What happened to startups over last year

The fourth issue of the Startup Barometer, an annual market survey of tech entrepreneurship in Russia organized by venture investor Alexei Solovyov, has been released. More than 630 respondents took part in the survey.


The research found that the majority of startups in Russia are still run by men although the number of female founders has grown, from 12% in 2019 to 16% in 2021.

Tech entrepreneurs are usually mature people (around 36 years old) with a university degree (sometimes more than one).

As in the previous year, startup founders are predominantly serial entrepreneurs: before starting their current project, 34% of the respondents had already been engaged in their own business and 29% had worked for a corporation. Moreover, 60% of the survey takers have past negative experience when their startup failed or had to shut down, which confirms that tech startup founders in Russia are not only highly educated people but also experienced serial entrepreneurs who learn from their mistakes.

Startups are not ‘aging’ as every year there is a natural increase in younger tech companies. The distribution of startups across stages remains even year after year: 22% are just starting out, 30% are at the prototype and first sales stage and 22% are scaling up.

The pandemic did not have any significant impact on tech startups. About half of entrepreneurs (47%) said that overall, their businesses had an upward dynamic over the past year and only 17% of projects took a turn for the worse.

EdTech has been the most popular niche among entrepreneurs in the past 12 months, followed by FinTech and E-commerce. There has been a notable increase in HRTech projects, which is now in the top five. There are also a substantial number of new startups in construction, real estate and insurance (ConstructionTech, PropTech and InsureTech). Although a decade ago, IT and Mobile were considered separate niches, this concept is now outdated as most IT projects cross over to Mobile and vice versa.

Looking at early-stage funding, we noted a backslide to figures of three years ago. While in 2020, 61% founders used their own funds to launch startups, this year’s indicator reached 75%, which is even higher than in 2018 (71%). Regrettably, in 41% of cases, entrepreneurs also have to invest their own money in development. Sales revenue is now the second largest source of current funding (35%).

Major corporations have already become notable players in the open innovation market, which startups also confirm: 84% of Startup Barometer respondents are considering cooperation or already cooperating with corporations and reporting a much higher interest on behalf of corporations in working with startups compared to the year before.

Exporting business models and technologies is a noteworthy phenomenon of this year. A successful business model or technology in Russia is often transferred to foreign markets. Recently, there have been numerous copies of food delivery services like Yandex Food and Samokat, or EdTech companies founded by Russians.

Most tech entrepreneurs (53%) are expecting market changes due to the general boost of digital literacy. Many people were forced to go further than basic digital skills during self-isolation, expanding the number of users of delivery, banking services, government services and streaming platforms.

The second most important factor is the bigger cohort of people working remotely which has given a boost to teamwork platforms, videoconference software, cloud storage and cybersecurity solutions. Also, more remote learning solutions are expected to emerge as a result.

The survey was conducted in cooperation with PepsiCo, MTS and EY.

By Konstantin Frumkin

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