— How did you come to invest in the Russian startup Elementaree?
— I have been professionally involved in investment my whole waking life. I graduated from Colgate University and Harvard Business School, where I was awarded an Academic Distinction. Every year, I go to Harvard to judge a startup competition. When Olga Zinovieva finished her MBA course, she presented the business plan for the Elementaree project. Her work made a big impression on me. The potential of this startup gave me the idea of investing in Elementaree. It stemmed from the following considerations: healthy food, and a convenient way of obtaining it, is a worldwide trend. The more society develops and becomes more affluent, the more people think about their health. A high-quality diet is the most important factor in their concerns. There is a great deal of evidence that people are prepared to pay a lot more than normal for high quality, healthy food. The success of Whole Foods Markets in the US is further confirmation of this. As I see it, Russia is no different from the rest of the world in this sense, and Moscow is the perfect place to put this idea into practice.
— Many investors prefer to put their money into IT or the mobile phone market, others into biotechnology or medicine. Which markets do you prefer?
— What makes Elementaree unique?
— Selling food is in no way a unique occupation. But Elementaree sell not just food, they sell convenience and quality in one “package”. You could say that they have created a new business product, a new market even. As far as I know, not one company in Russia offers the same quality of service at such prices.
— In which countries apart from the US and Russia have you invested?
— When is it, in your opinion, that you can take a risk for a greater profit, and when is it better to deal with a stable business?
— Embarking on something that no one has done before is always a big risk. My fellow investors and I have a saying: “You can always tell a pioneer by the arrows sticking out of his back”. For me, the main thing in business is people: decent and mature, and who know what they are prepared to sacrifice to turn their plans into reality. Furthermore, having an idea which is smart, and which the world needs. I like businesses where I know beforehand that they are going to work and bring in a certain amount of income. For example, I do not have the slightest doubt in the future of Elementaree nor in the fact that in the future people will be chowing down on food with an eye on its quality and health benefits. In every country!
I prefer a business which is more stable and less profitable. I believe that it is possible to succeed with a more low-risk project too: just that it will take more time. I have plenty of that, and am prepared to wait! The scenario in the spirit of “Take a risk: it’s all or nothing” is not for me. Offering people healthy food of good quality, though, is a simple and comprehensible business. If you do it well, your business will flourish.
— How important to the investor are the differences between countries in terms of mentality and cultural traditions?
— Very important. When you are counting on specific people, you assume that they know and understand the country they live in. Look at Olga, somebody who is capable of building a business in Russia. It is also clear that not every idea will work in this or that country. However, countries and people have a lot more common than is commonly thought. If you follow the development of a business plan in the US, you can forecast with great accuracy its development in other countries. Patterns usually repeat themselves.
— Would you care to compare Russia with other countries you have invested in?
— How important in the countries you invest in is the presence of a developed venture investment infrastructure? Would you mind comparing Russia with other developing markets?
— When a country has venture investment infrastructure, it helps a lot: connections, contacts, and extra funds for the next rounds of investments are all very valuable. If there is a wide choice of successful entrepreneurs who can become mentors for the initial stages of projects, a lot of issues can be more easily resolved. Russia has done a lot in this area, but it still has further to go. I think that technology here in the next ten years will develop, that there will be fresh success stories. My feeling is that Russia is roughly at the same stage of development as other BRICS countries like Brazil, India, and China. In terms of venture investment infrastructure, only India is ahead. For example, in Brazil and China, a good start for a business is mainly a question of connections, and how close you are to an influential family or clan. Any serious venture capital infrastructure is not something that I noticed there at all.
— How important is government support to a venture business?
— What advice would you give to foreign investors?
— My experience tells me that, to a large extent, good people in different countries are very similar. They like to work hard, support their family, live in peace. Cultures differ, but wherever you go, you will always find decent people. My advice to all investors is this: first get to know them better, then have faith in the people in whose projects you are about to invest in. There is no such thing as foreigners: we are all the same species!
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