According to the study by the Barometer project, each of the 30 largest Russian corporations in terms of revenue from the RBC 500 rating for the period July 2019-June 2020 carried out at least one initiative to implement a strategy for working with innovations. The interest of corporations in breakthrough technologies is shown in such forms as acceleration programs, hackathons, and qualifying sessions. Irina Kalashnikova, co-founder of GoTech Innovation, which helps corporations to work with technology projects, revealed to Invest-Foresight all the specifics of working in the field of corporate innovation.
— What does GoTech Innovation do, what are the specifics 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 over 6K 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.
The company’s Russian clients include X5 Retail Group, Rostelecom digital services provider, Gazprom Neft oil producer, Beeline mobile operator, Hoff furniture and household goods chain of stores, consumer appliances M.Video-Eldorado Group, Yandex.Market online retailer, FESCO transport group, Kirovsky Zavod heavy machinery manufacturer. Internationally it has cooperated with Kaspersky Lab, Helsinki Center, Enterprise Lithuania, Startup Estonia, Vienna Business Agency and other companies interested in dealing with Russian and international startups.
We are approached by corporations that need to monitor and search for technological solutions in accordance with their business needs. 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 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 do startup programs differ 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 their business goals. Clients come with their interests already set, 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 certain experience.
Hackathons are best suited for solving HR tasks, since in the format customary for Russia 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 for three 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 which 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 company CEO Evgeny Kaspersky is personally passionate about tourism, he wanted to support entrepreneurs during difficult times, he made up 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).
— What are the difficulties of 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 make 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, there are 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 couple of months later and check 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.
— Over the years of your experience, what startups have been most striking?
— 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 generates 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 Sistema VC venture capital fund, and in 2017 a deal with Sberbank was closed. I would also love to mention Miro online service for teamwork (until 2019 it was called Realtime Board), which was nominated by the jury of our contest in 2012, and in 2018 raised $25 mio from Accel US venture capital firm and AltaiR Capital fund with Russian roots, then, last spring, it raised $50 mio from the American fund ICONIQ Capital, which manages the capital of Mark Zuckerberg, Jack Dorsey and other executives of major technology companies. Among the 2019 contest nominees I would also like to mention an 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 Russia’s VTB bank at the end of 2019.
— 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 to 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 move 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 with Russian startups only, but with foreign ones as well. Is it any different to do business with a Russian or a foreign company?
— 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 a 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.
— Discussing the pandemic is now commonplace. How has the coronavirus crisis affected your operations?
— The pandemic has generated changes for everyone, including ourselves. First of all, the format of interaction with corporations and startups has changed and 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 now 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 city of corporate headquarters.
— If a startup turns to you for help to achieve success, what advice would you give them?
— Typically, successful entrepreneurs are confident people. They rarely come up with general questions since they are interested in specifics, for instance, 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.
By Christina Firsova