Collaboration between startups and corporations in many countries is already quite a familiar model of business development. But in Russia it is only taking root. What goals can be in such a partnership, and what does each of the parties get from it? Evgeniya Barchenko, executive director of GoTech Innovation shares her views.More
The formula for success
— What does GoTech Innovation do, what are the specialties of its work?
— GoTech Innovation has been operating since 2009, and it provides consulting services to corporations in the selection of technology projects and further work with them. The key services of our company are scouting startups and technologies around the world, conducting corporate acceleration programs, demo days and other events to help corporations work with startups. A well-known project of the GoTech Innovation company is GoTech – the largest independent contest of technology companies in Russia and Eastern Europe and the GoTech Arena forum. Our database contains more than 6,000 startups, and our portfolio includes more than 50 joint programs with partners to work with startups in Russia, Finland, the Baltic countries, France, Austria, Germany, and Latin America.
Among the company’s Russian clients we can see, for example, X5 Retail Group, Rostelecom, Gazprom Neft, Beeline, Hoff, M.Video-Eldorado Group, Yandex.Market, FESCO transport group, Kirovsky Zavod; on the international arena, we cooperated with Kaspersky Lab, Helsinki Center, Enterprise Lithuania, Startup Estonia, Vienna Business Agency and other companies interested in cooperation with Russian and international startups.
We are approached by corporations that need to monitor and search for technological solutions in accordance with a business request. We can both search for startups by broad criteria, and we can do targeted specialized scouting in any country in the world. Based on the results of the startups search, as a rule, assistance is required in the selection of the most suitable ones, in this case we analyze and prioritize the list of selected startups, request additional information from the founders, organize the process of the first negotiations with the corporation in the format of individual meetings or pitch sessions. If our client is interested in mature startups with a proven business model and previous cases of cooperation with other corporations, then our team accompanies the negotiations. If the search is focused on early stage startups, we suggest organizing corporate acceleration programs that help unleash the potential of teams and prepare for cooperation.
In fact, GoTech Innovation has a lot in common with the platform, because we are the connecting link for three audiences at the same time: entrepreneurs, investors, and corporate representatives. Since 2016, we have been holding a forum under the GoTech brand in Moscow, which is not randomly positioned as a meeting place for technology companies; we are convinced of the need to contribute to the development of the community, to the venture and entrepreneurial network.
— How are startup programs different for your clients? For example, when is a hackathon needed, and when is an accelerator needed, or does it depend solely on the client’s wish?
— We begin all negotiations with corporations by discussing the business goals. Clients come already with their set interests, but sometimes we are dealing with an open request, for the implementation of which different tools are needed. The general level of understanding of the formats of interaction with startups among corporations is quite high, and many of them already have experience.
Hackathons are best suited for solving HR tasks, since in the traditional for Russia format it is assumed that the organizing company sets tasks in accordance with business needs, and at the end receives small teams that present new ideas and solutions. On average, acceleration programs last 3 months; until recently, they were mainly held in the usual face-to-face format, but now they literally open borders for participants from other cities and countries online. Accelerators are suitable for early stage startups with little entrepreneurial experience. As a rule, mature startups are not ready to join an accelerator, as they feel confident and understand how to work with corporate clients.
There are also educational programs, they are focused on solving short-term tasks and can be of interest to startups of different stages, if not only employees of the initiating corporation, but also experts with industry expertise and investors participate in them as mentors. For example, we recently completed the program for TravelTech startups Kaspersky Exploring Russia: since Evgeny Kaspersky is personally passionate about tourism, he wanted to support entrepreneurs during difficult times, he made his own program, which included mentors from companies such as Booking, Amadeus, Zamato, and such venture funds as TMT Investments, Starta Ventures, Sunfish Partners and others and, of course, from Kaspersky Lab.
Another format is a pitch session with pre-selected startups to get more information about them. Experts of the corporation listen to the presentations and ask questions. Everything takes place in one day – in fact, it is an alternative option for initial negotiations, but with this format, a startup has the opportunity to present its solution to representatives of several divisions of the company (potential business clients).
The art of interacting with startups
— What difficulties arise when interacting with startups?
— There are no difficulties as such since the process is pretty much worked out. In our experience, entrepreneurs are happy to respond to invitations to participate in a particular selection if there is a well-formulated request and proposal from the corporation. Startup founders have limited resources, including human resources, and carefully assess opportunities for potential business benefits. I can hardly imagine a situation where a project participates in an acceleration program in order to gain new knowledge, because a business needs to conclude deals in order to grow. In the process of developing programs with our clients, we always work out the issues of motivation for entrepreneurs and determine the range of people, internal business clients who will be involved in negotiations with startups and are interested in the final result.
— Do you continue to interact with startups after completing programs?
— Yes, it is provided for some corporate programs. We help organize meetings and provide tracking. If support upon completion of scouting is not provided, then to assess our performance, we contact entrepreneurs in 1-2 months and specify the status of negotiations. We do interviews about success stories for our blog on the website and share the achievements of startups in our social media accounts.
— What are some memorable startups that you can pick out over the years of work?
— Starting in 2009 (it was then that we started holding a contest for technology companies), an impressive list of startups notable not only in the Russian but also in the global market was formed, which were noted by the jury of the contest. VisionLabs, which creates software and cloud services for face recognition and analysis, became one of the three winners of the contest in 2015, and a year later, VisionLabs attracted investments from the venture capital fund Sistema VC, and in 2017 a deal with Sberbank was closed. I would also love to mention the online service for teamwork Miro (until 2019 it was called Realtime Board), which was nominated by the jury of our contest in 2012, in 2018 raised $25 million from the American venture capital firm Accel and the fund with Russian roots AltaiR Capital, then, in the spring of 2020 it raised $50 million from the American fund ICONIQ Capital, which manages the capital of Mark Zuckerberg, Jack Dorsey and other leaders of large technology companies. Among the nominees for the 2019 contest, I would also love to mention the Austrian startup Exomys, specializing in the development of exoskeletons for humans, TraceAir, which develops construction monitoring technology through aerial photography and the formation of a three-dimensional model of a building under construction, as well as Cybertronika, which uses AI/ML to monitor and investigate fraud cases against banks, e-commerce, payment and fintech companies. Cybertronika launched a pilot project with VTB at the end of 2019.
Startups in Russia and abroad
— What are the difficulties for startups in Russia?
— In Russia, there is only a small market where startups can sell their solutions; there is a lack of investors of different stages in comparison with other countries. Therefore, for ambitious startups that raise one investment round after another, Russia may be one of the markets, but not the main one. At the initial stage of business development, entrepreneurs can test demand here, but the next step should be expansion to international markets.
— Various studies show that more and more Russians want to go abroad. Do you see the problem of staff drain, knowledge leakage and the problem of new startups?
— There are two scenarios. The first is to go to another country and then open a business. The second is when people want to open a business here, but to do so they go abroad. Their move is dictated by the business needs. In addition, many global entrepreneurs with roots in Russia open offices here when they see prospects for further growth of the company, which means they create jobs and contribute to the development of the community.
— You cooperate not only with Russian startups, but also with foreign ones. Are there any differences in work between Russian and foreign companies?
— An obvious external difference lies in the fact that foreign entrepreneurs present their products very well, clearly explain what problem they are solving, provide a competitive analysis and forecast of market demand, present a development plan, and focus on the experience and motivation of the team. They structure information to generate interest. Russian entrepreneurs are strong in technical development, but their self-presentation skills require training. However, we see that the situation is gradually changing: those founders who make sales not only in Russia and have gone through foreign acceleration programs aimed at attracting investments are especially good.
Startups during pandemic
— Now many are talking about a pandemic. How has the coronavirus crisis affected your work?
— In the face of the pandemic, everyone has faced changes, including us as well. First of all, the format of interaction with corporations and startups has changed: the transition to online has taken place, which is unusual. There is a lack of live communication that was previously available at industry conferences. But there are two sides to everything, and the main advantage in what is happening is the shortening of the negotiation time: we are observing how business processes in corporations are changing. Now the startup founders just need to make online calls and exchange documents to start cooperation; it does not require a physical presence in the same city as the corporate headquarters.
— If a startup turns to you for help to achieve success, what advice would you give them?
— Typically, entrepreneurs who succeed are confident people. They rarely approach with general questions, they are interested in specifics: for example, how to raise investments or strengthen a team. To get the most out of communication, specific questions need to be worked out. I would like to wish the entrepreneurs to have the courage to ask difficult questions and take non-trivial actions, because without this, success is impossible. The most successful entrepreneurs are determined people who break rules and boundaries and move forward.