Your favorite startups. How to turn the enthusiasm and ideas of young entrepreneurs into money
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17 January 2020

Your favorite startups. How to turn the enthusiasm and ideas of young entrepreneurs into money

We often hear that Russian startups are technologically advanced, but they cannot turn ideas into money. That university scientists are busy with high science and neither know how, nor want to commercialize their inventions. It is partly true. But, fortunately, more and more Russian innovators are thinking about how to "wrap up" their project to successfully tell "business angels" and corporations about themselves. However, corporations also began to seriously reconsider their principles of working with startups.

Ekaterina Petrova
Ekaterina Petrova, Director, GenerationS Corporate Accelerator by RVC

Startup Marketing

Most often the founders of startups are really gifted guys with very interesting ideas. But they need mentoring so they can form up and present their ideas, find investors and enter the market.

Over the past few years, a great number of educational programs in different regions were launched in Russia, some of them with the help of the Russian Venture Company (RVC) and the GenerationS accelerator. The developers are now provided with more opportunities to learn what kind of tools are available to promote their projects, how to bring a product to the market and where to look for customers. Nowadays large cities have business incubators - the sites prepared for startups. They have the workplaces and all the equipment ready.

Startups in Russia have begun to understand that they need to refine their projects in order to get venture investments, if there is a request, rather than say: "No, we have such a great idea, we know how to promote it ourselves, and we're not going to change anything. We want to sell exactly what we came up with." Now many teams, having worked with both Russian and international corporations, understand how to create a product that can be scaled.

Some time ago, as a federal platform for working with corporate innovations, we faced yet another problem: there was simply no one to offer the projects to in Russia. To develop technologies, the country needs not only a market of ideas, but also a market of customers. We started working with corporations, explaining the prospects of fruitful cooperation with technology developers. We did our best to persuade large companies that they had to spend some resources and time to consider new technological ideas and support those who they got interested in, not just keep an eye on a startup and wait for it to finalize the product by its own efforts.

By now, the creation of corporate venture capital funds has already become a trend. The fashion for acceleration and innovation has come to Russia. Things are happening much faster now than a few years ago. There were examples when a corporation that invested in a startup successfully withdrew from it and made a good profit. And then acquired it, because its solution fit well with the business logic of the company.

Thus, in February 2018, MTS bought 100% of MDTZK LLC (operating under the brand) for RUB 3.3 billion, and 78.2% of the brand for RUB 495 million. The first company was sold by a number of investors and the iTech Capital fund. In the acquisition of the sellers were the entities of its founders and the Buran Venture Capital fund. In April 2019, Sberbank bought 100% of the online recruiter for about RUB 500 million. In October 2018, Yandex became the sole owner of the Edadeal startup, increasing its stake in it from 10% to 100% by spending RUB 233 million.

Unpretentious startups

Another interesting feature of Russian innovation projects is their unpretentiousness. If they have decided to enter the market, they are making every effort to succeed. For example, an average startup in Israel would immediately put up a high price tag and its representatives would not go to talks with a particular client 5-10 times - one round is enough. Our startups, even if they have unique technologies, are trying to find an optimal approach and a comprehensive solution, where they will earn money and the client will work with them comfortably. Our innovators are moving in the right direction. International venture capitalists, whether from Singapore, China or Europe, are now interested in working with startups from Russia.

There is no need for startups to leave Russia. For example, a GenerationS alumnus, the Perm-based RCML company, created a universal controller for industrial robots and entered the US and Chinese markets with this product. The company also cooperates with German Ktsk Robotics, Swedish ABB and other industrial robot manufacturers. The RCML headquarters was established in Perm and still remains there.

What happens next

Our common task is, on the one hand, to make sure that there are many high-quality R&D projects in Russia, and on the other hand, that more and more corporations interact with them. The creation of new ideas and tools should be encouraged. Now corporations are interested, for example, in hackathons - this is a team competition of developers, in which a specific technical task is set, and the participants must find a solution by the finale. It is in such places where talented developers gather together and communicate directly with technical specialists about the work tasks. There should be as many hackathons in Russia as possible, including those involving students and schoolchildren.

We expect the number of technology developers, venture capitalists and “business angels” in Russia to grow every year, as well as the level of government support. In particular, there should be more activities aimed at business networking and communication of technology startup founders with potential investors. This will increase the level of trust between them and help them enter the market with truly breakthrough technological solutions.

Source: Forbes
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