Press about RVC

Venture assistants

13.12.2016
Source: Tatarstan Expert


Innovation is a combat unit of the economy. An economy with the biggest number of such units is growing faster

Startups are the accumulators of innovative ideas in modern society. How to turn ideas reserves into emerging businesses? TE discussed it with the Deputy General Director — Director of Development of Russian Venture Company Gulnara Bikkulova.

“What exactly can RVC do to help Russian start-ups?”

“It is believed that our culture of entrepreneurship has not rooted in tradition. Unlike the U.S., for example. Therefore, the primary task that RVC is facing now is to form the culture of entrepreneurship. It is important to underline that in the field of technology where we work; it is much easier to change the stereotypes of consciousness. After all, high-tech products are created by special people who choose for themselves not a very trivial for our society way of doing business, due to the willingness to take risks, to accept responsibility, and to do business on the idea that many consider as fantastic. Our main target audience — engineers, scientists, graduate students, and simple students ... However, these people may initially be far from commercial issues. We encourage them to create their own business by telling them about successful examples. We are taking the first steps with them, helping them understand their idea of who might be interested in their idea and how to monetize it. RVC through its support programs can help in creating a business plan, or to accompany a start-up team to the first client in order for the founders were able to see: there is a market for their ideas. Some people think that everything can be sold. It is far from being like that.

We work in three main directions. The first one is investment. RVC is a state fund of funds, which actively invests in high-tech knowledge-intensive projects. The second direction is the development of the venture capital industry in Russia. Moreover, the third one — the performance of the functions of the project office of the National Technology Initiative (NTI).

Our funds are created in association with partners — commercial organizations that are interested in investing in technology projects. We have 21 funds today. Through them, more than 190 projects have been approved for investment. Actually, RVC was created in 2006 for this activity. Although, there were almost no investment projects then, and it was very difficult to find partners for the funds. Large companies are not yet aware of why they need to invest in the development of high-risk ventures. It is now understood by many that it is necessary to create a favourable environment for the emergence of new breakthrough projects. Thus was born the second area of the RVC activity — the one associated with the development of the innovation ecosystem.

Over the time, which has past since the establishment of RVC, a large number of investors has appeared in Russia. It should be understood that a start-up life cycle consists of various phases: appearance of an idea, team building, company registration, prototyping, first sale, and so on. These are so-called pre-seed, seed and venture stages. So, all of these stages require their own investor. For example, when a start-up has just an idea and a business plan, it can receive a state grant. Further, when the most dangerous stage is over, the project is supported by so-called business angels. These wealthy people contribute not only their money to the project, but also their expertise. At the seed stage, venture funds begin their action. To make this funnel work, we are constantly searching for new start-ups. The more good start-ups appears in our country, the greater the choice of the investor.”

“Do you have any pre-selection of projects?”

“We have a small team in our institute — a little more than a hundred people, therefore, we physically cannot work with everyone. For this purpose, RVC has partners in each region. There are several hundreds of them. For example, in the Republic of Tatarstan, it is Venture Investment Fund or your IT-park, but, of course, there are other organizations. In Tatarstan, there are a lot of them, because the region is very active in terms of research and innovation.

Together with our regional partners, we create start-up schools. We invite developers — potential entrepreneurs — for learning the basics of running a business. Those schools also help the founders of start-ups to receive feedback and valuable advice on their projects from experts.

RVC helps regional partners to do the job effectively. We can provide federal experts for advice, if needed, as well as financial help. But as for the regional specificities, this is where our partners are more competent - they know the scientific potential of the region. It is easier to reach a specific person.

For several years, we have been collecting start-ups through a large-scale federal GenerationS start-up-accelerator. One of the motives for the creation of this project was that a huge number of start-ups remain unnoticed by regional metropolitan investors, despite the start-up forums regularly held in some cities. The venture market needs an aggregator of ideas that will lead to the federal level, the strongest technology and high-tech projects. Meanwhile, it was not enough to simply finalize the base of such projects. There have been certain examples when investors could not agree with the founders of start-ups simply because they spoke different languages. It was necessary to act as a mediator between the start-up entrepreneurs and large customers and investors, and to train them on mutually beneficial cooperation.

In determining the principles of GenerationS, RVC starts from requests of potential investors and customers. For two years, we have been working as a corporate accelerator. We are looking for projects that are initially demanded by potential partners, and this approach is bearing fruit. For example, GenerationS opened a biotechnological direction, which every year is gaining more and more projects.

Annually, GenerationS works with a dozen of partner corporations that place an order for specific projects areas. Once we gather a pool of projects (for example, there are more than four thousand of them this year), the stage-by-stage examination begins. Based on its results, several hundred teams of quite "young" projects will learn the basics of business and modify their start-up to the next stage of development. The founders of the more mature projects will be selected for corporate accelerators; about 200 teams will receive this opportunity. They begin to work directly with corporate experts. They will jointly finalize their product and technology, adapting it to the needs of potential partners, exploring the intricacies of cooperation with large companies. We have recently assessed the graduates of GenerationS — about 200 start-ups, which at various times participated in the accelerator. The volume of investments in start-ups amounted to 1.13 billion rubles, the total valuation of business — 2.2 billion rubles. As many as 69 start-ups implement joint projects with more than 20 Russian and international companies, including Saturn, GC Morton, GC Efko, Rostelecom, MTS, Krastsvetmet and others. The mobile operator MTS has found a few start-ups through us, which it has accumulated in the new, services afterwards that have become a part of their product line. One of our partners found the air conditioning manufacturers, with which they are now building a plant for this technology to sell the equipment outside of our country.”

“How many of these accelerators does RVC have?”

“Last year, we launched seven accelerators. This year, the number grew to eight. The first track is called AgroBioTech & Food, which will bring together projects in the field of high technologies to improve the efficiency of agriculture, the creation of "new food", biotechnology for the processing of raw materials, selection, precision farming, and personalized production.

The second direction — CreativeIndustries. This is the largest accelerator for creative entrepreneurs in Russia. CreativeIndustries brings together various lines of business to open up new opportunities for the development of creative entrepreneurship, increase the share of firms with high intangible value and innovation component in the segment of creation.

Our third track — Finance & BankingTechnologies — appeared only this year for the first time. We are implementing it with the support of the Russian mega-regulator — the Bank of Russia. The track will combine projects in the area of financial technologies, services and e-commerce.

Our fourth area we called LifeScience. It is directly related to biomedicine. This track for the teams, which are engaged in the development of new drugs, diagnostic systems, medical devices, evidence-based medicine, as well as M-Health-technologies, related to the monitoring of human health.

The fifth track — Mining & Metals. It brings together a wide range of refining technology, processing of precious metals, diamond, and a smart investment by the world's leading industries — Krastsvetmet JSC and ALROSA. These are companies of traditionally complex and closed areas for start-ups. In GenerationS, they offer the projects from the metal industry, diamond mining and related industries to present their technologies and gain refinement, implementation, construction of joint business, investment or sale of technology. Particular attention will be paid to technical solutions in the field of energy efficiency, environmental protection, industrial safety, simulation of technological processes at metallurgical and mining industries.

The sixth track — Power & Energy. It is focused on the energy sector. It covers global trends in the world market, for example, SmartGrid.

SmartCity is our seventh track. As it is clear from the name, we are talking about the search in the field of intelligent technology solutions for life in the city. Perspective projects will have a chance of getting a business partnership with one of the largest developers in Russia — the Morton Group of Companies.

And finally, the eighth direction is called TechNet. As part of this direction, we are looking for projects in the field of advanced manufacturing technologies.”

“How do you choose directions?”

“We usually choose directions as follows: we issue a call to corporations — who would like to participate, to be a partner? This year, we have received more than 30 such applications. We tool all of them and have formed these eight directions.

The problem is that all these areas today are not very popular. Our venture investors prefer to invest in another web development — an online store, an aggregator of discounts and so forth. But this trend can and must be reversed.

The process of collecting applications usually takes up to six months. The GenerationS team travels to technology parks, universities, business incubators, and selects projects, helping them to fill out the application ...

Sometimes, the authors of ideas need to be convinced that large companies are interested in their developments. Over the six months of autumn, we drove through 30 regions. In general, it is a huge and difficult job. As a result, in 2016, we collected 4,237 applications. Each year, around 5,000-6,000 start-ups, several hundred investors and dozens of corporations go through the RVC development program.”

“And what about the projects the demand in which is not so obvious? After all, some of them may also become a sudden success.”

“First of all, every large company has some employees who, so to speak, forecast the future. Companies need to understand in which direction the market will be developing. This is how strategies are being developed for the next 10-15 years. Usually this work is transformed into new products. Some companies go through advisory boards, which may be attended by creators of start-ups who want to collaborate with corporations. There we select all unusual, original, which looks attractive to the corporate top management.

Thus, information about the prospects of a particular industry is gathered. The company's website usually inform what products or services they plan to put onto the market. Young entrepreneurs must learn to be integrated into these trends, understand how their development can be linked to the plans of corporations. In fact, by means of GenerationS the needs of large Russian enterprises are "crystallized".

Secondly, there are projects that may seem crazy, because the market is not yet ready for it, and it is required at this point to assess their resources and understand how feasible it is to come onto the market with such a product. Oftentimes, it happens that people come up and try to sell a project, which has already been implemented. However, unfortunately, unique ideas is a rarity. Therefore, the author of these ideas must be able to check his idea for its viability. You may have to correct it taking into account the market requirements. At the same time, our scientists often do not think as businesspersons. They find it difficult to carry out a competitive analysis, develop a business plan, to "pack" their idea for the sale to the investor. In doing so, it is necessary to go out of your comfort zone.”

“Do you come across any projects that are able to compete on global markets?”

“The above-mentioned GenerationS monitoring of start-ups has shown that more than 70 of our teams are successfully operating on foreign markets, meanwhile, 25 projects have continued their development in foreign accelerators. At the same time, the total number of respondents had more than 200 counterparties around the world. Our projects take first place in international competitions; they are able to attract foreign investors, often at the expense of professionalism and creativity of teams.

Within the framework of the TechNet direction, we cooperate with NPO Saturn. This company is part of the United engine-building corporation. At their plant in Rybinsk, they make aircraft engines, including for Airbus and Boeing. They need start-ups associated with additive technologies — D-3 press, new materials. In addition, they are interested in business management systems related to robotics. Last year, as part of our accelerator, they collected sufficiently large number of good projects, and in this year, they have returned for new ones.”

“The question may seem naive, and yet ... Where should start-ups go for the money?”

“To the development institutions of their region. They are everywhere. However, one important thing should be noted: investors give money not for a bare idea; they invest generally in a strong team. Once again, there are very few unique ideas. However, if really ambitious and motivated people back the idea, it seriously increases the chances of the project to be invested in.”

“What hinders the development of high-tech projects in our country?”

“The mentality. Russia is a country of large business. Most parents wish their child to find a prestigious job in the office, with a good salary. It is quite rare when a mom encourages her child's desire to organize a start-up, being deprived of sleep for years, bashing his head against the wall, hoping that in two or three or five years, this idea will be a breakthrough.

In California, for example, the situation is different. Only a small proportion of students studying in American universities — about 1% — will be engaged in fundamental science. Another 10% are aimed at future work in corporations. In addition, the rest consider opening up a start-up as a career. Starting from the first year, they are looking for interesting ideas, trying to figure out which team they can join to. In Moscow, the situation began to change a few years ago. There was a wealth of activities for new entrepreneurs. However, not so many high-quality start-ups. I think it is a matter of time. We will create start-ups, learn from our mistakes, and the number of successful businesses will grow.”




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