• Contracts with foreign buyers that name the end user, restrictions on re-export and the intended use.
• The company's internal export-control procedure and its counterparty screening.
• The map of supply chains and the checks on suppliers, customers and beneficial owners.
• A record of any technology transfers, demonstrations or repository access given to foreign persons.

Red flags:

• Technology shown or transferred to a foreign person before any export assessment. Transfer of technology, source code or access to it can itself be an export.
• A product assumed to be uncontrolled because it is not on a list, with no catch-all analysis.
• No procedure for screening counterparties.

6. Structure and Defence City

The way the group is built affects tax, regulatory status and the ability to close a deal.

Ask for:

• A clear map of which entity holds the operations, the intellectual property and each project.
• Evidence of separation between civil and defence activities in accounts, staff and assets.
• If resident status is part of the plan: the Defence City application, the register entry, the annual compliance report and the calculation of the qualified income share.
• Whether any restriction applies to selling a stake to a foreign investor, and any approval that the transaction would need.

Red flags:

• Defence and civil business run through one entity with shared accounts and staff.
• Defence City resident status claimed, but no calculation of the qualified income share.
• Tax-exempt profit with no record of how it was used.

7. Finance and tax

The investor wants to know whether the economics are real, whether money is under control and whether there are hidden liabilities.

Ask for:

• Audited financial statements and management accounts.
• The tax position, including the basis for every operation relieved from VAT: the specific provision of the Tax Code, the goods and their classification code, the end recipient, and the supporting documents.
• For imported goods used in defence production, the records that trace what was imported, where it was used and what was delivered.
• The split of revenue by customer and channel.
• The internal control over payments and purchases.

Red flags:

• VAT relief justified only by the words "for defence" in the contract.
• No way to separate defence and civil production in the accounts.
• Dependence on a single customer or channel.

8. People, access and continuity

If the technology leaves with the people, the investor will reflect it in the price.

Ask for:

• The list of key engineers and managers, their agreements and the plan to retain them.
• Confidentiality agreements and the rules of access to sensitive information.
• Internal policies on information security and the procedure for reacting to incidents.
• A business continuity plan: critical processes, who decides in a crisis, data backup and alternative communication channels.

Red flags:

• No retention plan for the engineers who hold the know-how.
• Sensitive data open to every employee.
• No incident response procedure.

What an investor may require before closing

If the review finds gaps, the investor commonly responds in one of several ways: a lower valuation or revised terms of the round; an escrow or holdback of part of the price; additional warranties; or conditions to be met before closing, such as re-papering the rights to the technology, changing the structure or settling a conflict between founders. Where the problem touches sanctions or export, talks can stop altogether.

How a founder can prepare

1. Start before the first negotiation, not after the investor asks.
2. Run your own audit of the eight areas above.
3. Close the chain of rights to the technology first, because it is the gap that is hardest to repair under time pressure.
4. Describe your export and sanctions perimeter and who makes decisions in it.
5. Build the data room: group structure and corporate documents, IP and asset register, key contracts, state contracts with acceptance acts, export history, a short compliance memo and the personnel documents.

An investor does not expect perfection. It expects a structured company with a transparent position on its risks.

Frequently asked questions

What is due diligence for a defence tech company?
A review of the company's structure, rights to its technology, contracts, sanctions and export position, finances and people before an investment or partnership.

When should a company prepare for it?
Before negotiations begin. Preparation reduces the discount, the number of conditions before closing and the risk that the deal fails.

Which documents do investors ask for first?
The group structure and corporate documents, the IP register, key contracts, state contracts, the export history, a compliance memo and the personnel documents.

Why is the IP chain checked so closely?
Because the technology is the main asset. If contractors or outside teams created it without a written transfer of rights, the investor may make resolving this a condition before closing or price the risk in.

Can sharing technology with a foreign investor be an export?
Yes. Transfer of technology, source code or access to it to a foreign person can be an export, so assess it before you open the data room.

Related reading

• Ukraine Defence Tech: Legal Guide for Investors
• Export Permit for Military and Dual-Use Goods from Ukraine
• Selling to Ukraine's Ministry of Defence
• Raising investment in DefenceTech projects (Ukrainian)
• IP protection in military developments (Ukrainian)
• Risks of mixed structures in military projects (Ukrainian)
• Internal security of a DefenceTech company (Ukrainian)

Contact

To discuss preparation for an investment round or a review of an investment target, contact the Juscutum Technology and Investment team through the contact page.

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