Rating. Top 10 of the most active accelerators in Russia
The Russian venture eco-system, just as the Universe thirteen billion years ago, is starting to come into sharper focus. Its particular elements have begun to emerge, many of which were still exotic not so long ago. Of one these elements is accelerators.
As is often the case with venture elements, accelerators do not have a precise definition or clearly defined functions. Speaking generally, their main task is to rapidly bring the startups that are at early stages of development to their first investor (most often it is an angel, but it can also be a foundation, and not necessarily of seed funding), finalize their development and provide them with various assistance. Typically, the movement of the project within the accelerator reminds that the path of a university student, which involves the selection process (admission), studies (acceleration programme lasting for several months with instructors, mentors and experts) and exams (demo day for investors). In addition, the accelerator usually provides its residents with non-financial support: a venue with communication facilities and office equipment (for the duration of the programme).
However, it is not always clear what is the difference between accelerators and other popular market actors, such as incubators that technically do pretty much the same. As we see it, the main difference is the later stage at which the projects come to accelerators. Also, the work of accelerators is of a commercial nature, which is typically not present in partnerships with incubators. The core function of the latter ones is social, which is why the majority of well-known incubators were established on the basis of large universities. In contrast, accelerators often receive a share of the company in exchange for its services, because at the early stage of development the startup is unlikely to have solid assets. On average, this share varies between 3 to 7 per cent.
In other words, it is basically a foundation of the earliest stage, which supports its portfolio companies much more actively by investing in them not money, but its own services, knowledge and competence (although some accelerators give small amounts of money too). And in that sense, the main goal of the accelerator is to attract investors for its residents in order to give them a fresh impetus for development, and leave the project later, getting high returns on its expenses. An American accelerator Y-Combinator is an iconic actor on the venture market, which traditionally provides seed funding for hundreds of startups and has already gave the world such prominent companies as AirBnB, DropBox and other organizations.
Although acceleration is a fairly new form of support in Russia, there have been quite a lot of new accelerators emerging in recent years (according to our estimates, 27), which we believe is sufficient to assess the quality of their work. We made a research into this rather small market of services, using publically available data and taking into account the way the participants of the eco-system identify themselves, found the most active accelerators and created our top-10 list (our methods of calculation are described at the end of the article).
Top 10 Russian accelerators
Acceleration Programme of IIDF
The number of residents: 76
Founded in May 2013
Famous residents: NormaSakhar, Dve Ladoshki, Citycelebrity
The acceleration programme of the Internet Initiatives Development Fund (IIDF) was established in May 2013 (which is why it has not yet had any graduates), but has already demonstrated a high level of activity. As of now, the acceleration programme, as estimated by IIDF, includes 76 projects (36 offline and 40 online). Representatives of the 27 projects had a meeting with the President Vladimir Putin on 5 November 2013.
The accelerator acquires on average a share of about 7 per cent of the startup, offering $25 along with the services of “guaranteed acceleration, which is equivalent to $20”. The period of acceleration is three months. IIDF has a list of eligibility requirements. In order to apply, every startup has to have a team of at least two people with relevant experience. It also has to be a legal entity with an established business model, the opportunity to test this model and begin monetization during the acceleration period, have a public version of the product that can test the business model and a potential market worth at least $10 million.
Representatives of IIDF say that over the course of acceleration, the projects receive assistance from successful practitioners: Lubov Simonova (Almaz Capital), Mikhail Tsygankov (Global TechInnovations), Felix Shpilman (Start Fund), Alexey Solovyov (Prostor Capital), Vadim Tarasov (Media 3) and several dozen other professionals. The whole concept of IIFD envisages that once acceleration is completed, the project should be able to try to raise funds from either the Fund itself or its angel-partners.
The number of residents: 70
Founded in October 2013
Famous residents: WayRay, Appercode
Generation S is an acceleration programme for semifinalists of the iconic startup competition BIT. It was launched in 2013 under the aegis of RVC and the Moscow Agency of Innovations. As indicated in the definition, projects ‘from the outside’ cannot access the programme. What is interesting is the fact that the programme prioritises non-digital offline projects. So far, Generation S does not have its own venue — the recent programme in October-November took place at the venue of a partnering API Moscow at Krasny Oktyabr.
The acceleration turned out to be robust, consisting of two weeks of learning and entertainment-courses (speakers included the founder of IBS Group Anatoly Karachinskiy, co-founder of Kaspersy Lab Natalya Kaspersky, former president of JFSC Sistema Leonid Melamed and others), pitches and mentoring sessions. The winners received awards at a representative forum “Open Innovations”.
Being a state-run programme, Generation S does not seek to pursue commercial interests: its organizers do not take a share in startups. They also do not invest in startups real money, although there is a prize fund of 5 million roubles allocated among the winners (this sum was shared among the winners this year).
According to the organizers, 70 per cent of projects that have successfully completed the acceleration programme (70 startups in total) attracted the interest of investors.
The number of residents: 50
Founded in 2009
Pulsar Ventures was founded in Kazan in 2009 by the Investment and Venture Fund of the Republic of Tatarstan. RVK is also one of founders of the company. Pulsar is not a pure accelerator, as apart from acceleration, it also conducts venture consulting in the broadest sense of the word (including training) and attracts money to its projects (according to its own information, the company has attracted about $2 million since its establishment). It focuses not only on IT, but also on other fields such as biotech. However, as the company itself says, acceleration is one of the key areas of its work.
It is not surprising that the majority of startups participating in the project are from Kazan, and not all of them are necessarily young. Some teams, for example, need help with sales instead of an active acceleration (as Pulsar says, they helped 5 companies to boost their sales). An indisputable advantage of Pulsar Ventures is its extensive partnership with different institutions, such as with the Government of Tatarstan, RVK, U.S. Russia Center for Entrepreneurship, University of Maryland, George Mason University, London School of Business & Finance and other organizations.
Pulsar has a wide range of interests. This year, for example, it organized the 3rd Russian TechTour (similar to a venture fair for Russian and European investors) in Moscow and Kazan.
The number of residents: 40 (25 of them are constantly present at API)
Founded in August 2013
Famous residents: Planner5D, SocialMart, Getsy, GBooking, Alytics
Another young accelerator — API Moscow, which positions itself as a meta-accelerator, was founded in 2013 by the Moscow Agency of Innovations on the territory of Krasny Oktyabr, which has been a popular venue among startups. API’s operational development is administered by Digital October, which is located in a nearby building.
API has a large profile of projects related to the sphere of IT. It has an unusual organization of work: the selection of projects is carried out not by its specialists, but by officially accredited investment partners. Altair (founded by Igor Ryabenkiy), IMI.VC (founded by Igor Matsanyuk), VESTOR.IN (founded by Pavel Cherkashin) and Global TechInnovations were the first ones to be chosen from the pool of potential partners. Later, the programme was joined by a company “Great Stuff”, founded by Elena Masolova, and a seed foundation Starta Capital. These organizations created their own startups within API, which are now monitored by the accelerator.
There is no formalized acceleration, although Digital October organizes lectures, master classes and other events for its residents. It is still unclear how long the acceleration of a single startup will last. The director of the Moscow Agency of Innovations Konstantin Fokin spoke about a couple of months of acceleration (the first group of graduates will officially complete the programme in February 2014). However, it already seems that basic the conduct of business, which involves the selection of a number of operating investors who manage the resources provided by API, has already proved its effectiveness.
The obligations of these operators to their projects are unclear, but they have to meet KPI targets before coming to API, which includes some kind of investment in startups. The accelerator does not ask for a share of the company and makes no financial investments. Instead, it invests resources such as knowledge and connections, conducts various learning activities etc. As of now, one can join the accelerator de facto through investors, but, as stressed by Konstantin Fokin in an interview with Firrma, there might be new conditions for entering the programme — e.g. for the winners of reputable startup competitions and awards.
The number of residents: 20
Founded in 2010
Famous residents: Lakato, Teamo
FLV is often referred to as a ‘foundation’, but it is technically an accelerator. Its founders — the structures of the investment company of Pascal Klemann, an influential investor, who stays away from public light, and the founder of KupiVIP company Oskar Hartmann — were clearly inspired by the example of the most famous European accelerator the German Rocket Internet. Fastlane starts with researching already tested, successful business models on the global market, chooses which ones to replicate and gathers together a team of people to launch them. Since its foundation three years ago, FLV says that it has launched 20 projects. It has also managed to expand two companies to non-digital markets, namely Sapato and Shopping Live.
FLV invests in its startups, on average, up to $500000 and takes a large share of the business. In this regard, it is different from other accelerators. This is, however, easy to understand, considering the fact that FLV does not participate in carrying the projects out, but launches them itself, which is quite unusual for accelerators. FLV is interested in almost all spheres related to the Internet. According to its own information, in three years it has spent on its startups almost $100 million.
The number of residents: 20
Founded in 2012
Famous residents: Dish.fm, Prognolic, Kula
Although Farminers is called ‘an academy of projects’, it is in fact another typical accelerator. It is also another project of a famous investor and entrepreneur Igor Matsanyuk (Game Insight, IMI.VC). The project also benefits from the work of Alisa Chumachenko (CEO Game Insight), Vsevolov Leonov (an entrepreneur and former vice president of Mail.Ru), Alexander Borodich (private investor) and some other persons.
Farminers website provides a rather detailed description of how to create a presentation and write a pitch and lists a number of recommendations for young startups, such as “10 reasons why you should not start a startup”. For those who join the programme, the acceleration process lasts for six months: three months of work, an internal examination, and, in case of successful competition, three additional months for finalizing the project. The founders of Farminers aim to raise the value of the project during this time to at least $1 million. For that, startups should be ready to give Farminers the share of 40 per cent of their company for $150000.
The academy has already had several famous ‘graduates’ such as Empatika Group belonging to Bayram Annakov, which is currently working on a mobile app “App in the Air”. Representatives from Farminers say that many of their projects, which completed the acceleration programme, moved on to the next round with IMI.VC (the foundation of Igor Matsanyuk and his partners). Officially, however, only one deal has been made public — with an app developer “My-Apps”.
The number of residents: 20
Founded in 2012
Famous residents: Car-Fin
The company Global TechInnovations has launched its acceleration programme GRI Lab. Originally, it was started in close partnership with the foundation Prostor Capital, but later the programme acquired a life of its own — it has become, for example, the officially accredited partner of API Moscow. Its focus of work is traditional, encompassing high-tech projects in the following spheres: IT, bio-tech/life sciences, robotics/smart systems, e-health.
According to GTI Lab, three fourths of their recent graduates have attracted investment. To the knowledge of GTI, the current number of startups that have received investment is eight. The accelerator does not reveal the share that it asks for from participating startups (as market actors claim, it starts from 5 per cent and higher). GTI Lab also avoids talking explicitly about its own spending, saying that pre-seed investments are relatively modest and the following seed funding is conducted together with its partners.
Startups that complete GTI Lab acceleration programme receive the following benefits: access to the pool of technological and business mentors from the expert network GTI TechAngels, learning opportunities, assistance in the preparation of preliminary investment documents, assistance in attracting investment, and PR and legal assistance. The duration of the programme is between three and six months.
The number of residents: 17
Founded in 2012
Famous residents: Miiix, Prixel, Oriense
iDealMachine is a typical commercial accelerator, which is currently based in St Petersburg but is expected to open its Moscow branch sometime soon. Its founders Sergey Fradkov and Mikhail Averbakh, the entrepreneurs who sold their American company DynoPlex, decided to change their field of work and become investors. Not only did they manage to establish an accelerator, but they also attracted as their leading partner one of the most award-winning institutions ITMO University, which also provided the office for iDealMachine.
According to Sergey Fradkov and Mikhail Averbakh, they had spent a substantial amount of time preparing, researching and learning about the business models of the world’s best accelerators Y-Combinator and TechStars. Their acceleration programme for pre-seed and seed-projects lasts for 15 weeks and is divided into six parts. iDealMachine focuses on startups in any field of IT. Successful applicants have to reside in St Petersburg for the whole duration of the session. The accelerator helps with the creation of the product, its technological upgrading and prepares the project for a meeting with investors. Every session ends with a demo-day, where recent graduates get a chance to deliver their pitch to potential investors.
iDealMachine takes a share of 15 to 20 per cent. Its pre-seed funding amounts to $25000. Upon successful completion of the programme, the most prospective startups can receive investments from the foundation of Sergey Fradkov and Mikhail Averbakh RSV Venture Partners, which can be around $250000 at a seed-stage round.
According to the founders of iDealMachine, to date seven startups that had completed their programme received seed funding from different foundations and angels.
The number of residents: 8
Founded in 2013
Famous residents: 3DPrintus
MetaBeta was founded by young entrepreneurs Dmitriy Maslennikov and Evgeny Ginzburg. The partners identify themselves as a “sweat equity accelerator, which takes a share in exchange for experience, competence and assistance within the project, as opposed to financial investments or superficial mentoring”. Despite the last part of their self-proclaimed philosophy, Dmitriy Maslennikov admitted that sometimes the accelerator makes financial and infrastructural investments at early stages or to scale up the project. The amount of these investments remains unknown. The accelerator has a tradition focus on IT-related projects.
D. Maslennikov and E. Ginzburg are advocates of the popular lean theory, encouraging their graduates to adopt this approach. They do not like the word “startup”, using instead an “entrepreneur”. Several projects benefitting from MetaBeta did not come from the outside, but were in fact developed within the accelerator itself.
MetaBeta provides acceleration not only for its own applicants. This year, for example, it developed methodology for the much-talked-of Yandex project “Tolstoy Seed Camp”. The statistics speak for themselves: 4 out of 12 graduates of MetaBeta received investments.
The number of residents: 4
Founded in 2013
Famous residents: MyWishBoard
FutureLabs is a laboratory that also does not have a word “accelerator” in its name, which it in fact is. It was founded by Alexander Borodich, former top manager of Parallels and Mail.Ru, business angel, serial entrepreneur (and a member of the team of another accelerator from the Forbes list — Farminers) and already mentioned entrepreneur and investor Igor Matsanyuk. FutureLabs’ website is very succinct, saying “We invest in mobile future” and listing pretty much no other information.
However, the accelerator indeed exists. Its founder not only searches for projects on the side, but also develops his own. FutureLabs does not yet have any graduates since it was developed in the summer of 2013. The focus is on IT, Mobile and Digital Heath. Alexander Borodich says that upon successful completion of FutureLabs’ acceleration programme, in addition to financial assistance the projects receive “lectures, substantive expert assistance and access to the restricted areas of marketing/sales/legal/accounting.” The total investments can range between $25000 and $200000. Participating startups will have to give up a share of at least 5 per cent of their company.
In addition, A. Borodich actively makes his own investments as a business angel: about 22 investments in projects at early stages (including pre-pre-seed funding) on both sides of the pond. Some of his projects include ConferenceCast, VKReader, Colorizza, SuperFolder.co, Chatle.co, Errorlog.co, MiniBuh.ru.
Our counting methods
After researching publically available information (mass media, blogs, resources of venture industry participants, communities) and using formal indicators we found 27 organizations, which can be considered to fall within this group. In accordance with the definition given above — “an organization that brings the project to a pre-investment stage (in exchange for equity or without it)” as well as taking into account the way these organizations identify themselves, we narrowed down our list to 19 active accelerators and sent them a questionnaire. Having checked the received information against the publically available data, we created a list of Top 10.
Taking into account a small amount of pure accelerators (we do not include incubators, IT-parks and startup schools, although we interviewed those organizations that met our formal requirements and could technically be considered accelerators, such as Skolkovo Startup Academy, Ingria and others), we decided not to divide them into groups based on age, industry and other grounds. The ranking was made based on the number of projects. Of course, this criterion is very relative. An ideal ground for assessment would have been the number of graduates that succeeded in attracting investment. But since the market is so non-transparent, it is extremely hard to receive credible information regarding these deals. Since the quantity does not always transform into quality, the profiles of accelerators can also provide other useful information.
It should be also noted that several accelerators did not respond to our enquires, and it was troublesome to understand their activities and sometimes their state based on the publicly available information. For this reason, we had to exclude them from our review. TexDrive, which has become part of the foundation Genezis, was also left out of the sample.
Our Top 10 will be useful primarily for young projects that need assistance with bringing the project to the investment phase and possibly for beginner private investors who are looking for your startups.