How did you find out about the Bimbasket.ru project, and why were you interested in such a company for asset investment?
We had been looking for a long time for an investment project in Russia on the electronic subscription business model. It is obvious that there are not nearly enough of such businesses in Russia, and those that do exist are small ones. The concept is relatively new, and consumers are only just getting used to cash-free transactions, let alone buying by subscription.
He graduated from Oxford and passed a course on entrepreneurship and innovations at MIT. He is a graduate of the Moscow business college SKOLKOVO (2012, MBA). He worked as a private consultant, seeking out investors for startup operators and vice versa. He works for Black Ocean, a New York based international company investing in startups, including on Russian territory. He is an analyst and consultant for the RusBase.com project, which has also been given support by Black Ocean.
What criteria do you use in seeking out a project for investment?
We are looking for projects which are commercially viable and flexible in scale, but above all, we want a startup that is socially significant. Both our investment projects in Russia fully meet these criteria.
What is the other project?
The internet portal RusBase.com.
The project was founded in 2010 by Alena Popova and Marusya Podlesova under the name of Startup-Afisha, as the Russian version of Startupdigest.com, which provides intermediary services to venture investors and startup operators. The project was redesigned in 2011, and a database for Russian business incubators was launched. In 2012, the project received a three-million-dollar investment from Black Ocean and changed its name to RusBase.com.
What investment sums are we talking about? How is the financing done? By direct investment, buying shares, or something else?
The financing is whatever we consider the most appropriate for the requirements of the startup founders. We would not like to talk about specific sums now. There is a certain tendency, here and in the USA, for startup operators to display sums of investments attracted as signs of prowess and success. Investments show that you have a team, a product or a technology in which someone has believed. But the proof of the pudding is in the eating. I think the results should speak for themselves.
In comparison with other countries, what do you think are the particular features of investment projects in Russia?
There are projects in Russia like those I have seen in other countries, but people’s attitudes to Russian startups vary considerably. Everyone I meet here is either extremely pessimistic about the Russian market or extremely optimistic about it. Russia is full of people with ambitions. They have looked at American success stories and think that they can achieve the same. Russia is a big market with a huge growth potential, and there are very many talented people here, but many potential startup operators have no idea how difficult it is to create and expand a business. I also see quite a lot of “parallel entrepreneurs” here – startup operators working on three or four projects at the same time. This is very impressive, but most of them lack focus as a result.
Have contradictions occurred between you and the startup operators, failure to understand the final aim or the procedure for implementing the project?
When it is a matter of nuances, each has his own point of view, but no serious contradictions have arisen. If there is a total consensus, there must be something wrong. Healthy discussions are always useful.
How was the project implemented? What difficulties arose and how were they overcome? What stages would you say there are, and what is your role at each stage? What is your role in the project now?
We spent some time discussing the project with its founders and their consultants. Then we tried several potential versions simultaneously, and agreed on the main parameters for starting them. All startups work by developing, so it is important to be flexible, and not to tie the implementation plan too closely to ephemeral details. We call on our startup operators to listen to their clients and learn from them, before and after the launch of the project.
How, how often and on what matters do you confer with the project leaders?
Like everyone else, we communicate by Skype, email, the telephone and regular personal meetings. Furthermore, I recently installed an information tool to control projects – it’s an American one called Siasto. It has greatly improved my ability to communicate.
Are you confident that the project will be in demand? On what is your confidence based?
Our potential clients have shown great interest in the project. We have received many pre-orders, but we’ll have to see how it all develops. Teaching at this very early age is extremely important. I believe every mother would want to see her child develop in this way if she had the opportunity. Our job is to convince parents that Bimbasket.ru can help them. I am confident that our project will not leave many people indifferent to it.
Online trading is a relatively new development in Russia. In your view, how is it developing today, taking into account the unevenly developed infrastructure (coverage by the internet and electronic payment systems), and also the incompleteness of the logistics plans for delivering the goods to the consumer? What are the prospects for online commerce in Russia?
Online trading is developing exponentially in Russia. By 2014, it will be a market worth 25 billion dollars. There are problems with the infrastructure and a lack of trust in cash-free accounting, but everything is changing. If you look at the success of such companies as Ozon, KupiVIP, La Moda and Wikimart, you will realise that online trade is experiencing a real boom. From the investor’s point of view, this is a great responsibility, because serious money is needed for serious growth. In such sectors as clothing and domestic electronics, the odds are stacked against you. There will be few winners and many losers. To understand this, you only have to look at how dominant Amazon is.
Bimbasket.ru is a niche product representing something more than a simple toy sales website. It is an educational programme, and we are concentrated on building up relationships with the clients, not on organising an efficient retail trade.
Can one say that there are attractive conditions for foreign capital in this sector of Russian business? Will the Western investor be keen to come here? How can he be attracted? On what specific terms?
Foreign investors have always been interested in Russia, but it’s only recently that they have begun to pay attention to startups. The ecosystem here remains young, and in spite of the visits of such eminent people as Dave McClure and Mark Zuckerberg, it is not well enough known abroad. The justice system looks opaque and unfriendly for investors. For example, it’s difficult to draw up an agreement for shareholders here, and even Russian investors and startup operators have to resort to the aid of offshore structures, which pleases the lawyers a lot, but gives everyone else a headache. We are trying to relieve investors of such fears with the help of our RusBase project.
When do you expect a return from Bimbasket.ru?
It’s too early to speak of a return, but we hope that the project will soon pay for itself.
Do you have plans for other projects in Russia?
We do indeed, but at the present stage we would prefer not to talk about them.
What advice would you give investors intending to invest assets in Russian projects? Which sectors of the market offer the best prospects for investment?
I would advise them to visit the RuBase.com website!