“Projects Must Bring Real Benefits to People”

“Konstantin Petrovich, which attribute is the most important for an investor, in your opinion?”

“You’ve got to believe in the person [behind the idea]. You may not understand the idea all the way through, you may fail to see the beauty of the business plan… But the right person will always get results, will always come through. The business plan for the best project I ever invested in was drawn on an envelope on a park bench. It is now a chain of training centers in Moscow suburbs which has been growing successfully for seven years now.”

“Does GenerationS help identify those “right people”? In what ways is it superior to other contests?”

“Our country simply has no other [business development] acceleration contests of the same magnitude. There are some anecdotal, isolated cases where startuppers give up a share in their project in exchange for an acceleration program. Unlike these examples, we are inviting interesting companies from across the entire country — from a tiny community to a megapolis. The entry point is open to everyone, and it is free. Last year’s contest started with an acceleration program, to which 70 applications were admitted, selected out of 1,600 submitted. Semifinalists got to experience close, high-intensity, quality interaction with industry experts, marketing gurus, mentors who evaluated their projects from different perspectives: what was going on with the product, business processes, capital structure, development, etc. Those who were able to grow in the limited time of this interaction, went on into the finals and got the chance to present their projects to investors. Our contest winner gets cash prizes, too, but the most important thing is getting access to prospective investors.”

“In what ways is the current GenerationS contest different from last year’s?”

“This time around, 200 projects will be admitted for the acceleration program, which will be taking place not only in Moscow, but also in Tomsk and Kazan. In addition to IT, we are getting ready to provide acceleration programs for developers of biotechnology and energy-saving methods. We have noticed a recent spike in investor interest in these clusters.”

“Why does the Moscow Center for Innovation Development need this contest? What objectives does it have?”

“The organization (CID) was established by Mayoral decree to develop programs to help the city grow innovative companies capable of making the city more livable. The first thing we did was launch a unique facility — API Moscow Startup Accelerator, which hosted last year’s GenerationS program. It has been essentially handed over to startups which received investment finance from six of our venture capital fund partners. More than 40 IT startups have become API Moscow residents.

“The GenerationS contest is important for achieving the second objective — implementation of appealing solutions in the urban environment [of Moscow], specifically, in the areas of public health, education, road construction, and so on. Many projects would not be able to develop quickly without Moscow’s resources and capabilities, and our objective is to explain, to bring home all the benefits of support by the City Hall.”

“What kind of projects is the CID developing?”

“They must bring real benefits to the people. We have launched the API Challenge Contest of Applications for the city, and received applications from 129 projects; right now, about 50 of these are already available as functional services. For example, people with movement disabilities can use a smartphone to chart an optimal route through the city using public transportation. We are also going to develop open-source applications to enable companies from other cities to adjust and fine-tune the apps to fit the conditions specific to their cities.

“Moscow has issued its first-ever international request for proposals to resolve the problem of urban noise. Standard bidding procedures are actually geared towards identifying the best supplier of a clear, easy-to-understand solution, but when the solution is yet unknown, the standard approach just doesn’t work. We have received 20 bids from a number of different countries so far.

“A series of pilot projects got under way early this year to implement a system for ideas management in [government] organizations in Moscow. The systems ensures that thousands of people receive invitations to share ideas on how to increase the efficiency and quality of their work. The [Moscow] City Hall will make a decision this fall on how to scale this project. We are running 15 projects altogether.”

“It is beginning to look like half the country’s population have launched a startup. What is driving them?”

“Russia was the fastest-growing venture capital market in 2013, and the fourth-largest after the UK, France, and Germany. The market economy has matured: business angels have entered the stage who already made their money and are ready to invest in high-risk high-tech projects. Government-sponsored RVC (Russian Venture Company), Skolkovo, and regional incubator programs have started to produce real results. A generation has emerged of people who know of companies built from the ground up, whose founders have been able to become billionaires. These facts become powerful drivers for them, [for this new generation].”

“Experts are talking of an outflow of foreign investments as the political situation grows more tense. How dangerous is this trend for startup entrepreneurs?”

“Indeed, there are some risks, they are hard to ignore. Investors have always been wary of Russian companies. This wariness and apprehension had begun to subside over the past ten years, but now they’re slowly on the rise again. However, no markets are completely closed [to Russian startups], and a solid project with a good team will always find a market. However, one needs to realize that now this may require an extra effort.”

“What would your advice be to beginner startuppers?”

“The most important thing is to believe in oneself. Everybody around you may have doubts, but so long as you have confidence [in what you’re doing], you have a chance to sell your idea, put together a team, find experts and investors. The second thing is that one has to be ready to work a lot, and work hard: success does not just fall from the sky. And finally, it’s teams rather than loners who achieve serious accomplishments. The chances of raising capital are an order of magnitude greater for a team of two or three people who complement and motivate each other than for the most talented of individuals who goes it alone.”

“How would you like to go back to being a business angel?”

“I really want to, and this will happen on day. For now, I need to take what we started here to conclusion. The projects we are dealing with here have time horizons of at least three – five years.”

“Dows working in a government official’s position not ‘clip your wings’?”

“No, this only gives me greater strength. Here I have a chance to help many entrepreneurs find a firm footing.”

The authors of this story have relied on RusBase content.