Russia start ups: grabs from the Globe Forum
The Globe forum at MGIMO University brought together various players to discuss Russian start up companies and venture capital projects. They related some of their experiences to RT Business.
RT: What industry branches are most attractive for a venture investor in Russia?
Dmitry Vasyutinsky, managing director, Allianz ROSNO Asset Management.
“Internet projects, industrial innovations, software and hardware are perhaps the most interesting markets for venture investors today.”
Sergey Orlovsky, President at Nival Group of Companies
“From my practical experience I can add, that venture investors are mainly interested in markets that double every year, since new technology trends were outlined exactly under their influence.”
RT: What factors are important in selecting a potential partner?
Dmitry Vasyutinsky: “The first thing we certainly pay attention to is the people we may work with. If we have a really worth team with a clear idea, then we are sure to back them.”
Sergey Orlovsky: “For me, it’s about mutual understanding, psychological compatibility are of paramount importance. It is also important that everyone does what he or she is capable of and willing to do – mind his or her work.
Today, many venture investors say they are engaged in various markets, but it’s important, when you look at the portfolio of the company, to make a clear picture as to what it is special about. It is also important to consider not only the estimated costs but other aspects, too. If, for instance, an investor is asking for too much control from the very start, it is highly probable that nothing good will come out of it. It’s like choosing a future wife: it’s preferable to weigh all the pros and cons several times before deciding.”
Aleksandr Galitsky, Director at a Almaz Capital Partners venture fund
“As for me, when selecting an investor it’s yet preferable to be guided not by personal likes but rather pay attention to the professional qualities of the future partner, because you and he are supposed to address complicated and serious issues.”
RT: Why do you think the Russian IT market has not yet actually created its own products, but borrowed ideas from foreign partners instead?
Sergey Orlovsky: “There are many factors. First, it’s about people and their mentality. We simply don’t have the capability for dreaming and getting our dreams come true.”
RT: What was it like to start a project of your own on the Russian IT market in early 2000s?
Nikolay Dobrovolsky, Vice-President at Parallels
‘When the Parallels company was only beginning its activity as it was a department of a major Russian IT company, many showed interest in the subject, but they knew yet very little about that market. At that time there were no venture investors, so the search for money was much more difficult and would take considerably more time. As for me, it took me a year and a half to find one.”
Sergey Orlovsky: “The system is obviously to blame, too. So far it has not yet let one bring rather good ideas to life.”
RT: What are business angels like in Russia?
Vadim Asadov, President, NeurOK LLC
“Normally, angels are the first to push novices who are in need financial support, onto the market. They help slightly open the door, because they are either former or current entrepreneurs themselves, or just wealthy people. We don’t have a boss or experts, but instead we have a set of connections to let us sort the offered projects out. If a particular offer from another startup, we simply find out, through our own sources, to what extent it could be interesting for the market.
At the same time, it’s important to understand that we are not a charity, to lend assistance every day. Our commission rate is about 50-70 % for the work we do. It justifies our risks. Should a customer leave the company at an early stage, I, as an investor, may lose much more than he will.”
RT: What about red-tape barriers an entrepreneur of any scale has to face in Russia?
Nikolay Dobrovolsky: “At the end of the day, there were practically no bureaucratic problems, because in 2000 when we were beginning our business as a department of a major IT company in Russia, we were too small and could draw much attention from the authorities.”
Aleksandr Galitsky: “Companies of this type hold nearly 2-4 % of the whole market. Therefore they are normally of no interest [for the red tape].”
Sergey Orlovsky: “So far nobody has essentially comprehended what we do actually, so there is scarcely anyone to meddle in our affairs.”