Live on ItStarts!, Sergey Lavrinenko asked Ivan Vedenin about the accelerator from Sberbank and 500 Startups, Russian startups, and talked about the pros and cons of acceleration for the state’s eco-system.
Belarusian (partly) startup in the Russian accelerator
Our project Synpatic hit the accelerator having passed a rigorous selection. We initially dealt with audio analysis technologies, extracted the emotions of the interlocutors from various audio conversations, analyzed how the conversation was going, and based on this we prepared various useful metrics for the business, for example, what is the loyalty of the client participating in the negotiations, and what is the level of service quality by the operator or manager. Also, we helped automate business processes that build on these two things. Perhaps, during the acceleration, we will somehow change our idea, but so far we are working in this frame.
We got into the accelerator by Sberbank and 500 Startups. I already had experience in accelerators and therefore, at first, I was skeptical. Looking at the project, I expected it was a bureaucratic, fake thing. But I was very surprised to get there.
Firstly, there was an awesome set of 25 startups out of 800 were accepted! And we got into this list, can you imagine?
Half of the startups I talked to there already have revenue. As I understand it, preference was given to just such in the selection.
Revenue simply confirms that we are not doing something meaningless.
As I understand it, we were the only team from Belarus. Nobody came up and waved a handle, they say hello colleagues. In the set description, there was a requirement of a legal entity, but towards the end, the requirement was softened. It was possible to apply without a legal entity and to register it quickly later. I wrote them to found out if a team from Belarus could participate. I was told that I still needed to quickly register a legal entity and transfer intellectual property there. We are in the process now. But Belarusians probably did not show interest in this program, although, it was rather simple to write a letter and receive an answer.
Perhaps our startup will soon become Russian, but if we do not receive the investment, then most likely we will not complete the process.
The distribution of roles in accelerator
I was surprised that this entire program was maintained by 500 Startups. That is, people from Sberbank do not hold masterclasses and do not teach anything. Mentors from different countries who have passed through Silicon Valley and have experience have been brought to us.
90% of the mentors in this program did 1-3 exits.
There was a feeling that we were in 500 Startups, not in some kind of Sberbank project.
It is difficult to say what interest Sberbank had here since I missed the introduction a bit. In the first week of acceleration, our founder Aliaksandar Astafyau was there, and I arrived already in the second week. But I think that Sberbank in Russia is more than just a bank. Their general director German Gref emphasizes that one should not be afraid of other banks or FinTech-companies that could undermine their business, but something like, roughly speaking, Uber.
Sberbank seems to adhere to a strategy to try to cover all areas of life with its umbrella. Looking at the selected startups, it is impossible to single out a specific area, but there is no one in the FinTech field.
It seems to me that Russia is trying to return in the time of the Soviet Union, centralized economic management, and Sberbank is one of the points that do this according to commercial principles, that is, not to take everything, but to buy everyone.
Initially, I did not know the formula by which Sberbank cooperates with 500 Startups. Now I understand that Sberbank hired these guys and told them to do what they can do best with startups. Probably it is Sberbank that invests in companies.
Why does the project need an accelerator?
One of our goals is to get an investment. But for this, we need to show good traction (The Heroes — the growth of certain indicators: the number of users, transactions, revenue, etc.). Those who enter some top startups will receive more investment.
That is, you need to show that you are working hard to get an investment.
Until we realized that this was a real accelerator just without the necessity to go to America, we didn’t hope for anything. But our company’s strategy is to get paying customers. You open the website of the Sberbank accelerator and it is written there that 33 companies for pilot projects are included in the Sberbank ecosystem. Well, that’s cool! We do not need to run across Russia to look for companies to make a partnership with.
That is, the most important point for us is a network among potential customers. And second, of course, is an investment. They are useful if they move you somewhere. You need to see the goal of what you will do for the money. If there are pilot ideas for which you need to create a product, then it’s clear why this money is needed for.
There was a lot of talk about evaluating a startup. Everyone who is included in the program is given an assessment.
Our valuation is $ 2 million.
In Belarus, the default mark is from $ 1 million and below, and there they give $ 95 thousand for 5%.
Theory for an experienced IT specialist
Attendance is a sore spot for any accelerator. If people are not forced, then they bail on, so the founders just need to be pulled out of the OS and forced to do what needs to be done. And there are a lot of people watching this!
There is a lot of knowledge in the world, you can read an article on any topic for free, but these knowledges should be learned on the right time.
When I go and try to make sales having the sales-coach next to me, who at the same time holds masterclasses, workshops and individual consultations, it goes very well. The level of assimilation of information, in this case, is 80-90%.
The program of the week I visited had different aspects. Something was more useful to me, something less, but all the companies were different and the developers had tried to please everyone, give some kind of set, and startups had already selected what was more valuable to them.
My goal is sales. I am actively learning this, although before I did not understand how to peddle something.
Now I am involved in the creation of this product, I know what I am selling and how to implement it in this or that company. This is not a shame!
Foreign and local mentors
I was always skeptical of people who were called mentors.
The question always arises: do you have your own startup or in which startup you participated?
Few people can show something. This does not mean that he does not understand anything, it means that he is, rather, an adviser who can advise in some narrow sphere.
Personally, I am for the purity of the terms. For me, a mentor is the one who made the startup himself. Or as Mikhail Rumyantsev said: “A cool mentor is one whose startup is one step higher than yours.”
Still, we need to get the previous experience into account. Experience strongly gives a roll: if a person has been engaged in a certain startup all his life, then he is already in a certain way formed as a mentor.
Here one still needs to think not only with the category “can this person be a mentor?”, but also with the category “can this person be a mentor for my startup, is his experience relevant to mine?”.
Our startup has a very powerful technological component. We cannot throw away the developed algorithms, we cannot do any crazy things. We must be based on these algorithms because this is our advantage in the market. But at the same time, we must make different versions of the product based on these algorithms. That is, the development work is twice as much. It is easy for us to work with those mentors who understand this. And those who do not understand come on every week you will release a new version of something and test it. But this is unreal. Any algorithm must be tested for at least a month so that it carries at least some value for data science.
We have very few real mentors in our country.
I talked with some of the mentors. They are smart enough, they can suggest something and direct you somewhere. But I did not work closely with them. In the accelerator, I spend 80% of my working time at master classes or individual consultations. Mentors are constantly there, they are available all the time. Because these specially hired guys are always busy with us. In Belarus, to involve someone like these people, they must have unlimited faith in your startup. But the reality is that you can meet for 10-30 minutes to chat for coffee on networking.
I don’t see any sky-high level at the Russian startup teams, I don’t see such things that are not accessible for Belarusians teams. You see, Russia is huge, a lot of people from regions came to the accelerator. This is a bunch of enclaves like Minsk scattered across Russia, from where they pulled the most, most promising guys. The best minds are gathered together there.
Moreover, several Belarusians work in Russian teams. There is also a guy from Krasnodar who had a development office in Minsk a few years ago. He praised Belarusian programmers very much.
Is it true that Russian startups are focused only on the Russian market? Many of the Russian startups make money because they have a client base (Russia is huge) and there are sales. But they do not have a clear job placement only in the Russian market. All communication in the accelerator is in English, this is generally a prerequisite. I do not think that they are somehow particularly concerned about the Russian market.
Some guy even said that when his project was chosen, he had to come from the USA, where he fundraised money.
I hope that the accelerator will explain all the charms of the global market and if they thought locally, then all this will be expanded.
Is it possible to gather promising guys in Belarus?
In the accelerator from Sberbank, there were less than 25 Belarusian start-ups. But it’s very difficult to say how many companies of such a high level could be assembled. For example, I know that TechMinsk was going to take ten startups, and they took seven, although there were about a hundred applications.
There are not many startups in Belarus that would pass for the accelerator from Sberbank and 500 Startups.
Fake and best startups
Previously we participated in several accelerators.
The problem with all our previous accelerators was that for them it was probably their first experience.
I cannot blame them for doing something wrong as they are training. Even if they make copy-pastes of some kind of program, they still miss something.
The current accelerator is great. For a week there, I realized that they are doing everything correctly and professionally. It’s not the first time they are organizing such a program. Everything is adjusted there, all the nuances are thought out. In particular, a coercive system has been created: I can’t come later than the appointed time, because it threatens to miss the demo day.
At first, coming at 10 in the morning seems to be a stupid requirement, but it works as everyone comes and gets into work.
Initially, it was agreed that no one will settle us anywhere. All that is given to us is the entrance to the incubator, where you can come at any time. In the incubator, there is food for breakfast and a light dinner, juices, two coffee machines, and for lunch you can go to the food court. I have to spend money on life in Moscow, but it is not so far. On the weekend I come to Minsk, see my wife, I can solve problems, record a podcast. But for some startups, this is not available, because they live on the other side of Russia.
The meaning of acceleration
Acceleration has an independent value. We need both acceleration and money. This is only useful as a kit.
If they accelerate me, but I don’t have the resources to do everything later, then there is a chance that we will simply close the company because we will not have money.
I agree that projects in accelerators are customized to a single common standard. And I even think that it’s good.
If we had at least one such accelerator in Belarus, which once a year gained such an amount and adjusted according to the template to one standard, that would be wonderful.
There is a difference, as in the crafting method of manufacturing shoes or conveyor. The accelerator makes the conveyor. From the point of view of the country, it’s cool to make a conveyor of startups that turn out to be somewhat viable at the exit. Perhaps they cut off some non-standard thinking and unusual models, there is such a risk. But for an entire ecosystem, this is good.
The history of the creation of accelerators is extremely mixed. There are probably a dozen successful accelerators in the world. Many startups go through them, so we can say that their methodology works.
But the top companies did not pass accelerators.
Does it make sense to get in small accelerators?
For startups, there are a dozen very desirable accelerators, because there are cool mentors. But if this is an average crappy startup accelerator, then you need to think a hundred times whether it is worth spending money and time on them and to think about what they can give you. Most small accelerators exist either on a grant basis, for example, for European or government money, or they, as an appendage to the fund, make a funnel to give investments later, and the accelerator itself is good if it covers its expenses.
Now I would recommend to everyone to consider the program from Sberbank because it is really cool.
The price of money differs. $100 thousand that you will be given you will spend much faster in America than here. The cost of housing is much higher there, also you would not have been given there, most likely, $ 100 thousand. You will receive $150 thousand, of which $ 100 thousand you will spend on acceleration services. So far there is nothing similar, but it may turn out that I don’t know something because of the small print.