Startups in Russia and Kazakhstan. View of the American investor
Kaushal Chokshi, founder and president of the venture capital fund Scaale Group (US), compared the development of start-up environment in Russia and Kazakhstan. What we lack, to become the second Silicon Valley?
Developing countries – from Eastern Europe to Africa and the Middle East to Southeast Asia – a long time attract the attention of investors from the United States. The yield on these markets – not an easy task, which, however, offers great opportunities.
As the founder Scaale Group, I worked for many years on a variety of emerging markets, and in recent years drew attention to the companies from Russia and Kazakhstan. I participated in several activities in Skolkovo and will speak at the conference TechConnect in Astana on November 12. I also spoke with a number of teams of entrepreneurs from both countries.
Looking at the Russian and Kazakh ecosystem by, I notice their similarities and differences (adjusted for the size and level of development, of course), which would be interesting to speculate.
One of the main factors that attract international investors in Russia (and, to a lesser extent, Kazakhstan) are technologies that develop local startups. The level of training of technicians, as well as many of their products, is no worse than what you can see on the pitch sessions in the valley.
But the pitches themselves, unfortunately, fails. Russian businessmen are mostly explained by catastrophically bad, and “sell” their product. Therefore, any international investor who is interested in Russian startup, you need to learn not just to rely on the first impression of the pitch and dig deeper to consider the prospects of the product.
The same applies to business models. Entrepreneurs with whom we worked in Russia, in many cases, thought through this part of the project is extremely weak and unable to answer simple questions.
The situation with the culture of pitches and thinking through business models in Kazakhstan looks a little better, but this is likely due to the fact that the start-ups themselves are much less and spend more time training.
What do equally well in Kazakhstan, and Russian entrepreneurs is their culture in the broadest sense. Recently, I was asked, it is difficult for a person to communicate with the American ideology with startups in the emerging markets, and I realized that there was no cultural barrier is not at all.
It is convenient to be an investor in emerging markets in the world today, where entrepreneurs, investors and authorities are trying to build on the example of the ecosystem of Silicon Valley. In doing so, local startups often adopt the best features of our foreign colleagues: responsiveness, openness, a desire to help and a fantastic desire to learn.
The latter quality is equally well seen in the Kazakh entrepreneurs: lack of experience in many areas more than offset by the ability to absorb new information like a sponge.
Working with the state
An interesting topic for analysis – government initiatives and programs to support entrepreneurship. Russia has “Skolkovo” and FRII, Kazakhstan – more similar (but smaller scale) initiatives, as well as the program “Bolashak”, by which talented young people can be trained in foreign universities at public expense.
I have been to “Skolkovo” many times, and I really like the fact that there is happening. Moreover, I see that the Russian government initiatives actually accelerated the development of the ecosystem.
But at the same time, it seems to me that everything could be done much more efficiently.
And in terms of the effectiveness of state support, it seems to me, can succeed Kazakhstan. Firstly, due to the small size of the country and hence the ecosystem itself it is much easier to understand where it needs help. Second, Kazakhstan has remained on good terms with all the important countries of the world for business, starting with the US and China and ending with Western Europe and the same Russia. Not many countries can boast of such a position.
If the authorities will be able to properly use such a set of circumstances, Kazakh startups with “local” public and private funding can be much easier to enter new markets, than the team of Russia.
Tip: Do not get hung up on the US market
Despite the fact that I live and work in the US, I can confidently advise budding entrepreneurs today are not too focused on America. The level of competition and high prices in this market can kill even a good idea to start-ups and sales.
Instead, I recommend the break in the project on the market in India. This is a huge English-speaking country, actively absorbent technological innovation where the market is open for almost all products. In addition, Kazakhstan and Russia are in good relations with this country, which may be important in the early stages.
Thus, the Indian market may become a testing ground for the globally oriented startups. Having achieved the result on it, you can safely move on to a highly competitive market – at least in Western Europe, at least in the United States.