Belarus, Once a Startups Magnet, Faces a Tech Exodus
Crackdown on protesters urging new elections sours sentiment around the industry; ‘We live in fear’
In recent years, cheap labor and political stability had made Belarus an unlikely magnet for startups from Silicon Valley and Europe, providing a rare bright spot in an economy still dominated by Sovietera heavy industry and collective farms. But a violent crackdown on protesters demanding an end to President Alexander Lukashenko’s 26 years in power is now threatening the future of Minsk’s vibrant tech sector.
Security forces have raided the offices of some information-technology companies where staff and executives have supported the weekly demonstrations, sometimes detaining employees. Periodic internet outages have disrupted dayto-day business as authorities throttled internet speeds or blocked access to social-media websites amid swelling street protests.
Some entrepreneurs are now relocating employees to other countries out of fear for the workers’ safety. Investors have been rattled by the uproar after last month’s presidential election. Some were among the 2,500 tech-industry figures who signed an open letter warning of an exodus from the sector unless the crackdown ends and new elections are held. Mr. Lukashenko claimed to have won the vote, but his opponents and the European Union say the ballot was neither free nor fair.
“We live in fear and that’s no way to do business,” said Darya Danilava, chief executive of Minsk-based RocketData, which helps companies such as McDonald’s, Nike and Samsung manage their online reviews.
Several of Ms. Danilava’s staffers have already moved to neighboring Ukraine. U.S.-based software-engineering company EPAM Systems Inc. has also relocated some employees to other locations. It didn’t specify how many it has moved, but said it is taking the situation in Belarus seriously.
An internal survey at California-based software firm PandaDoc Inc. showed that 83% of its 250 Belarus employees want to move, while executives and recruiters say dozens of tech companies have already begun the process of fully moving out of the country. Others are talking with lawyers about relocating to Lithuania or Poland.
But with the tech sector being the main growth driver of Belarus’s otherwise anemic, command-style economy, where the state enterprises still account for around half of gross domestic product, the stakes are higher, economic analysts say.
Average salaries in the sector lie between $1,500 and $2,000 a month, compared with a national average of about $400. It already contributes 7.6% of GDP. Belarus’s Hi-Tech Park, a special economic zone, exported more than $2 billion in software and services last year.
Fitbit Inc. and robot manufacturer Rozum Robotics LLC set up development teams in Minsk. Viber, a messaging app with more than a billion users, chose Belarus as its development hub, while Wargaming.net created software for its “World of Tanks” online game in Belarus.
Some executives say Belarus’s tech sector largely blossomed because Mr. Lukashenko ignored it. While he once called the internet a “pile of garbage,” tech businesses coexisted with his government, keeping out of politics while benefiting from preferential tax rates and an easy regulatory regime.
That relationship was already changing ahead of the Aug. 9 election.
Valery Tsepkalo, a former Belarusian ambassador to the U.S. who was among the founders of the Hi-Tech Park, was barred from running in the election and fled the country out of fear he would be arrested. Some startups created apps to monitor vote counts and collect data on poll violations.
After the vote, tech workers joined the wave of protesters, with some holding up computer keyboards at the rallies.
“If the regime wins, it will be impossible to be a Belarusian IT company,” Ms. Danilava said.
A spokeswoman for the Hi-Tech Park said that most IT businesses are willing to continue working in Belarus and that current temporary movements of personnel don’t exceed their normal levels.
Mr. Lukashenko’s office didn’t respond to a request for comment. The Ministry of Economy declined to comment.
Some tech entrepreneurs were swept up in the violence that followed the vote. Mikhail Chuprinsky, the Belarusian founder of California-based Rozum Robotics, which has a development team in Minsk, said he was forcibly detained by security forces. He suffered a concussion, according to a medical report reviewed by The Wall Street Journal.
He is now talking to lawyers about how to relocate the company if Mr. Lukashenko stays on.
“I want to be able to walk safely outside. This isn’t even about business,” Mr. Chuprinsky said.
Others were accused of financial crimes. Earlier this month, Belarusian authorities raided the Minsk office of PandaDoc and detained its local head, the company said. Belarus’s Investigative Committee confirmed that it is investigating a criminal case against representatives of PandaDoc and has charged four employees with fraud.
The company denied the accusations and called them “purely an act of repression” after the company’s founder raised money to help protest victims.
“A line was crossed. This shows that there is no future for tech in Belarus under this regime,” said Mikita Mikado, PandaDoc’s San Franciscobased chief executive. “Unless things de-escalate, unless there is a change,” he added.