According to Dow Jones Venture Source experts, over the past decade, Russia’s share in the global venture capital investment market has grown from 0.3% to 8.5%, and they predict further growth. Venture capital is practically the main source of funding for innovative startups. How does an investment fund work? How can it support a new business? What projects are currently in trend? Maxim Volokhov, co-founder of Admitad and head of the Admitad Invest fund answers these questions in the interview below.
– Please tell us about the Admitad Invest fund. How was it created? What does it do?
– Admitad Invest was founded in 2016 by a group of entrepreneurs. What we do is help business people like ourselves. Our goals are simple – diversifying the core business and finding strategically interesting assets. It is also good to be able to help projects in which we believe and which we understand. Our first major deal was the letyshops.com project that helped organize and streamline the fund’s own activities.
– What difficulties did you face when establishing Admitad Invest?
– We had no experience in managing investment funds, and no textbooks to read. We had to learn as we went along, but that way we understood the things they write and give tips about so much faster.
Our entrepreneurial experience proved good enough. We had been creating and investing small amounts in internet companies for more than 10 years, so the business was not entirely new for us – just on a bigger scale, and more paperwork, that’s all.
– Who are the fund’s major clients? What services do you offer to them?
– Speaking about our niche, we are interested in online projects. We prioritize startups that operate based on the SaaS, CPA, lead gen or enterprise models, marketplaces, as well as content projects with mass audience and various B2B services. In terms of technology, Admitad Invest gladly invests in AI and augmented reality. If you look at startup founders, they are primarily young people aged 25 to 35. The fund offers entrepreneurs and owners of promising ideas so-called smart money, which comprises not only funding but also full support of their projects. We provide assistance in marketing, share our expertise, connections, experience and everything that Admitad has. Potential funding ranges from $200K to $2 mio.
The main goal for the fund is to search for the projects that could strengthen or complement Admitad and diversify our main business (Admitad is a platform that brings together advertisers and web developers). Our fund is corporate; therefore, its main goal is not to withdraw from a project once it has demonstrated growth, which is typical for conventional funds (it is possible but it’s not our goal), but further development, new markets, customers and solutions.
– Can you tell us about some of the most interesting startups that the fund supported?
– To Admitad Invest, all the current and future projects are important so it is difficult to single out anything in particular. In direct investment, closing a deal takes anything from five to 12 months. Over this period each party has a chance to discuss any issues thoroughly and understand each other. If the deal happens it means that we are interested in this project. I just want to note that since the fund was established, we have supported such projects as letyshops.com, epicstars.com, blinger.io, push.world, meds.ru, sarafan.ai and others. For example, we repeatedly invested in epicstars.com.
– What does the fund do to attract clients? Are there any secrets and know-hows?
– There is nothing extraordinary here. We seek new projects on our own and process the incoming requests. In this regard, it is easier for us due to our long-time presence in the market. Many know Admitad, and we know many [players].
– How many projects can the fund process over, say, a year?
– So far we make about 8 to 12 deals per year. Currently we have four people employed on a permanent basis – including me, there are also an analyst, a manager, and a marketing expert.
– What criteria should a project match to receive your support?
– We consider projects that have a minimum viable product (MVP) and show consistent sales, and whose developers have relevant experience. We also pay attention to profits and losses, as well as the financial model. We also consider what other assistance the company can provide, apart from finances.
– What projects are beyond your scope of interest? What do you think is the image of a perfect and the least desirable client?
– We do not work with online shops and anything related to cryptocurrency, especially if there is blockchain just for the sake of it, and offline projects. Overall, we are not interested in projects where we do not have enough expertise, experience and knowledge. In my opinion, there are no undesirable clients, there are just very persistent people who address all funds without clarifying the aspects they focus on. They send requests with projects that are totally unsuitable for us. I also cannot understand people who are willing to receive investments worth millions at the stage when a project exists only as an idea.
A perfect client is a project that does not seek money – that is, it can exist without investments, it produces profit and its developers know how to make it work. An investor’s task in such projects is to provide assistance by boosting it ten-fold.
– What support does the fund provide to beginner entrepreneurs?
– Admitad has a program to support beginner webmasters: we provide one-time grants of up to $3K to increase their account turnover. The program only applies to experts who have worked with us for over six months. There is also an internal projects department where any Admitad employee can suggest their ideas. If the managers like the idea, the employee can lead the project or have a stock option in it.
Admitad Invest is looking for experienced business people who know what to do with a project. Nevertheless, novice entrepreneurs can also count on our assistance and support.
My advice is that you should not pay for receiving experience. Before you start your own business in any area, try to work as a wage worker there, learn the industry and the market where you want to launch a project. Do not strive to hire star employees because at the initial stage, you will need people who believe in the product and who are ready to diversify and learn new things.
– Do you believe that it is useful for an investment fund to cooperate with the media?
– Our team is only beginning to learn this relationship, but we are definitely going for useful and interesting content and not just press release send-outs.
– Maxim, in your opinion, what will be the best investment options in the nearest future?
– I can only speak for internet projects. Here, popular will be SAAS, AI, FinTech and startups that digitize various non-digital sectors, such as AgroTech.
By Christina Firsova