Global Startup Platform_Market Research Report_2012

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Global Startup Platform. Marketing Research Report. Version 4.0. …

Global Startup Platform. Marketing Research Report. Version 4.0.

80+ pages of analysis and research, 4 online surveys analyzed, 9 reports from BCG, Startup Genome Project, Global Entrepreneurship Monitor, Opora Report, Yandex Report, TNS Report are analyzed.

New results are found.

Market Size Estimation for Russia is calculated.

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  • 1. Virtual Entrepreneurship Lab TEAMGlobal Startup PlatformMarket Research Report v.4 “WHEN ENTREPRENEURSHIP BECOMES A LIFESTYLE” 18.06.2012
  • 2. Market Research Report ǀ GSP TeamAbstract .......................................................................................................4Acronyms ....................................................................................................4Introduction ................................................................................................4Objective .....................................................................................................5Summary of Findings ...................................................................................7 Problems ......................................................................................................... 7 Services ......................................................................................................... 10 Potential Customers....................................................................................... 11 Market Conditions ......................................................................................... 11 Market Size .................................................................................................... 13 Growth Potential ........................................................................................ 13 Market Niche ................................................................................................. 14 Market Location ............................................................................................. 14 Features of the Platform ................................................................................. 15 Market Channels ........................................................................................... 15 Marketing tools which are popular in Russia Internet ................................. 15Methodology and Types of Market Research............................................... 16Part 1 – Online Survey by GSP Team .......................................................... 16 Methodology .................................................................................................. 16 Results of the Online Survey.......................................................................... 19 Information about respondents ................................................................... 19 Global Startup Platform – testing hypothesis .............................................. 20 Future research and problems with Online Survey ..................................... 26Part 2 – Analysis of International/Russian Reports on Startups and InternetEconomy in Russia .................................................................................... 28 Report 1. Global Entrepreneurship Monitor Russia 2011 ............................... 28 Report 2. Entrepreneurship and small businesses in Russia: A review of empirical research. ........................................................................................ 34 Report 3. OPORA Russia. All-Russian Non-Governmental Organization of Small and Medium-Sized Business 2011 ................................................................. 35 Report 4. Yandex Report – Development of Internet in Russia 2012 ................ 39 Report 5. Internet in Russia 2012 (TNS Agency) ............................................. 43 Report 6. Russia Online: impact of Internet on Russian Economy 2011 (BCG) 45 Report 7. Russia in 2011-2021: diagnosis and trend ...................................... 51 Report 8. OPORA’S INDEX 2010-2011 (business climate report throughout Russian regions). ........................................................................................... 53 Report 9. Startup Genome Report 01 (A new framework for understanding why startups succeed)........................................................................................... 58 Copyright ©2012 GSP team. All rights reserved. Page: 2 Prepared by Ryzhonkov Vasily.
  • 3. Market Research Report ǀ GSP TeamPart 3 - Research and Analysis of Related Online Surveys .......................... 60 Survey 1 – Online survey “Opinion of Russian Internet audience about career development steps (Russia)” ........................................................................... 60 Survey 2 – Online survey “Types of Ru-net users (Russia)” ............................. 61 Survey 3 – Online survey “Research on IT StartUps (Russia)” ......................... 62Part 4 – Google KeyWord Tool and Yandex WordStat Analysis .................... 65 Methodology .................................................................................................. 65 Results .......................................................................................................... 67 Process 1 – Determination of related Search Requests and Services ............ 67 Process 2 – Determination of trends in SR .................................................. 73 Process 3 – Determination of potential markets .......................................... 76 Process 4 – Market Size Determination ....................................................... 79About the Team ......................................................................................... 80Version of the Document ........................................................................... 81List of Figures............................................................................................ 82List of Tables ............................................................................................. 84 Copyright ©2012 GSP team. All rights reserved. Page: 3 Prepared by Ryzhonkov Vasily.
  • 4. Market Research Report ǀ GSP TeamAbstractThe purpose of this report is to present and analyze results of the MarketResearch held on in order to understand possible market value of the Startupproject called “Global Startup Platform”.AcronymsGDP Gross Domestic ProductGEM Global Entrepreneurship MonitorGSP Global Startup PlatformSR Search RequestIntroductionEntrepreneurship and starting up ventures has been the main driver ofinnovation in all economies throughout the world and centuries. Solow-SwanGrowth Model1 proved that increasing wealth of nation is impossible withoutinnovations in the country. GDP growth is highly dependent on amount of moneyinvested in the Innovation, Startups and R&D. Thus, an innovation is a key factorof success to the country’s prosperity.World is heterogeneous and each country has its unique combination of historicalbackground, economic, political, cultural models, etc. There are examples ofcountries that prove the theory of Solow into practice, such as USA, Sweden,Germany, Canada, Australia, Singapore and others. These countries arecharacterized by high levels of investment in innovation, and high level ofentrepreneurial activities. They sometimes also referred to as countries witheconomies of innovation2. However, there are countries with as much potential,but with still immature economic and political systems. BRICI countries are oneof the possible examples, where the knowledge, technology, patents, etc. arepresent but underdeveloped3.One member of BRICIs is Russia. It is a country where there is the lack ofinnovations due to several reasons such as investment climate, lack of platformsfor meeting of Russian entrepreneurs and global businesses, cultural differences,language barriers, lacks of communication with Western and Asianentrepreneurs, lack of international experience, etc. nowadays.1 http://en.wikipedia.org/wiki/Neoclassical_growth_model2 http://en.wikipedia.org/wiki/Innovation_economics3 http://en.wikipedia.org/wiki/BRIC Copyright ©2012 GSP team. All rights reserved. Page: 4 Prepared by Ryzhonkov Vasily.
  • 5. Market Research Report ǀ GSP TeamAt present Internet provides society with such tools as eCommerce, Social Mediaand Communities (facebook), Wikis (Wikipedia). All this tools and projectsconnect millions of people and organizations with different aims, diversebackgrounds and in different ways. This brought to the world manyopportunities, one of them is to startup businesses using virtual communitiesand creating networks of entrepreneurs, mentors, investors, experts.We see tremendous opportunities presented today and still underdeveloped4 inthe entrepreneurship world especially in developing and BRIC countries. GlobalStartup Project (GSP) is the international project which is developing bymultinational team that is dedicated for creating such kind of online platform.ObjectiveIn this report we reveal in-depth research about what is online virtual incubatorcould be, what problems it should solve, services contain and market address.The report is 2 month work of 80+ pages analysis based on data from 4 onlinesurveys, 9 reports on startups, entrepreneurship climate and internet economy inRussia and worldwide, Startup Genome Project, Analytical Tools of Search Engines(by Google and Yandex). The report was mainly prepared by Ryzhonkov Vasily.Other contributors include Vitaly Moroz, who shared results of his online survey,GSP Team.The report is the Venture Entrepreneurship Lab Team’s first step towarddeveloping GSP project and helping entrepreneurs throughout the world startingup their businesses.The objectives of this survey are: • to understand the needs of the market (problems, services needed); • to form customer segments; • to estimate market size; • to validate the main ideas and assumptions behind the GSP and to test the project hypothesis; • to get new insights and ideas about possible added-value services of GSP; • to get insights on marketing (channels, eMarketing, Social Marketing, SEO, sites).Main project hypothesis are: • Developing countries and emerging economies (BRIC, CIS) have lack of innovations. Test Russian market. • Innovation and startup ecosystems in these countries are developed poorly in comparison with countries with economies of innovation. There is no sufficient amount of incubators in Russia.4 Will be tested in the survey Copyright ©2012 GSP team. All rights reserved. Page: 5 Prepared by Ryzhonkov Vasily.
  • 6. Market Research Report ǀ GSP Team • Particularly, there is no united communication platform which is gathering entrepreneurs, mentors, venture investors, business angels and startup teams locally and internationally. • There is lack of professional entrepreneurship networks, primarily consisting of private and specialized firms that provide services for start-up projects. • Internet audience in Russia is quite high. Web startups are popular in Russia. • Market needs an online platform which will provide customers with online services for startups. Test what kind of services needed.Global Startup PlatformGSP as a "virtual business incubator" with a wide range of services forentrepreneurs, investors, mentors, teams and companies in Russia, BRIC andCIS economies. Main distinctive feature of this platform is combining socialnetwork with different tools and services for startups (such as strategyconsulting, financing, online database of projects and entrepreneurs,predeveloped business ideas, tools for managing and developing a startup, etc.).Copyright ©2012 GSP team. All rights reserved. Page: 6Prepared by Ryzhonkov Vasily.
  • 7. Market Research Report ǀ GSP TeamSummary of FindingsMain results: 1. Through analyzing the results from our market research we found that GSP is valuable project for the market. There is lack of innovations in Russian market, which is proved by many indicators. For instance, only 19% of Russians believe that enabling conditions of starting up a business are satisfactory. 2. Set of Problems and Services was revealed after analysis of Reports and Online Surveys. They were classified. This set forms services for GSP value proposition. These problems prove that innovation system and entrepreneurship climate in Russia is weak. Some of the problems couldn’t be solved through GSP Project directly, such as bureaucracy or corruption. But we could address these problems indirectly. 3. Entrepreneurship Online Market in Russia is very young. First organizations of investors or business angels appeared there only few years ago – in 2006. However, there are some projects that could be considered as competitors to our project. This Report will not cover analysis of them and we will devote to this separate work. 4. Internet audience in Russia is the number one in Europe with around 55 mln people. 5. Online Survey showed that there is need in services we proposed. However, the survey was made internationally. Now, we will test market needs locally. 6. We also identified potential market size, niche, channels and tools of the GSP in Russia. 7. Customer segments were identified in Russian market.Summary is structured as follows: • Problems of Startups • Services of GSP • Potential Customers • Market (Size, Conditions, Channels and Tools, Niche) • Features of the GSPProblemsStartup Problems in Russia (according to Global Entrepreneurship Monitor): 1. Bureaucracy – 1,83 2. The introduction of scientific and technical developments – 1,9. 3. Barriers to market entry – 1,97. 4. Access to financing (Virtually inaccessible to young companies to obtain investment through public offering on the market) – 2,02. 5. Elementary and secondary education (does not sufficiently encourage creativity of students, self-sufficiency and personal initiative, entrepreneurial skills) – 2,14. 6. Federal Programs – 2,16. 7. Social and cultural norms – 2,34. 8. Governmental policy – 2,39. Critical factors are:Copyright ©2012 GSP team. All rights reserved. Page: 7Prepared by Ryzhonkov Vasily.
  • 8. Market Research Report ǀ GSP Team a. duration to obtain the necessary permits and licenses – 1,44 b. sequence of state policy with respect to small firms – 1,94 9. Commercial infrastructure – 2,77. 10. High education – 2,85. 11. Physical infrastructure – 3,1. 12. Market dynamics – 3,18Problems revealed through Online survey made by Vitaly Moroz: 1. Team selection problems • team leader qualities; • team members qualifications; • selection of team with the right motivation; • vision of the leader; • commitment of startup team members to business idea, common goals5.2. Team organization problems • distribution of roles in the group; • finding a compromise and control / conflicts solving; • consolidation and retention of the team; • insufficient time members spend for startup activities.63. Planning and organization of the work • select the correct model of work; • planning and setting tasks; • coordination and control.4. Financing problems • lack of funding; • stops in funding; • lack of funds for marketing.5. Business Model • incorrect assessment of the risks. Teams needs a critic to land on the ground and reveal the risks7; • search for a business models may take a long time (years)8.Startup creation Problems (according to Startup Genome Report): • Startup teams and Founders do not learn in the process (without mentors, helpful metrics and thought leaders) • Startups don’t change ideas or hypothesis in the process. • Overinvestment. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. • Optimum team size isn’t found or reached. Team size influences time to reach scale stage.5 Was added to the survey by Vasily Ryzhonkov while analyzing interviews.6 Was added to the survey by Vasily Ryzhonkov while analyzing interviews.7 Was added to the survey by Vasily Ryzhonkov while analyzing interviews.8 Was added to the survey by Vasily Ryzhonkov while analyzing interviews. Copyright ©2012 GSP team. All rights reserved. Page: 8 Prepared by Ryzhonkov Vasily.
  • 9. Market Research Report ǀ GSP Team • Motivation of teams and founders is undervalued. Motivation of founders driven by impact rather than experience or money. • Overestimation the value of IP. Founders overestimate the value of IP before product market fit by 255%. • Incorrect Market Analysis. Startups need 2-3 times longer to validate their market than most founders expect. • Incorrect Market Analysis. Startups that haven’t raised money over- estimate their market size by 100x and often misinterpret their market as new. • Premature scalingInternet Penetration and Economy ProblemsBarriers (from the main to the least significant, according to BCG Report): • Don’t have resources to develop internet site • Don’t have time to maintain internet site • Internet is not safe • There is no community of practice in the internet • Employees don’t have sufficient skills • Our clients don’t need internet site • We don’t know how internet could contribute to development of the business • Employees don’t have access to a PC • EtcSMEs Problems are (according to OPORA Report): • Low availability of skilled personnel – 61% • Problems with purchasing power – 59% • Limited access to financing – 38% • Problems with infrastructure – 36% • Low availability of highly qualified management – 32% • Difficulties with implementing new technologies – 28% • High personnel costs – 23% • Problems with administrative regulations – 19% • Difficulties with changing the organizational structure of the company – 13%Main Startup problems revealed are (according to OPORA Report): • Low availability of personnel – 43% • Overall decline in demand in the sector – 33% • Low availability of financing – 30% • Unfair competition – 17% • Corruption – 13% • Undeveloped infrastructure – 12% • Demands of regulatory authorities – 10% • Low availability of real estate and facilities – 9% • Crimes – 1%.Copyright ©2012 GSP team. All rights reserved. Page: 9Prepared by Ryzhonkov Vasily.
  • 10. Market Research Report ǀ GSP TeamServices Table 0 – Category of servicesService Number of Voices Overall PercentageFinancing 31 71%Strategy consulting 18 38%Business Models creation 30 64%The team building 27 57%Mergers 10 21%IPO 8 17%Other 8 17%Acquisitions 6 13% Table 0 – Name of potential GSP services Number OverallService of Voices PercentageCommunity and network of entrepreneurs, mentors, 34 72%business angelsMentorship by experienced entrepreneurs from 30 64%Russia, Silicon Walley, other IT ParksDevelop business strategies 27 57%Marketing of new projects 27 57%Legal Advice 24 51%Online database of advices, draft business ideas,predeveloped business plans; 24 51%Best practices, successes, rules.Lists and collections of funds for venture capital 21 45%projectsTesting new products and services 20 43%Finding teams or team players for your start-up 20 43%Obtain a patent 18 38%Source information and knowledge on management,creation of new businesses (blogs, articles, business 16 34%courses)Taxation 14 30%Crosscultural analysis and Advices on the Platform 28 57%Accounting 13 28%Professional comm 10 21%Other 5 13%Rationing of resources, 1Optimization of office rent and other resources, 1Copyright ©2012 GSP team. All rights reserved. Page: 10Prepared by Ryzhonkov Vasily.
  • 11. Market Research Report ǀ GSP TeamUse of IT technologies (enterprise information systems 1for small companies),Coding know how, 1“I dont get the idea of the platform”. 1The library of tips, hints, solutions to themajor problems startups face along life-cycle (for 1example, ways to overcome the bureaucracy,options and schemes to reduce the tax burden, etc.)Source of useful materials: books, methodologies,tools, analysis of the success examples – startupstages. (Guy Kawasaki book)Startup EventsAccess through platform to American, Europeanand foreign examples and best practices, businessideas from abroadStartup Education (Videos, audiobooks, texts)Startup Fair (Buy/Sell a startups)Startups CatalogueBusiness Idea for CountrysideInvestor Tools (risk assessment, portfolio analysis,goalsStartup Blogs, ForumPotential Customers • Experts, Entrepreneurs, Mentors, Venture Investors almost equally. No other role was proposed. Second echelon is Consultants, Business Trainers, Management Bloggers and Management Gurus. • 92,8% of adult population represents non-entrepreneurs. • Survey shows that 25-44 group is the largest one. • 80% Russian entrepreneurs have high or unfinished university education • In Russia we found 7.78% of potential entrepreneurs in 2011 - usually in the age range from 18 to 44 years. The average age of potential entrepreneur is 37 years. • In 2011 in Russia, only 5.8% of respondents planned to start their own business in the next three years. • 80% of entrepreneurs have unfinished or finished high education or professional education. • Only 25% of young Russian Internet audience is willing to "Start up a business" (18-30 years).Market ConditionsCopyright ©2012 GSP team. All rights reserved. Page: 11Prepared by Ryzhonkov Vasily.
  • 12. Market Research Report ǀ GSP TeamRussia • 19% of Russia found conditions favorable to startup. Population in Russia feels lack of knowledge and skills in entrepreneurship, fear of failure and see no good opportunity to startup a business. • 37% of entrepreneurs in Russia are satisfied with the enabling conditions. • The level of entrepreneurial intentions in Russia is the lowest among the countries participating in the project (lower only in the UAE). • There is obviously lack of financing by Business Angels and Colleagues. • The performance and growth potential of Russian small firms is based mainly on their social capital and network relationships, their intellectual capital, and the human-based resources available. • The Russian business climate for SMEs oſten looks unattractive in the context of international comparisons. Generally speaking (there are, of course, some exceptions), our companies face various complications and barriers more oſten than majority of European ones.Copyright ©2012 GSP team. All rights reserved. Page: 12Prepared by Ryzhonkov Vasily.
  • 13. Market Research Report ǀ GSP TeamMarket Size Figure 0 – GSP Market Size Estimation Growth PotentialInternet Economy. Internet impact on Russian GDP was $19,3 bln or 1,6% ofGDP (2,1% of GDP excluding oil and gas industry) in 2009.It is expected that impact of Internet on Russian economy will increase, and it’scontribution to GDP will be up to 3,7% (or 5% of GDP excluding oil and gasindustry) by 2015.Pessimistic scenario shows that Internet economy in Russia will grow by 22%each year. We will use this data to estimate cash flows up to 2015.Copyright ©2012 GSP team. All rights reserved. Page: 13Prepared by Ryzhonkov Vasily.
  • 14. Market Research Report ǀ GSP TeameCommerce in Russia is $7,4 bln.Internet Investments were $10,3 bln and consist of: telecom-operatorsinvestments ($6 bln) and private companies (non-telecom) ($4,3 bln).Governmental expenditures equal to $1,5 bln.Small and Medium Enterprises (firms with number of employees less than 250).SMEs revenues are 25% of total companies’ revenues.This data gives initial data to make the top-down estimation of the market. This willbe covered in the next version of Report.Market NicheIT and eCommerce with around 70% of voices. Next group is Education,Industrial Organizations and Biotechnology with 49%, 40% and 38%respectively. One new sector was proposed which is Energy & Environment.Market Location Country Search Index 1. Singapore 100 2. United States 89 3. Estonia 84 4. Trinidad and Tobago 78 5. South Africa 75 6. New Zealand 73 7. Jamaica 72 8. Australia 70 9. Canada 70 10. Philippines 66 11. India 60 12. Brazil 9 13. Russia 16 14. Indonesia 37List of cities: 1. San Francisco 2. Singapore 3. Bangalore 4. Sydney 5. New York 6. Melbourne 7. Toronto 8. LondonAccording to Google Insights Tool we received that list of locations and citieswhich uses the word “startup” more often than the others. Index 100 shows themaximum score.Copyright ©2012 GSP team. All rights reserved. Page: 14Prepared by Ryzhonkov Vasily.
  • 15. Market Research Report ǀ GSP TeamAccording to that Index we could see that Brazilian, Russian market have verylow index. This could be due to several reasons. One of them possibly that Googleis not so wide spread among Russian Users as local Search Site (Yandex). It couldbe the same in Brazilia. We didn’t validate that yet. India and Indonesia showquite stable indicator around 60 and 37.In conclusion, we can state that this indicator shouldn’t be the only one. But itgive some useful insights on what is happening around the globe.Features of the PlatformWe came up with the preliminary list of features the Platform should possess: • Long term cooperation • Relative Advantage • Comparability • Simplicity or Easier to Use • Security and Trust • Fun! • Faster! • Sustainability (Social, Economic, etc)Market ChannelsThis wasn’t the main purpose of the survey but we found the most popularInternet resources in Russia and also popular marketing tools among RussianInternet Companies. Social Networks seems to be really important channel,because almost 80% of Internet Audience in Russia uses Social Networks.List of the most popular Russian Companies: 1. Yandex.ru 2. Mail.ru 3. Vkontakte.ru (InContact) – social network 4. Odnolklassniki (Schoolmates) – social network 5. Google 6. Social Media Marketing tools which are popular in Russia Internet • Advertisement in search systems – 77% • Advertisement mailers – 44% • Banner advertisement – 42% • SEO – 37%Sales: • Internet orders - 42% • Paying for goods through Internet – 20%Copyright ©2012 GSP team. All rights reserved. Page: 15Prepared by Ryzhonkov Vasily.
  • 16. Market Research Report ǀ GSP TeamSocial resources: • Clients’ comments – 42% • Pages in the Social networks – 23% • Blogs – 19% • Twitter – 5%Methodology and Types of Market ResearchMarket research and analysis consists of few parts: 1. Online Survey (International and Russian). 2. Search/Analysis of the Reports of Entrepreneurship Climate and Market in Russia and Internationally. 3. Search/Analysis of other surveys connected to the main topic. 4. Google Key Word Tool and Yandex WordStat – “startup” key words analysis.Part 1 – Online Survey by GSP TeamMethodologyThis is a semi-qualitative and empirical online-survey of the responses of 46participants. Google Docs Forms tool was used for creation the Survey andgathering the responses.You could find our Survey by clicking the following link: https://docs.google.com/spreadsheet/viewform?formkey=dEhHUERGTmxk SXotZlQyRFhNWHMtY1E6MQQuestions were divided into two categories. First 46 Participants passedwas aimed on gathering information about through the Online Surveyparticipants: • age, • sex, • professional experience, • location, • sector of job.Second part is about the project itself.Following questions were asked: 1. How would you name this kind of Web platform? 2. What kind of services will you need being an entrepreneur from this platform? 3. How important could be that solution for you and your organization? 4. What services would you like to see in the global startup platform? 5. What types of specialists would you like to see on the platform?Copyright ©2012 GSP team. All rights reserved. Page: 16Prepared by Ryzhonkov Vasily.
  • 17. Market Research Report ǀ GSP Team 6. Will be the physical infrastructure relevant for the platform? If yes, what kind? 7. Which sector of the industry should be addressed by the global startup platform? 8. Do you need a cross-cultural analysis (a systematic comparison of similarities and differences in physical and behavioral aspects of the people from different cultures) in the platform? 9. What is the size of your organization? 10. What could be the period of time your organization can use services of this platform?In the second version of survey several questions were added about payments.However, we didn’t receive sufficient number of answers and decided to carry outseparate survey on this topic. Questions to be asked: 11. Will you pay for the services that you will find in the Platform? 12. How much on average would you spend for the services you will get through the Platform? 13. What could be your advice for our project? What do you want to see there additionally? 14. Did you like our survey? What could be improved in the future?Information about this survey was posted by Ryzhonkov Vasily in the followingsources and platforms: • Facebook contacts and groups, LinkedIn contacts and groups, Gmail contacts; • Facebook venture groups, Management Engineering Students group, International Management in Industrial Management (IMIM) Group, LinkedIn group • IMIM Professors • Colleagues from NVisionGroup, T-Platforms (Russian Companies).This survey was available to the public since15th of May 2012. Results for this report were Survey was published on 18th ofcollected on 31th of May 2012. New surveys May. Second set of results waswill be designed to test hypothesis about collected on 31st of May.payment possibilities of customers in localmarkets. Figure 1 – GSP Online Survey. Number of daily responsesMain assumptions behind online-survey were: • Time period of survey was 16 days.Copyright ©2012 GSP team. All rights reserved. Page: 17Prepared by Ryzhonkov Vasily.
  • 18. Market Research Report ǀ GSP Team • In questions 2, 4, 5, 6, 7, 9,10 people were allowed to select more than one variant, so percentages may add up to more than 100%. • One respondent will participate only once (however, analysis showed that at least one participant passed it twice). • On-site interviews in Russia and WorldWide will be carried out separately. • Interviews with entrepreneurs and inventors Russia and Worldwide will be carried out separately and additionally to the online-survey. • Audience interviewed is general public and not entrepreneurs specifically.Copyright ©2012 GSP team. All rights reserved. Page: 18Prepared by Ryzhonkov Vasily.
  • 19. Market Research Report ǀ GSP TeamResults of the Online Survey Information about respondents Mainly all participants were from Europe with dominating figure around60%, North America (6%), South America(4%), Africa(4%) and Asia & Pacificregion took equally 15%. 72% of respondents were men. Age of participators lies between 18 and 45 years with prevailing group ofpeople from 25-35 age group (55%), which indicates a sample of respondents as“productive age”. Participants with little experience (no experience and less than a year)consist only 21% of a sample. Whereas around the half of sample hasprofessional experience more than 3 years. Figure 2 – GSP Online Survey. Region of origin & Age Figure 3 – GSP Online Survey. Sex & Years of professional experience Due to sources where survey was put and background of project team,participants mostly with IT and engineering background constitute the biggestgroups (17% and 30% respectively). Student’s percentage is 15%. However, thereis group “Other” which contributed with 13% (the second largest group). Detailedanalysis showed that it consists of 6 different professions: HR, student (pointedout different caption), office workers (2), Media specialist, and empty field. Thisgives us changes in results, making students the third largest group with 4people.Copyright ©2012 GSP team. All rights reserved. Page: 19Prepared by Ryzhonkov Vasily.
  • 20. Market Research Report ǀ GSP Team Figure 4 – GSP Online Survey. Sphere of industry Global Startup Platform – testing hypothesisName of the projectIn addition to proposed name of the project respondents suggested following: • Diving Platform or Diving Board Height • Start-up Support • StartMeUp • Launch your idea of business • Platform for Reconstruction and Development • E-Ship • USS (Union of Successful Start-Ups) • Virtual Entrepreneurship LAB • RuConn • Start Helper • Online Technological Incubator • EntreWebPlat • RuCom • Comsinity • Innovation for Start-up companies platform • Entrepreneur Assistance PlatformCopyright ©2012 GSP team. All rights reserved. Page: 20Prepared by Ryzhonkov Vasily.
  • 21. Market Research Report ǀ GSP Team • Global Start-up • Guidance Catalogue • Russian High Tech Following Project Names were • Launchpad distinguished by our TEAM: • Startstartup • Start Together StartMeUP • GlobalWork GSP or Global Startup Platform • GSP.com • Launch IT iStartUp • Entrementorship • Startup Flame • iStartUp • Global Startup Platform • StarTech • SGE – Success Global EntrepreneurshipWhat kind of services you will need from this Platform?Main expected services by the audience are Strategy Consulting, Financing,Business Models Creation, Team Building (they got 66%, 64%, 57%, 38%respectively). Results are shown in the Table 1. Also audience proposed new kind of services and comments: • General start-up consulting Main general services are: • Thoughts hygiene (??) • Setting goals Strategy Consulting • Technical know how Financing • “None of the above. I need Business Models Creation understanding WHAT to sell and HOW to sell it”. Team Building Table 1 – Services by the PlatformService Number of Voices Overall PercentageFinancing 31 71%Strategy consulting 18 38%Business Models creation 30 64%Mergers 10 21%IPO 8 17%Other 8 17%The team building 27 57%Acquisitions 6 13%Importance of such SolutionCopyright ©2012 GSP team. All rights reserved. Page: 21Prepared by Ryzhonkov Vasily.
  • 22. Market Research Report ǀ GSP TeamApproximately 74% of respondents found this idea useful. This data is shown inthe Figure 5. 74% of respondents found our project valuable and important to the society Figure 5 – GSP Online Survey. Importance of the Platform to the Global Technology BusinessTypes of services people expect to get from the PlatformAnswers were grouped into several categories and presented in a graphical andtable form because of the importance of information gathered.Green sector consists of services that got more than 50% (particularly between51 and 72%). Orange sector consists of services that got 30-50% of votes. Bluearea is consisted of services got less than 30% and following comments, services: • Rationing of resources, • Optimization of office rent and other resources, • Use of IT technologies (enterprise information systems for small companies), • Coding know how, • “I dont get the idea of the platform”. Figure 6 – GSP Online Survey. Services of the PlatformCopyright ©2012 GSP team. All rights reserved. Page: 22Prepared by Ryzhonkov Vasily.
  • 23. Market Research Report ǀ GSP Team Table 2 – Services of the Platform Number OverallService of Voices PercentageCommunity and network of entrepreneurs, mentors, 34 72%business angelsMentorship by experienced entrepreneurs from 30 64%Russia, Silicon Walley, other IT ParksDevelop business strategies 27 57%Marketing of new projects 27 57%Legal Advice 24 51%Online database of advices, draft business ideas, 24 51%predeveloped business plansLists and collections of funds for venture capital 21 45%projectsTesting new products and services 20 43%Finding teams or team players for your start-up 20 43%Obtain a patent 18 38%Source information and knowledge on management,creation of new businesses (blogs, articles, business 16 34%courses)Taxation 14 30%Accounting 13 28%Professional comm 10 21%Other 5 13%Rationing of resources, 1Optimization of office rent and other resources, 1Use of IT technologies (enterprise information systems 1for small companies),Coding know how, 1“I dont get the idea of the platform”. 1It is important to highlight that people People perceived the Platform asperceived this platform as network or virtualtool which will allow mentors, a social network of entrepreneursentrepreneurs, business angels to be and set of virtual tools whichconnected to other interested people all overthe world. Important services are also Legal allow mentors, entrepreneurs,Advice, Developing of Business business angels to be connectedStrategies, Marketing of new projects and to other people interested inhaving access to Online database ofadvices, draft business ideas, startups all over the world.predeveloped business plans.What types of specialists you would like to see on the platform?Copyright ©2012 GSP team. All rights reserved. Page: 23Prepared by Ryzhonkov Vasily.
  • 24. Market Research Report ǀ GSP TeamBasically people voted for Experts, Entrepreneurs, Mentors, Venture Investorsalmost equally. No other role was proposed. Second echelon is Consultants,Business Trainers, Management Bloggers and Management Gurus. Figure 7 – GSP Online Survey. Services of the PlatformWill be the physical infrastructure relevant for the global technologybusiness? If yes, what kind?This part of survey made the most amount of different proposals coming from theaudience. They are listed below (proposals are in italics): • Rental of a Lab • Rental of an Office (premises) • Clustering (1 vote) • Servers, an office (1 vote) • None (8) • There is no difference between two proposed (1 vote). Figure 8 – GSP Online Survey. Physical InfrastructureIndustry Sector that should be addressed by the GSPCopyright ©2012 GSP team. All rights reserved. Page: 24Prepared by Ryzhonkov Vasily.
  • 25. Market Research Report ǀ GSP TeamLeading sectors are IT and eCommerce with around 70% of voices. Next group isEducation, Industrial Organizations and Biotechnology with 49%, 40% and38% respectively. One new sector was proposed which is Energy &Environment. IT, eCommerce, Education, Manufacturing and Biotechnology are sectors which should be addressed by the GSP mainly. This hypothesis will be tested in the future. Figure 9 – GSP Online Survey. Sector of the industry presented in the PlatformImplementation of Cross-cultural analysis in the Platform Figure 10 – GSP Online Survey. Cultural analysis and Advices on the PlatformCopyright ©2012 GSP team. All rights reserved. Page: 25Prepared by Ryzhonkov Vasily.
  • 26. Market Research Report ǀ GSP TeamWhat could be the period of time your organization can use services of thisplatform? Figure 11 – GSP Online Survey. Period of time for using the PlatformVoices distributed almost equally between each period of time. However, it isimportant to state that we also got “None” answer (5 people voted for that option)and following answers: • Depends on a services provided by the Platform – 1 • Constantly – 1 Future research and problems with Online Survey1. We tried to correct mistakes we made. They were stated in the previous reportand they are: • Spelling and grammatical mistakes were identified. Corrected. • Participants from Russia and CIS countries were not localized. Will be done in the next survey. • Need to reach potential customers and respondents from Asia. Will be done in the next survey. • Sectors of economy could be added (Chemical, Automotive, Energy and Environment, etc). Corrected. • Professional experience could be expended (HR, Media, Office Worker, etc). Engineer and Student are very broad concepts – should be detailed. Corrected. • Section about size of organization is not clear and not obvious how is it linked to testing hypothesis of the Project. Corrected. • Question about roles in decision-making process is not obvious and irrelevant. Should be explained to audience or eliminated in the future. Corrected, section was eliminated. • Need to add form for getting feedback of the survey (collect potential areas for improvement, etc). Corrected, section added. • Clear explanation needed as far as not all participants got the idea behind the project. Corrected. • Leave a blank field in order to get feedback on each question. Corrected.Copyright ©2012 GSP team. All rights reserved. Page: 26Prepared by Ryzhonkov Vasily.
  • 27. Market Research Report ǀ GSP Team • Eliminate passing the online survey more than once by the same participant. Is not possible to distinguish by tool we used.2. We added section about payment and possible sources of revenue. Followingquestions were asked: 1. Will you pay for the services that you will find in the Platform? 2. How much on average would you spend for the services you will get through the Platform? 3. What could be your advice for our project? What do you want to see there additionally? 4. Did you like our survey? What could be improved in the future?Only few answers were received after correction. So, we consider this as possiblefield for improvement in the future.Useful insight was received saying: “Platform should be oriented on the long- term cooperation, managing and guiding startups”.There was one more valuable answer: “It would be useful to create and organize the library of tips, hints, solutions to the major problems startups face along life-cycle (for example, ways to overcome the bureaucracy, options and schemes to reduce the tax burden, etc.). It would be better if this library will be compiled of tips for different countries and will provide information on cultural differences in different countries, specifics of each country.”3. Future improvement that should be done: Get data about customers who willing to pay and for what kind of services. Localize and increase number of entrepreneurs, mentors, investors, startup teams participated in the survey, address it to the audience involved in the entrepreneurship activities. In the User Information section more linkages to entrepreneurship could be done. Following questions are proposed to be asked: Did you participate in startup? • If yes, what was your role (name roles)? • If yes, what was the result of startup project? • If yes, in what sector of industry was it? Understanding needs of local markets, as far as our online survey is a bit more biased towards European market. Splitting efforts for each market and making surveys more focused o Russian market o UK market o US market o Indian market o New Zeeland and Australia market Edit and specify hypothesis to more precise one, we want to have it more focused.Copyright ©2012 GSP team. All rights reserved. Page: 27Prepared by Ryzhonkov Vasily.
  • 28. Market Research Report ǀ GSP TeamPart 2 – Analysis of International/Russian Reports onStartups and Internet Economy in RussiaReport 1. Global Entrepreneurship Monitor Russia 2011(source http://www.gsom.spbu.ru/en/research/eship/projects/gem/, availableonly in Russian, year – 2011; year 2010 also available in English)Description - research program is the annual assessment of the national level of entrepreneurial activity. Started as a partnership between London Business School and Babson College, it was initiated in 1999 with 10 countries, expanded to 21 in 2000, with 29 countries in 2001 and 37 countries in 2002. GEM 2007 conducted research in 42 countries. Now GEM covers 55 countries in the world.Objective – GEM Research has three main objectives: • To measure differences in the level of early stage entrepreneurial activity between countries. • To uncover factors determining the levels of entrepreneurial activity. • To identify policies that may enhance the level of entrepreneurial activity.Method: 1) Formalized interview face-to-face method. The study did not include: persons undergoing compulsory military service in the army, persons in prison, living in monasteries and other enclosed areas, those living in small villages and towns with fewer than 50 residents, residents of the Chechen Republic and the Republic of Ingushetia , residents of the Far North with a low population density (the Nenets Autonomous District, Yamalo-Nenets, Taimyr, Evenki autonomous area, Chukotka and Sakhalin). 2) National Expert Interviews (36 experts). 3) National Economic and Demographic Statistics.Sample – multi-stage stratified probability sample, representative of the adult population of Russia at the age of 18 to 64 years, the volume of 7500 respondents. Sampling error is less than 0.01%.Age group: 18-64 yearsResults connected to our projectCopyright ©2012 GSP team. All rights reserved. Page: 28Prepared by Ryzhonkov Vasily.
  • 29. Market Research Report ǀ GSP TeamStartup climate Russian startup climate could be characterized by the following framework. 92,8% взрослого на селения России Непредпринимательский слой составляет Figure 12 – Attitudes of Russian population and entrepreneurs towards entrepreneurship, 2010, %Picture is given from 2010 but the 19% of Russia found conditionsfigures are pretty the same. In 2011evaluation of the conditions for starting favorable to startup. Population ina business non-entrepreneurial sector of Russia feels lack of knowledge andthe population was very pessimistic, only skills in entrepreneurship, fear of19% of this group found conditionsfavorable to startup. Entrepreneurs failure and see no good opportunitywere more optimistic in assessment the to startup a business.environment - about 37% of them calledthe conditions favorable for starting a 37% of entrepreneurs in Russia arebusiness. satisfied with the enabling conditions.Age AttitudeThere is the difference in perception ofentrepreneurs. Thus, career attractiveness of an entrepreneur declines with theage. 63% of young generation below 25 years find it attractive, percentage forrespondents above 55 years is lower and around 48%.Entrepreneurial potentialCopyright ©2012 GSP team. All rights reserved. Page: 29Prepared by Ryzhonkov Vasily.
  • 30. Market Research Report ǀ GSP TeamPotential entrepreneurs are persons who have not started their business, but havea positive view on their own entrepreneurial skills and the prevailing marketconditions. In fact, potential entrepreneurs are in a state of "unstableequilibrium", deciding to work them self-employed or start their own business.In Russia we found 7.78% of potential entrepreneurs in 2011 - usually in theage range from 18 to 44 years. The average age of potential entrepreneur is 37years. There is no significant gender difference in this group. However, thepercentage of males (8.54%) is higher than the level of women (7.09%).The level of entrepreneurial intentions in Russia is the lowest among thecountries participating in the project (lower only in the UAE).In 2011 in Russia, only 5.8% of respondents planned to start their ownbusiness in the next three years. Figure 13 – Dynamics of entrepreneurial intentions entrepreneurship 2011, %40% of respondents with entrepreneurial intentions have already started at leastone project; new comers represent only 3,6% of total Russian population in2011. There is positive trend after 2010-2011. • Level of entrepreneurial intentions in Russia is the lowest among 55 countries • 7.78% of potential entrepreneurs in 2011 in Russia aged between 18 and 44 • 5.8% of respondents planned to start their own business in the next three years • New comers represent only 3,6% of total Russian population in 2011Copyright ©2012 GSP team. All rights reserved. Page: 30Prepared by Ryzhonkov Vasily.
  • 31. Market Research Report ǀ GSP Team Figure 14 – Beginning entrepreneurs: women and men, 2006-2011, %Gender and ageAverage age of Russian • Survey shows that 25-44 group has isentrepreneur is 37 years.Evidently, there is a prevalence the largest oneof “25-34” year’s old group • 80% Russian entrepreneurs have highamong new entrepreneurs. or unfinished university educationAmong established entrepreneursthe most significant groups are35-44 – 34% and 45-54 – 33,5%. We think that these people already run abusiness and potentially are free to open new ones. Figure 15 – Distribution of established and early entrepreneurs among age groups, %EducationCopyright ©2012 GSP team. All rights reserved. Page: 31Prepared by Ryzhonkov Vasily.
  • 32. Market Research Report ǀ GSP Team80% of entrepreneurs have unfinished or finished high education or professionaleducation. Figure 16 – Education of entrepreneurs in Russia, %InvestmentsRussian startups are mainly financed by banks and close family members.Federal Programs have less importance and still considered not so effective.There is obviously lack of financing by Business Angels and Colleagues.Friends and Other relatives have improved their figures since 2006, but notsignificantly. Figure 17 – Investment in Startups in Russia, %Experts InterviewsCopyright ©2012 GSP team. All rights reserved. Page: 32Prepared by Ryzhonkov Vasily.
  • 33. Market Research Report ǀ GSP TeamExperts evaluated conditions and entrepreneurship climate in Russia using 5-grades scale. According to experts’ opinions there are several problems thatRussian entrepreneurs are facing now (listed from worst to best): 13. Bureaucracy – 1,83 14. The introduction of scientific and technical developments – 1,9. 15. Barriers to market entry – 1,97. 16. Access to financing (Virtually inaccessible to young companies to obtain investment through public offering on the market) – 2,02. 17. Elementary and secondary education (does not sufficiently encourage creativity of students, self-sufficiency and personal initiative, entrepreneurial skills) – 2,14. 18. Federal Programs – 2,16. 19. Social and cultural norms – 2,34. 20. Governmental policy – 2,39. Critical factors are: a. duration to obtain the necessary permits and licenses – 1,44 b. sequence of state policy with respect to small firms – 1,94 21. Commercial infrastructure – 2,77. 22. High education – 2,85. 23. Physical infrastructure – 3,1. 24. Market dynamics – 3,18It’s better to concentrate on the main problems which are indicated in red colour. • There is obviously lack of financing by Business Angels and Colleagues • Main problems of Russian entrepreneurs according to the 36 experts’ opinions are closely connected to bureaucracy, market entry barriers, and governmental programs and policies for entrepreneurs.Copyright ©2012 GSP team. All rights reserved. Page: 33Prepared by Ryzhonkov Vasily.
  • 34. Market Research Report ǀ GSP TeamReport 2. Entrepreneurship and small businesses in Russia: Areview of empirical research.(authors: Ojala, Arto; Isomäki, Hannakaisa, year - 2011)Objective – paper brings together current knowledge concerning the phenomenon, and suggests further directions for research.Method – the study consists of a systematic review of forty-eight refereed empirical articles on entrepreneurship and small businesses in Russia.Results obtained and relevant to our project The performance and growth potential of Russian small firms is based mainly on their social capital and network relationships, their intellectual capital, and the human-based resources available. Most of the obstacles confronting entrepreneurship and small businesses are related to financial problems and governmental restrictions. It is important to adapt training programs to local cultural values and ways of doing business (Ojala and Heikkilä, in press), since Western practices cannot be applied indiscriminately to the Russian business environment. Russian startups stay locally. There are only few examples of internationalization. Internationalization process of Russian small firms faces many obstacles.Copyright ©2012 GSP team. All rights reserved. Page: 34Prepared by Ryzhonkov Vasily.
  • 35. Market Research Report ǀ GSP TeamReport 3. OPORA Russia. All-Russian Non-GovernmentalOrganization of Small and Medium-Sized Business 2011(source – www.opora.ru, year - 2011)Description – OPORA Russia is one of the most major unions of the entrepreneurship in Russia. The Organization’s goals are to improve existing legislation in Russia, protect entrepreneurs’ rights and interests.Objective – to state the conditions of the SMEs in Russia in 2010 and 2011.Method – presentation about annual survey.Sample – is not known.Results obtained and relevant to our project2010 - The key activity indicators of the Russian SME entities in the 1st half of2010 According to the Federal service of the government statistics (further Rosstat) and the Federal tax service (FTS Russia) implemented activity in 5 650 313 SME entities based on the data July 1, 20109, including: - 1 374 661 micro-enterprise (in accordance with article 1 part 4 of the F e • dRussia had 5 650 313 SMEs on July 1, 2010 • e 037 785 of them are individual entrepreneurs 4 r • a 374 661 micro-enterprises (up to 15 people, turnover under 60 mln 1 lRUR. • 219 607 small companies – number of employees is between 16 and l a100 people and annual turnover is no more than 400 million rubles • wBank loans to SMEs in 2011 (on 01.03.2011) from 30 biggest banks dwere around 343 524 mln rubles (equals to $11 450 mln); to individual aentrepreneurs – 40 160 mln rubles (equals to $1 338 mln). t e d July 24, 2007 № 209-FZ «On SME development» statistical analysis of micro-enterprises is conducted once in a year) – number of employees under 15 people and annual turnover up is up to 60 million rubles; - 219 607 small companies – number of employees is between 16 and 100 people and annual turnover is no more than 400 million rubles;9 Analytical data on micro-enterprises is based on January 1, 2010 Copyright ©2012 GSP team. All rights reserved. Page: 35 Prepared by Ryzhonkov Vasily.
  • 36. Market Research Report ǀ GSP Team - 18 260 medium companies – number of employees is between 101 and 250 people and annual turnover is no more than 1 000 million rubles; - 4 037 785 individual entrepreneurs.2011 – Statistical data and trendsBank loans to SMEs in 2011 (on 01.03.2011) from 30 biggest banks were around343 524 mln rubles (equals to $11 450 mln); to individual entrepreneurs –40 160 mln rubles (equals to $1 338 mln). Figure 18 – OPORA Report. Structure of small enterprises, %Copyright ©2012 GSP team. All rights reserved. Page: 36Prepared by Ryzhonkov Vasily.
  • 37. Market Research Report ǀ GSP TeamFigure 19 – OPORA Report. Development of small entrepreneurship in a market economy, % Figure 20 – OPORA Report. Dynamics of SMEs’ development in Russia Figure 21 – OPORA Report. Federal Program of SME support in RussiaCopyright ©2012 GSP team. All rights reserved. Page: 37Prepared by Ryzhonkov Vasily.
  • 38. Market Research Report ǀ GSP TeamFigure 22 – Vision of innovative system structure in Russia (according to OPORA)Copyright ©2012 GSP team. All rights reserved. Page: 38Prepared by Ryzhonkov Vasily.
  • 39. Market Research Report ǀ GSP TeamReport 4. Yandex Report – Development of Internet in Russia2012(source – www.yandex.ru, year – 2012/03)Description – Yandex is the largest project in Russia in terms of number of users and has 37 projects. It also has around 60 % of search engines’ market in Russia.Objective – to define and report the structure of internet in Russia.Method – repetitive report (quarter basis).Sample – is not known, but seems to be rellevant.Results obtained and relevant to our project Number of Internet users – 57,7 • Number of users – 57,7 mln mln users above 18 years age. This equals to 47% of the adult users above 18 years age. This population of the country10. equals to 47% of the adult Growth is 18% in comparison with 2010. population of the country September 2011 was the break- • Growth is 18% per year even point when Russia became • Russia is number one in Europe number one in Europe in terms of internet users (according to in terms of internet users comScore). Figure 23 – Penetration of Internet in different cities in Russia, %10 Adult population is above 18 years. Copyright ©2012 GSP team. All rights reserved. Page: 39 Prepared by Ryzhonkov Vasily.
  • 40. Market Research Report ǀ GSP Team According to the Figure 22 average penetration of Internet in Russia is 47%. Rows are Moscow, Saint-Petersburg, Cities above 1 mln people, etc. 92% of Internet users live in cities with populations of more than 100 thousand people. And more than 70% of them use broadband (high speed) access. As part of the Internet audience continues to increase the proportion of users who go online every day: according to the Public Opinion Fund, from autumn 2010 to autumn 2011, this figure rose from 69% to 75%. According to Yandex, in 2011 the average cost of the Internet in Russia, reduced more than twice. Figure 24 – Speed of Internet connection, MbsMajor players of the Russian Internet Market Yandex (www.yandex.ru) Yandex is Russia’s largest internet company and the oldest one in thischart. Yandex owns the most popular search engine in Russia, has about 50 internet-services, more than 2000 employees and made $278 mln in revenue in 2009. Yandex’ main business model is search and contextual advertising — in this market segment Yandex is estimated to have more than 75—80% of market share. Mail.ru (www.mail.ru) One of the two most visited sites, the largest e-mail and communication portal in country, Mail.ru provides more than 40 services to its audience. It has own social network MoiMir, photo-, blog- and video hostings and one of the most popular instant messaging services — Mail.ru Agent. The main business model of Mail.ru is banner (media) advertising. Mail.ru is aCopyright ©2012 GSP team. All rights reserved. Page: 40Prepared by Ryzhonkov Vasily.
  • 41. Market Research Report ǀ GSP Team private company and does not publish its inancial statements. In 2008 Mail.ru made $74,5 mln in revenue. Vkontakte (www.vkontakte.ru, www.vk.com) Launched in 2006 as a Russian clone of Facebook, Vkontakte has some very popular features that Facebook doesn’t — e.g., mp3 hosting. It is the largest personal photosharing site and the fastest-growing social network in Russia. Being Portal #3 in the country, in Saint- Petersburg Vkontakte is more popular than any other Russian Internet site. For now there are no clear data about Vkontakte’s proitability. Odnoklassniki (www.odnoklassniki.ru) Odnoklassniki (Russian word “Classmates”) is one of the two most successful social networks in Russia, with more than 50 million accounts, and is one of very few signiicant newcomers in the market. This site tries different business-models, including banner advertising and some original premium services, like micro-payments for using graphical smiles in short text messages. Finance statements of Odnoklassniki.ru are not available publicly. In 2008 company had net income of $6,9mln, Vedomosti newspaper reported. Google (www.google.ru) Google translated its interface into Russian in 2001 and in the last 9 years grew its search market share from 5% to 25%. Now it is the only real competitor to the market leader — Yandex. Company does not separate Russian advertising sales in its global financial statements. Google revenue in the Russian market is estimated at a round $30mln, in 2008 — at a round $15-20 mln.Global losers of the Russian Internet Market These companies from Quantcast Top-15 are total losers of the Russian Internet market. None of the chart is known by the mass audience in Russia. Yahoo, Live.com, MSN, AOL, Ask Having a lot of local content and smart technologies, Russian domestic portals are extremely good in keeping their dominant positions in the market. Almost none of the major world portals and search engines (except Google) achieved success in the country. Search market share in Russia of any member of this group of companies, according to Liveinternet.ru, does not exceed 0,5%. Facebook, MySpaceCopyright ©2012 GSP team. All rights reserved. Page: 41Prepared by Ryzhonkov Vasily.
  • 42. Market Research Report ǀ GSP Team Some of the most active users of Russian social networks have their accounts on Facebook and MySpace. But that’s nothing in comparison with dozens of millions of user proiles in the Russian networks Vkontakte and Odnoklassniki. It seems that Facebook and MySpace showed up late with their localized versions and had lost the moment when Russian Internet audience was ready to create accounts anywhere. eBay It’s not eBay fault that online auctions in Russia are probably the form of online business that grows the most slowly. Lack of user confidence in buying used stuff combined with absence of peer-to-peer logistics system seems to be critical — none of local players succeeded much in this sphere too. Blogspot.com Top local blog-hostings — Livejournal.com (Russian-owned) and Live- internet.ru — collected their core audience a lot earlier than Blogspot.com interface was translated into Russian. Besides, standalone blog platforms are not very popular in Russia generally, and Blogspot is not an exception. Craigslist.org Russian online classifieds are still in the embryonic stage. To sell a car, people print their ads in special classifieds newspaper, like ‘ Iz ruk v ruki’ (‘Сhange hands’). It is noteworthy that ‘Iz ruk v ruki’ search query remains in Top-100 most popular searches made by local audience. About.com, Answers.com The major part of content needed by Russian users must be written in Russian, so these sites do not have any audience in Russia. Mapquest.com Content is the king in online maps and other cartographic services. Mapquest.com doesn’t have one for the Russian audience, so it has no audience.Copyright ©2012 GSP team. All rights reserved. Page: 42Prepared by Ryzhonkov Vasily.
  • 43. Market Research Report ǀ GSP TeamReport 5. Internet in Russia 2012 (TNS Agency)(source: http://www.tns-global.ru/rus/data/ratings/index/index.wbp, date –2012/04)Description – monthly issued survey by Russian agency TNS since January 2007. TNS Agency covers more than 130 internet sites in Russia in its investigation.Objective – to measure socio-demographic structure of the Internet audience and audience of the websites, as well as their sections.Method – please refer to TNS Global site.Sample – 150+ internet projects. Cities -100 000+. Month – April 2012. Age: 12- 54. Quantity per month.Results obtained and relevant to our project Table 3 – Russian Internet Audience Russian Population Men Women 12-17 18-24 12-54 Reach Reach Reach Reach Reach Reach Reach Reach Reach Row% Row% Row% Row%Russian Population12-54, 000 45178,7 21771,9 48,2 23406,8 51,8 3692,2 8,2 7857,8 17,4Internet Audience 12-54, 000 35399,7 17512,1 49,5 17887,7 50,5 3188,0 9,0 7075,4 20,0 Table 3 – Russian Internet Audience (continuation) 25-34 35-44 45-54 Works Doesnt work Reach Reach Reach Reach Reach Reach Reach Reach Reach Reach Row% Row% Row% Row% Row%RussianPopulation 12-54, 000 12558,5 27,8 9966,7 22,1 11103,6 24,6 31614,7 70,0 13564,0 30,0InternetAudience 12-54, 000 11042,2 31,2 8157,5 23,0 5936,7 16,8 25132,6 71,0 10267,2 29,0 • Russian Population 18-54 is 41 486,6 thousand people in cities 100 000+. • Russian Internet Audience 18-54 is 32 211,8 thousand people in cities 100 000+. • 90.04% of 18-24, 87.93% of 25-34, 81.85% of 35-44 and only 53,47% of population from 100 000+ cities are present in the Internet. •Copyright ©2012 GSP team. All rights reserved. Page: 43Prepared by Ryzhonkov Vasily.
  • 44. Market Research Report ǀ GSP Team Table 4 – Russian Internet Audience (by jobs) Russian Population 12-54 (answered the Managers Specialist White Collars question about occupancy) Reach Reach Reach Reach Reach Reach Reach Reach Row% Row% Row% Row%Russian Population 12-54 44702,1 100,0 5678,2 12,7 10774,7 24,1 6333,3 14,2Internet Audience 12-54 35198,1 100,0 5186,7 14,7 10026,3 28,5 5221,6 14,8 Table 4 – Russian Internet Audience (by jobs). Continuation Blue Collars Students Housekeepers Doesnt work Reach Reach Reach Reach Reach Reach Reach Row% Row% Reach Row% Row%Russian Population 12-54 7898,0 17,7 7659,0 17,1 3404,4 7,6 2954,5 6,6Internet Audience 12-54 4611,2 13,1 6656,2 18,9 2470,4 7,0 1025,7 2,9 Figure 25 – Internet Audience Dynamics in RussiaCopyright ©2012 GSP team. All rights reserved. Page: 44Prepared by Ryzhonkov Vasily.
  • 45. Market Research Report ǀ GSP TeamReport 6. Russia Online: impact of Internet on Russian Economy2011 (BCG)(source -http://dl.dropbox.com/u/1568654/Russia_Online_RUS_final_from_central.pdf,year - 2011)Objective – Google commissioned this report to BTG in order to understand the nature and extent of commercial activities related to the Internet, as well as to assess the impact of the Internet on the Russian economy.Method – please refer to the Report.Results connected to our project Figure 26 – Internet Economy in Russia, 2009Main figures of Internet economy of 2009 • Internet impact onare: • Consumption – $12,6 bln. Russian GDP was $19,3 • Investments – $10,5 bln. bln or 1,6% of GDP (2,1% • Governmental expenses – $1,5 bln. of GDP excluding oil and • Export - $1,0 bln. • Import -$6,3 bln. gas industry) in 2009. • Internet GDP is 1,6% of Total GDP • Private Investments in and equals to $19,3 bln. Internet were $4,4 bln, governmental expenditures - $1,5 bln.Copyright ©2012 GSP team. All rights reserved. Page: 45Prepared by Ryzhonkov Vasily.
  • 46. Market Research Report ǀ GSP Team Figure 27 – Structure of Internet Economy and Invesments in Russia, 2009Main investments in the Internet economy of 2009 are: • CAPEX – $6,1 bln by telecom companies (providing infrastructure). • Investments by private companies – $4,4 bln.Structure of the Consumption: • eCommerce – $7,4 bln. • Access points – $1,5 + $0,8 bln. • Access – $1,6 + $1,2 bln. Figure 28 – BCG e-Intensity Index in 2009Copyright ©2012 GSP team. All rights reserved. Page: 46Prepared by Ryzhonkov Vasily.
  • 47. Market Research Report ǀ GSP TeamRussia got 52 points of e-Intensity index between Brazil (53) and Turkey(48).China got 41, Mexico – 33, India – 22, Indonesia -16. Figure 29 – Use of network resources and Internet technologies by companies in 2009Marketing tools: • Advertisement in search systems – 77% • Advertisement mailers – 44% • Banner advertisement – 42% • SEO – 37%Sales: • Internet orders - 42% • Paying for goods through Internet – 20%Social resources: • Clients’ comments – 42% • Pages in the Social networks – 23% • Blogs – 19% • Twitter – 5%Results were obtained via survey of 700 SMEs (including 84% which are active inthe Internet).Copyright ©2012 GSP team. All rights reserved. Page: 47Prepared by Ryzhonkov Vasily.
  • 48. Market Research Report ǀ GSP Team Figure 30 – Main barriers for more active Internet usage in 2009Barriers (from the main to the least significant): • Don’t have resources to develop internet site • Don’t have time to maintain internet site • Internet is not safe • There is no community of practice in the internet • Employees don’t have sufficient skills • Our clients don’t need internet site • We don’t know how internet could contribute to development of the business • Employees don’t have access to a PC • EtcCopyright ©2012 GSP team. All rights reserved. Page: 48Prepared by Ryzhonkov Vasily.
  • 49. Market Research Report ǀ GSP Team Figure 31– Growth of the Internet economy (prediction up to 2015)Main conclusions:Copyright ©2012 GSP team. All rights reserved. Page: 49Prepared by Ryzhonkov Vasily.
  • 50. Market Research Report ǀ GSP Team 1. Companies optimize their business through Internet, giving results of 10% performance growth and 30% cost reduction. 2. It is expected that impact of Internet on Russian economy will increase, and it’s contribution to GDP will be up to 3,7% (or 5% of GDP excluding oil and gas industry) by 2015. 3. eCommerce in Russia is $7,4 bln. 4. Internet Investments were $10,3 bln and consist of: telecom-operators investments ($6 bln) and private companies (non-telecom) ($4,3 bln). Governmental expenditures equal to $1,5 bln. 5. Social Effects. Internet is used by users as a mean for getting information. More than 70% of daily audience read news. 6. Internet Accessibility. Broadband connection in Moscow - 55%, Saint Petersburg – 49%, Russia in average – 20%11. 7. Small and Medium Enterprises (firms with number of employees less than 250). SMEs revenues are 25% of total companies’ revenues. SMEs are not a moving force of national economy, because of the huge impact of oil and gas industries and big corporations. 8. Highly successful Projects: a. WikiMart – online trading center with more than 2000 different shops available. WikiMart saves time of the customer, have 20 goods categories. Customer can read about good he wants and make an order. b. EcWid – software which helps to build online-shops, it’s an online- shop constructor. With this software it’s very simple to create your own online shop, embed it into your site. Freemium model. Key startup Tool was Google AdWords, then – search systems optimization, nowadays – social networks (75% of marketing). c. Avito.ru – the biggest bulletin board in Russia, 3mln goods daily, 50 personnel, 10 mln people daily. Good tool for marketing for out project. The key driver of the project is simplicity – we should do the same with projects, profiles, investors. 9. Main barriers of Internet spread: • Lack of resources and time (could be possible that SME doesn’t understand advantages of Internet usage) • It’s not safe • The is no communities of practice in the internet for our SME • Lack of personnel skills and experience • We don’t need internet site • We don’t know how internet could help to develop our business • Personnel don’t have access to the Pcs • Low speed of internet connection (or lack of broadband) • Lack of bank credits • Lack of trust 10. Future Trends. Pessimistic scenario shows that Internet economy in Russia will grow by 22% each year11 Data is not actual and updated in the Report 4. Yandex Report. Copyright ©2012 GSP team. All rights reserved. Page: 50 Prepared by Ryzhonkov Vasily.
  • 51. Market Research Report ǀ GSP TeamReport 7. Russia in 2011-2021: diagnosis and trend(…to be accomplished…)Copyright ©2012 GSP team. All rights reserved. Page: 51Prepared by Ryzhonkov Vasily.
  • 52. Market Research Report ǀ GSP Team Figure 32– Russia in 2011-2021: diagnosis and trendsCopyright ©2012 GSP team. All rights reserved. Page: 52Prepared by Ryzhonkov Vasily.
  • 53. Market Research Report ǀ GSP TeamReport 8. OPORA’S INDEX 2010-2011 (business climate reportthroughout Russian regions).(source www.opora.ru, year - 2011)Objective – to estimate business climate throughout Russian regions.Method - surveys were conducted as telephone interviews. Only owners the companies or executives (CEOs, or first vice-presidents) were permitted to take part in the survey.SampleThe survey covered more than 6000 respondents in 40 regions. Figure 33 – OPORA Survey. Structure of the sample Figure 34 – OPORA Survey. SME Development environment IndexCopyright ©2012 GSP team. All rights reserved. Page: 53Prepared by Ryzhonkov Vasily.
  • 54. Market Research Report ǀ GSP Team Figure 35 – OPORA Survey. Spread of corruption in various areas Figure 36 – OPORA Survey. Illegal payments to government officialsThe Russian business climate for SMEs oſten looks unattractive in the context ofinternational comparisons. Generally speaking (there are, of course, someexceptions), our companies face various complications and barriers more oſtenthan majority of European ones.One of the main problems is corruption. The most important components are: • Access to state and municipal contracts – 31,6% • Passing audits and inspections – 31,6% • Allocation of land – 31,1% • Obtaining government support – 29,8% • Connecting to infrastructure – 29,5% • Obtaining certificates and licensees (dealing with technical regulations) – 27,1% • Tax assessment and paying taxes – 16,7% • Passing customs procedures – 16,6% • Legal proceedings – 15,1% • Hiring foreign workers – 9,1%Copyright ©2012 GSP team. All rights reserved. Page: 54Prepared by Ryzhonkov Vasily.
  • 55. Market Research Report ǀ GSP Team Figure 37– OPORA Survey. Barriers for SMEs in Russia during last 2 yearsCompanies listed following barriers: • Low availability of skilled personnel – 61% • Problems with purchasing power – 59% • Limited access to financing – 38% • Problems with infrastructure – 36% • Low availability of highly qualified management – 32% • Difficulties with implementing new technologies – 28% • High personnel costs – 23% • Problems with administrative regulations – 19% • Difficulties with changing the organizational structure of the company – 13%Rankings in the figure below depict the situation in 31 countries (includingRussia). The share of SMEs that have admitted to facing difficulties or barriers inthe last two years is shown to each country. As can be seen in the figures (andthe total number of rankings is 9), in most cases Russia gets placed in the lowerhalf of a ranking, and in some factors is an obvious underperformer. As can beseen, Russia is most seriously lagging behind in such areas as access tofinancing, availability of skilled personnel (and highly qualified managementin particular), and the implementation of new technology.Limited access to financing is a barrier for 38% of Russian companies, whichcorresponds to the next to last position in the ranking shown for each country.For comparison, the EU average is 21%.Copyright ©2012 GSP team. All rights reserved. Page: 55Prepared by Ryzhonkov Vasily.
  • 56. Market Research Report ǀ GSP Team Figure 38 – OPORA Survey. Barriers to business (international comparison)Copyright ©2012 GSP team. All rights reserved. Page: 56Prepared by Ryzhonkov Vasily.
  • 57. Market Research Report ǀ GSP Team Figure 39 – OPORA Survey. Barriers to SME DevelopmentMain problems revealed are: • Low availability of personnel – 43% • Overall decline in demand in the sector – 33% • Low availability of financing – 30% • Unfair competition – 17% • Corruption – 13% • Undeveloped infrastructure – 12% • Demands of regulatory authorities – 10% • Low availability of real estate and facilities – 9% • Crimes – 1%.Copyright ©2012 GSP team. All rights reserved. Page: 57Prepared by Ryzhonkov Vasily.
  • 58. Market Research Report ǀ GSP TeamReport 9. Startup Genome Report 01 (A new framework forunderstanding why startups succeed)(Source - http://www.slideshare.net/Startupi/startup-genome-report, date – May28th, 2011)Description, Sample and Objective: “In this report we reveal in-depth research about what makes Silicon Valley startups successful. The report is a 50 page analysis based on data from 650+ web startups. The report was coauthored by Berkeley & Stanford faculty members. Other contributors include Steve Blank, the Sandbox Network, and 10 accelerators from around the globe. The goal of the report is to lay the foundation for a new framework for assessing startups more effectively by measuring the thresholds and milestones of development that Internet startups move through. This report is the Startup Genome Project’s first step toward cracking the innovation code of Silicon Valley and spreading it to the rest of the world.”Results obtained 8. Through analyzing the results from our survey we found that Internet startups move through similar thresholds and milestones of development, which we segmented into stages. Startups that skipped these stages performed worse. 9. We also identified three major types of Internet startups with various sub types. They are segmented based on how they perform customer development and customer acquisition. Each type has varying behavior regarding factors like time, skill and moneyAdditional Results1. Founders that learn are more successful: Startups that have helpfulmentors, track metrics effectively, and learn from startup thought leadersraise 7x more money and have 3.5x better user growth.2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x8734`better user growth, and are 52% less likely to scale prematurelythan startups that pivot more than 2 times or not at all.3. Many investors invest 2-3x more capital than necessary in startupsthat haven’t reached problem solution fit yet. They also over-invest in solofounders and founding teams without technical cofounders despite indicatorsthat show that these teams have a much lower probability of success.4. Investors who provide hands-on help have little or no effect onthe companys operational performance. But the right mentorssignificantly influence a company’s performance and ability to raise money.(However, this does not mean that investors don’t have a significant effecton valuations and M&A)Copyright ©2012 GSP team. All rights reserved. Page: 58Prepared by Ryzhonkov Vasily.
  • 59. Market Research Report ǀ GSP Team5. Solo founders take 3.6x longer to reach scale stage compared to afounding team of 2 and they are 2.3x less likely to pivot.6. Business-heavy founding teams are 6.2x more likely to successfully scalewith sales driven startups than with product centric startups.7. Technical-heavy founding teams are 3.3x more likely to successfullyscale with product-centric startups with no network effectsfounder raise 30% more money, have 2.9x more user growth and are 19%less likely to scale prematurely than technical or business-heavy founding teams.9. Most successful founders are driven by impact rather thanexperience or money.10. Founders overestimate the value of IP before product market fitby 255%.11. Startups need 2-3 times longer to validate their market thanmost founders expect. This underestimation creates the pressure to scaleprematurely.12. Startups that haven’t raised money over-estimate their marketsize by 100x and often misinterpret their market as new.13. Premature scaling is the most common reason for startups to performworse. They tend to lose the battle early on by getting ahead of themselves.14. B2C vs. B2B is not a meaningful segmentation of Internet startupsanymore because the Internet has changed the rules of business. Wefound 4 different major groups of startups that all have very differentbehavior regarding customer acquisition, time, product, market and team.Copyright ©2012 GSP team. All rights reserved. Page: 59Prepared by Ryzhonkov Vasily.
  • 60. Market Research Report ǀ GSP TeamPart 3 - Research and Analysis of Related Online SurveysSurvey 1 – Online survey “Opinion of Russian Internet audienceabout career development steps (Russia)”(source http://voxru.net, year - 2010)Objective – to understand what are attitudes and opinions of Russian young generation towards career development, socioeconomic values of them.Method – online survey.Sample – 1000 people.Age groups: 18-22 years – 17% of sample 23-26 years – 44% of persons 27-30 years – 39% of totalResults connected to our project57% respondents consider career development as an necessary step.24% - generally inclined to consider career as the main purpose of life.Possible strategies for employment among young Russian Internetaudience are: • "Job in a stable company, organization" - (36% of those surveyed), • Any opportunity to "work hard and earn a lot" (28%), • "Start up a business" (25%). Thus, we can assume that correction factor for our marketing research of young population (18-30 years) could be 25% of total population. Copyright ©2012 GSP team. All rights reserved. Page: 60 Prepared by Ryzhonkov Vasily.
  • 61. Market Research Report ǀ GSP TeamSurvey 2 – Online survey “Types of Ru-net users (Russia)”(source http://voxru.net, date – 2007/11)Objective – to classify types of Runet users.Method - methods of studying Internet life-style VALS, developed by SRI International. Respondents were asked to express their degree of agreement or disagreement with a set of statements describing the behavior of Internet users.Sample – no information.Results connected to our project"Experts" (12% of respondents) - the most active and skillful Internetaudience. Information technology - a key point of their life style. They areconfident with the computer, but does not necessarily have a technicaleducation. Internet access to them - an opportunity to meet both individual needsand resolve issues related to employment or professional activities."Working horses" (15%) - people who use the Internet primarily for utilitarianpurposes. Computers are mainly used in order to more effectively and to workquickly to solve problems. Therefore, for them, the Internet is also primarily a toolfor a very special and vocational information. For most of them Internet hasevolved into a primary and indispensable source of information."Power users" (46%). For them, the Internet - is it possible to satisfy bothindividual needs and resolve issues related to employment or professionalactivities. Most often they use the Internet from work and concentrate on gettinguseful information. A significant part of the user time just wandering around onthe web."Sociable" (24%) - a user-oriented social aspects of the Internet. On-line, meetmany people. They are often found at conferences that discuss social issues,current problems. Spend a lot of time traveling, surfing the Internet. They want toknow more about the web. For them, the Internet - is primarily a place ofentertainment and leisure facilities."Inexperienced users" (3%) - only recently started using the Internet, so familiarwith only a limited number of areas of the web. In conclusion we can assume that correction factor for Runet users who could potentially reach our Platform is 97% of total Runet population.Copyright ©2012 GSP team. All rights reserved. Page: 61Prepared by Ryzhonkov Vasily.
  • 62. Market Research Report ǀ GSP TeamSurvey 3 – Online survey “Research on IT StartUps (Russia)”(Author - Vitaly Moroz viforeb@gmail.com, date – 2011/04)Objective – to clarify startup’s characteristics; refine data on motivation people to participate in start-ups; problems of startups.Method – online survey.Sample – 123 respondents. Link to the survey was distributed randomly among the employees of IT companies and among the students of Belarusian State University MBA program. The sample does not match the proportions of the society as a whole, but close enough to the set of potential participants in the IT startups. Moreover, this sample is from neighbor country – Belorussia, where investment climate could be slightly different. 50 people participated in a startup as founder, specialist, consultant or investor.Classification: 1. By the experience of participation in the IT-startup: 1.1 participated in an IT startup – 39 people 1.2 participated in the startup, not related to IT, 10 1.3 does not take part in the startup, 62 2. By age group: 2.1 Younger than 25 years, 28 people 2.2 In the age of 25-30 years, 55 people 2.3 Older than 30 years, 37 peopleResults connected to our projectStartup characteristics and most important IT entrepreneursfeatures named are: believe that • startup is newly opened business; • novelty ("done the first time"), and optimum size for enthusiasm - more than 30% of startup team is respondents; • 20% of respondents as a between 3 and 9 characteristic feature called "business team members in a lack of funding".Team size for StartupThe majority of respondents favors the variant "from 3 to 9", or “doesn’tmatter” option. Experienced IT entrepreneurs believe that optimum size forstartup team is between 3 and 9 team members (blue color).Copyright ©2012 GSP team. All rights reserved. Page: 62Prepared by Ryzhonkov Vasily.
  • 63. Market Research Report ǀ GSP Team Figure 40 – Optimal Startup team sizeMotivation of entrepreneursThe most important factor in motivation for entrepreneurs is interestingbusiness idea. So the idea must be attractive and appear promising.The second motivation factor is to work with friends, but it’s significant to therespondents aged below 25 years and then decreases sharply.The need to increase wages is most pronounced for those aged 25-30 years.The promise of a percent in the future is the third significant factor, especially forthose who already have experience in a startup. Figure 41 – Motivational factors for participation in startup projectModel of workMost respondents would prefer to do a startup without changingcurrent job, until it begins to bring a steady income.Copyright ©2012 GSP team. All rights reserved. Page: 63Prepared by Ryzhonkov Vasily.
  • 64. Market Research Report ǀ GSP Team60% of entrepreneurs in the traditional sectors of business would preferto work in an office and full-time, while only 26% of IT entrepreneurs areready for it.Startup ProblemsThe answers to this question are classified in 4 categories:1. Team selection problems • team leader qualities; • team members qualifications; • selection of team with the right motivation; • vision of the leader; • commitment of startup team members to business idea, common goals12.2. Team organization problems • distribution of roles in the group; • finding a compromise and control / conflicts solving; • consolidation and retention of the team; • insufficient time members spend for startup activities.133. Planning and organization of the work • select the correct model of work; • planning and setting tasks; • coordination and control.4. Financing problems • lack of funding; • stops in funding; • lack of funds for marketing.5. Business Model • incorrect assessment of the risks. Teams needs a critic to land on the ground and reveal the risks14; • search for a business models may take a long time (years)15. IT entrepreneurs believe that optimum size for startup team is between 3 and 9 team members. The most important motivational factor for startup members is interesting business idea. Most respondents would prefer to do a startup without changing current job, until it begins to bring a steady income. Problems survey revealed are mainly connected to financing and team building, effective management.12 Was added to the survey by Vasily Ryzhonkov while analyzing interviews.13 Was added to the survey by Vasily Ryzhonkov while analyzing interviews.14 Was added to the survey by Vasily Ryzhonkov while analyzing interviews.15 Was added to the survey by Vasily Ryzhonkov while analyzing interviews. Copyright ©2012 GSP team. All rights reserved. Page: 64 Prepared by Ryzhonkov Vasily.
  • 65. Market Research Report ǀ GSP TeamPart 4 – Google KeyWord Tool and Yandex WordStat AnalysisMethodologyYandex.ru and Google.com are the most popular search sites and portals inRussia (according to Alexa.com). 16 That is why they were used to analyze internetactivity of users and search requests that are done by Runet users and users ofthe Globe.Google KeyWord Tool (https://adwords.google.com) and Yandex WordStat(http://wordstat.yandex.ru/) are instruments that are used for identifying mostpopular search requests and key words in these two most popular platforms.These tools are intended to help users; companies find keyword and ad groupideas that might be helpful while creating marketing campaigns.For determination of set of related key words Youtube Keyword Tool was used(https://ads.youtube.com/keyword_tool). It allows you to de set of related keywords in any region and most popular languages.Google KeyWord is more powerful tool in terms of sorting and analyzing keywords. Here is short list of proposed services: • Target and filter; • Sort your results; • Include or exclude ideas; • Include / Exclude terms; • Keyword matching; • Specify a language and location; • Popular requests; • Regional Interest.Yandex WordStat is similar to Google tool. It has following distinctions: • Possibility to classify requests by locations and visualize them on the map; • Boolean logic operators (!, -, +, (), []) to specify your request; • Statistics in graphs and tables.Objectives of this analysis were: 1. Estimate potential market in terms of Search Requests (Internationally, Locally). 2. Estimate potential market in terms of revenues from Online Advertising. 3. Understand needs of potential customers (Entrepreneurs, Investors, Mentors, Teams) in order to get insights about new services. 4. Identify needs and potential locations of customers in order to improve marketing of our Platform in the future. 5. Get insights on our topic looking at related search requests.16 http://www.alexa.com/topsites/countries/RU Copyright ©2012 GSP team. All rights reserved. Page: 65 Prepared by Ryzhonkov Vasily.
  • 66. Market Research Report ǀ GSP TeamMethod – use set of English/Russian keywords “startup”, “entrepreneur”,“venture”, “entrepreneurship”, etc to get number of requests of these keywordsper month, sort them according to region. Compare statistics from 2 tools andcome up with average parameters which will help to determine market size: • Number of customers/users interested in “Entrepreneurship and Startup” topic in Russia / internationally. • Key topics users are interested in. • Come up with a list of related search requests that could influence list of services we propose in GSP. • Geographical distribution of users and localization of users/customers.  –°  €° >¾ € ^ fn  fŦn¯ ¾   ¯° °–° ¾ f° ½½ f ¾ fn °–° ¾ ° Wf€¯¾  Z ¾¾f° Df ť %zf° °f % – E ¯  € ¾ ¾$¯° %nf ţ  €° ¯f° –f % Wff¯  ¾  Z –° f° Df ť Z ¾¾fţ  ¯ f¾  Df  E ¯  € ¾ fn   ¾¾$¯° ^ %nf ţ –f %  €° ¯f° d¾ – < t d  ¯ f¾  – d ° ¾ Wff¯  ¾ zf° t ^f   ¯°  ¾  €   ¾  – < t d  ¾ %° °–¾ţ zf° t ^f nf f°– f– Ŵ z  <  % ^Z Ŷ ^ fn Z  ¾ Z ¾¾f°% Wn ¾¾ Ŧ Wn ¾¾ Ŧ Wn ¾¾ Ŧ Wn ¾¾ Ŧ   ¯°f°   ¯°f°   ¯°f° €   ¯°f° €  f ^Z €  ° ¾ ° ½ °f ¯f ¾ € Df  ^ Ŧ f° ¾  n ¾Ŧ  ^ZŦ % –°¾%Ŧ Figure 42 – Method to determine market size via key word toolsStep 1 was described above.Step 2 is determined according to assumptions that market size and share arehighly dependent on people. Thus, key people-connected variables should beused, which are: • Number of users/month (locally, globally) used particular search request • Region and market • Number of search requests/month (locally, globally)Step 3 was described above.Step 4. Set of key words is determined with the Google AdWords tool. Russian listis broader due to flexibility of the language. You can find terms listed in the Table5.Copyright ©2012 GSP team. All rights reserved. Page: 66Prepared by Ryzhonkov Vasily.
  • 67. Market Research Report ǀ GSP TeamMain problem revealed and unsolved here is how to translate number ofsearch requests into the number of people. Table 5 – Set of Key Words used English KeyWords Russian KeyWords Startup* Бизнес идея Investor Стартап Investment Свое дело Startup Свой бизнес Service Startup +Advice Инкубатор Venture Венчурный Business idea Инвестиции/Инвестор* Технопарк * - added by Vasily RyzhonkovResultsProcess 1 – Determination of related Search Requests andServicesAnalytic Tools allow us to determine not only related search requests but alsogive insights on what are people’s demand and needs, how do they searchinformation.Below we provide you with data that could be used to determine key areas ofinterests related to startups in Russia and worldwide.Google SearchBrief explanations of terms used.Competition allows you to analyze the number of advertisers that assign ratesfor a particular keyword. Based on this information, you can determine howcompetitive ad placement.Monthly Searches. If you specify a target country, or language to find, thiscolumn will indicate the approximate average number of searches for thiskeyword in this country or the language in the last 12 months. In the calculationtakes into account the type of match you specified keyword.Copyright ©2012 GSP team. All rights reserved. Page: 67Prepared by Ryzhonkov Vasily.
  • 68. Market Research Report ǀ GSP Team Table 6 – What do people search in Google? Global Monthly Local MonthlyKeyword (Russian) Keyword (English) Competition Searches Searchesбизнес идея Business Idea Medium 22,2 12,1бесплатно бизнес план Business Plan free Low 33,1 22,2бесплатные бизнес планы Business Plan free Low 18,1 12,1бесплатный бизнес Free business Low 33,1 22,2бесплатный бизнес план business plan for free Low 22,2 14,8бизнес в интернет business in internet Medium 33,1 22,2бизнес в интернете business in internet Medium 22,2 14,8бизнес в маленьком business in a small city High 4,4 3,6городебизнес готовый predeveloped business High 74 33,1свой бизнес startup (own business) High 49,5 33,1как бизнес план Medium 450 301план бизнес business plan Medium 450 301бизнес планы business plan Medium 246 165для малого бизнеса small business Medium 165 135малого бизнеса small business Medium 165 135startup Low 9,140,000 110 000business plan Medium 2,740,000 201 000on startup Low 9,140,000 110000startup it Low 9,140,000 110000бизнес идеи ¾° ¾¾  f High 165 90,5business companies Low 20,400,000 74up start Low 4,090,000 33,1start up Low 4,090,000 33,1start it up Low 4,090,000 33,1entrepreneurship Low 2,240,000 27,1entrepreneur Low 2,740,000 22,2venture capital Low 2,240,000 22,2small business Low 7,480,000 22,2стартап ¾f ½ Low 27,1 18,1стартапы ¾f ½¾ Low 22,2 14,8new business Low 1,500,000 6,6бизнес идеи ¾° ¾¾  f¾ High 165 90,5startup business loan High 18,1 16business startup loan High 18,1 16business loan startup High 18,1 16business startup funding High 14,8 12startup business funding High 14,8 12Copyright ©2012 GSP team. All rights reserved. Page: 68Prepared by Ryzhonkov Vasily.
  • 69. Market Research Report ǀ GSP Team Global Monthly Local MonthlyKeyword (Russian) Keyword (English) Competition Searches Searchesstartup business investors High 880 < 10business startup investors High 880 < 10business startup grant High 18,1 < 10startup business grant High 18,1 < 10start up business funding High 14,8 12startup business financing High 9,9 12business startup financing High 9,9 12financing High 9,9 12a startup businessbusiness startup loans High 22,2 22startup business loans High 22,2 22startup business grants High 18,1 12business startup grants High 18,1 12investor Low 5,000,000 40,5investor visa us High 2,9 12us investor visa High 2,9 12find a business investor High 2,4 170immigrant investor program High 1,9 12offshore investing High 2,9 16investor green card High 1 < 10invest money High 135 27,1small business investor High 5,4 16find angel investors High 1,9 < 10investor immigration High 8,1 46small business investors High 6,6 16investors small business High 6,6 16Yandex SearchIn that case we got 10 Excel Sheets for each of the words mentioned in the Table5. Each Sheet contains categorized information about keywords. We will bringexample of only one sheet below: Table 7 – What do people search in Yandex? Monthly№ Category Keywords Search1 Startup стартап 193992 Startup стартап скачать 9733 Startup without expenditures стартап +без бюджета 6604 Startup стартап бизнес 5535 Startup. Guy Kawasaki ufaкавасаки стартап 4976 Startup стартап проекты 419Copyright ©2012 GSP team. All rights reserved. Page: 69Prepared by Ryzhonkov Vasily.
  • 70. Market Research Report ǀ GSP Team Monthly№ Category Keywords Search7 Startup. Guy Kawasaki гай стартап 4168 Startup Ideas стартап идеи 4119 Startup. Guy Kawasaki гай кавасаки стартап 403 Startup. Best practices, стартапы 2012 38610 successes, rules. Startup. Best practices, успешные стартапы 31011 successes, rules. Startup. Best practices, стартапы 2011 29912 successes, rules. Startup. Best practices, стартап компании 29413 successes, rules. Startup. Best practices, лучшие стартапы 28414 successes, rules.15 Startup скачать бесплатно стартап 251 Startup. Best practices, правила стартапа 24916 successes, rules.17 Startup. Guy Kawasaki кавасаки стартап скачать 24618 Startup. Books стартап книга 213 гай кавасаки стартап Startup. Guy Kawasaki 20919 скачать стартап +без бюджета Startup without expenditures 20320 скачать21 Investments and financing инвестиции +в стартапы 193 Startup. Best practices, стартап года 19222 successes, rules.23 Startup. Buy a startup куплю стартап 18824 Startup. Competition конкурс стартапов 18725 Startup. Buy a startup купить стартап 187 Startup. Best practices, прибыльные стартапы 17926 successes, rules. Startup. Best practices, правила прибыльных 16727 successes, rules. стартапов28 Startup Event игра стартап 16630 Investments and financing финансирование стартапов 162Each table contains around 200 items which were obtained from YandexWordStat.Results 1. We realized that words startup and business idea written in English are not popular in Russia and people tend to use more often Russian equivalents. Table 8 proves that by showing amount of monthly searches of each keyword. 2. All keywords were grouped into categories in order to analyze them together. Categories revealed main trends in the search that people carryCopyright ©2012 GSP team. All rights reserved. Page: 70Prepared by Ryzhonkov Vasily.
  • 71. Market Research Report ǀ GSP Team out. Search Requests directly lead us to the problems people are facing. The match is shown in the Table 9. 3. New areas were revealed they are highlighted in blue and orange. Table 8 – Monthly searches of keywords in Yandex Monthly № Category Keywords Search 1 Startup стартап 19 399 2 Business Idea бизнес идеи 188 766 3 Own Business cвой бизнес 73 615 4 Own Business cвое дело 197 849 5 Business Incubator бизнес инкубатор 18 498 6 Venture венчурный 23 444 7 SME малый бизнес 285 410 8 Technopark технопарк 102 916 9 Investor инвестор 102 077 10 Startup Service стартап+сервис 21 725 Table 9 – Main search categories vs problems according to Yandex Number of grouped Startup Problems and NeedsCategory of searches searches users tried to solve via search per category Get experience of successes and failures, get knowledge aboutStartup. Best practices, critical success factors of startups,successes, rules. understand how best startups were performing, startup cases, 31 most interesting ideas.Business Idea 30 Startup funding, findingVenture investors, funds, or other source ofInvestors/Investments 15 money.Startup 14 Access to communities whereStartup Incubator users can find information, help, 13 support, financing. Get access to knowledge fromStartup. Guy Kawasaki 12 popular author. Catalogue or database of businessBusiness Idea Catalogue 12 ideas. Startup funding, findingInvestments and financing investors, funds, or other source of 11 money, ways to get investments. Startup the project with lack ofStartup without finances and funding, access toexpenditures 11 the popular book with that name.Copyright ©2012 GSP team. All rights reserved. Page: 71Prepared by Ryzhonkov Vasily.
  • 72. Market Research Report ǀ GSP Team Number of grouped Startup Problems and NeedsCategory of searches searches users tried to solve via search per category Startup funding, findingFind Investor investors, funds, or other source of 10 money, ways to get investments. Access to communities whereRussian Venture Fund users can find information, help, 10 support, financing. How to create a startup,Startup Creation 8 methodology, rules, technology. Users are interested in theInternet Startups 7 Internet startups. Startup events, seminars,Startup Event 7 conferences, Startup Weekend Interest in an internationalAmerican Startups experience, access to foreign 6 entrepreneurs. Need for startup schools, courses,Startup Education 6 master classes, How to create a startup,Business Idea from scratch 6 methodology, rules, technology.Russian Startups 5Startup Promotion 5 Marketing of startup projects. Get knowledge about startupsStartup Video through video, shows, video 5 lectures. A need to buy or sell startupStartup. Buy a startup 5 project.Business Idea without Users don’t have money to spendexpenditures 5 How to create a startup,Business Idea Creation 5 methodology, rules, technology.Startup Catalogue 4 Catalogue or database of startups. Search for startup team members,Startup jobs and team 4 or jobs in the startup. Analysis, review and news aboutStartup Review and news 4 startups. Need for consulting services,Startup support 4 support. Understand investors aims andInvestor Aims and Goals 4 goals, risks and problems. Analysis of startup, methodologyStartup stages 3 of creation. Interest in an internationalBusiness Ideas from abroad experience, access to foreign 3 entrepreneurs.Copyright ©2012 GSP team. All rights reserved. Page: 72Prepared by Ryzhonkov Vasily.
  • 73. Market Research Report ǀ GSP Team Number of grouped Startup Problems and NeedsCategory of searches searches users tried to solve via search per categoryBusiness Idea for free 3 Access to business ideas for free. There is differentiation betweenBusiness Idea for cities and countryside, which leadsCountryside 3 to different conditions of startups. Understand investors aims andInvestor Risks 3 goals, risks and problems.Business plan 2Managing startup 2New Startups 2 Not clear what users wanted, butStartup Platform may be this is direct search for 2 services we want to create.Startup Ranking 2 Interest in an internationalEuropean Startups experience, access to foreign 1 entrepreneurs.Predeveloped Startups 1Startup audiobook 1 Access to knowledge aboutStartup Blog startups through social media, 1 blogs, forums, etc.Startup Environment 1Startup Evaluation 1Startup Forbes 1 Access to knowledge aboutStartup Forum startups through social media, 1 blogs, forums, etc.Startup Ideas 1Startup search 1Startup site 1 Not clear what users wanted toStartup Woman 1 find.Startup. Books 1 Startup grants throughStartup. Competition 1 competition. Process 2 – Determination of trends in SRGoogle KeyWord Tool and Insights.Tables 10-11 contain list of ten key trends that were popular in April, 2012. Someof the lines were deleted because terms were connected with softwaredevelopment.Copyright ©2012 GSP team. All rights reserved. Page: 73Prepared by Ryzhonkov Vasily.
  • 74. Market Research Report ǀ GSP TeamThus, we can see that Lean Startup, Startup Weekend, Startup Ideas, StartupJobs and Startup America are the most popular searches in the worldnowadays. Table 10 – Trends in Search Requests in startup area (March, 2012) 1. the lean startup +1,600% 2. lean startup +350% 3. startup weekend +160% 6. startup ideas +60% 9. startup america +50% Table 11 – Trends in Search Requests in startup area (April, 2012) +1,05 1. the lean startup 0% +350 2. lean startup % startup +130 3. weekend http://www.google.com/search?q=%22start % up+weekend%22 startup business 5. ideas http://www.google.com/search?q=%22startup+ +80% business+ideas%22 startup 7. ideas http://www.google.com/search?q=%22startup+ +60% ideas%22 startup 1 jobs http://www.google.com/search?q=%22startup+j +40% 0. obs%22Yandex WordStat Tool.Few terms were analyzed to determine the trends: «Стартап», «Свое дело», «СвойБизнес», «Startup». All of them have the same meaning in English but slightlydifferent in Russian. Period of time starts from April 2010 up to February 2012.This period is the maximum period that could be reached using that tool.Results are shown in the Figures below. But we could see is that words: «Startup»and Russian derivative from that - «Стартап» are not so popular. Total amount ofsearches is 320 109 and 286 856 respectively. Searches per month – 20 000on the peak for both of the key terms.Whereas terms «Свое дело», «Свой Бизнес» which were more used historically aremuch more popular and give us 63 831 684 total searches for «Свой Бизнес»with monthly average around 3,5 mln; 502 688 475 total searches for «Своедело» with monthly average around 35 mln SR.Copyright ©2012 GSP team. All rights reserved. Page: 74Prepared by Ryzhonkov Vasily.
  • 75. Market Research Report ǀ GSP Team Figure 43 – Statistics for the term «Стартап» Figure 44 – Statistics for the term «Свой Бизнес» Figure 45 – Statistics for the term «Свое дело»Copyright ©2012 GSP team. All rights reserved. Page: 75Prepared by Ryzhonkov Vasily.
  • 76. Market Research Report ǀ GSP Team Figure 46 – Statistics for the term «Startup» Process 3 – Determination of potential marketsGoogle searchGoogle KeyWord Tool provides following potential markets according to theRegional interest (by country): Table 12 - Regional interest in startups (by country) Country Search Index 15. Singapore 100 16. United States 89 17. Estonia 84 18. Trinidad and Tobago 78 19. South Africa 75 20. New Zealand 73 21. Jamaica 72 22. Australia 70 23. Canada 70 24. Philippines 66 25. India 60 26. Brazil 9 27. Russia 16 28. Indonesia 37List of cities: 9. San Francisco 10. Singapore 11. Bangalore 12. Sydney 13. New York 14. Melbourne 15. Toronto 16. LondonCopyright ©2012 GSP team. All rights reserved. Page: 76Prepared by Ryzhonkov Vasily.
  • 77. Market Research Report ǀ GSP TeamAll these lists were received by using “startup” keyword and related to it. Figure 47 – Regional interest to “startup” (by country) Figure 48 – Regional interest to “startup” (by city)Yandex searchYandex KeyStat Tool gives us different picture (applying English term andRussian one):Copyright ©2012 GSP team. All rights reserved. Page: 77Prepared by Ryzhonkov Vasily.
  • 78. Market Research Report ǀ GSP Team Figure 49 – Affinity Index of Startup key term through Yandex.ruInteresting point is that Search requests in Russian are coming not only fromRussia, but all over the world. For instance CIS countries have searched for“startup” too, even India has searches (around 2000) and rising interest of 254%.This means that we could have Russian speaking customers from abroad.Main results here are: 1. Regional interest to startup is higher where startup culture is more developed and advanced (the USA, Singapore, South Africa, New Zealand). However, there are also new comers such as Trinidad and Tobago, Estonia, Jamaica. Chosen markets of Developing countries (Russian) shows very low index of interest. India seems in this case more attractive market than Russia. 2. Searches for starting up a new business are coming not only from Russian territory but throughout the world.Copyright ©2012 GSP team. All rights reserved. Page: 78Prepared by Ryzhonkov Vasily.
  • 79. Market Research Report ǀ GSP Team Process 4 – Market Size DeterminationThis section is still under construction and will be presented in later edition ofreport. Main problem that we found here is how to transfer monthly searchrequests into potential users and customers.Copyright ©2012 GSP team. All rights reserved. Page: 79Prepared by Ryzhonkov Vasily.
  • 80. Market Research Report ǀ GSP TeamAbout the Team Vasily Ryzhonkov (Founder and Team Lead) aka the LifeStyler vryzhonkov@gmail.com Russia, ItalyMounir El Ogbani (Software Developer) aka The Technophile perbook@gmail.com Morocco Naveen Bagrecha (Universal team member) aka The Wiz-Kid naveenbagrecha2@gmail.com India Pavel Puchenkov (Designer, Software Developer) aka The Schmozer paul.softdeveloper@gmail.com Russia, New Zealand Rajat Pal (Marketing) aka The Brain creativerajat@gmail.com India, UKPeter Tamer (Marketing,Networking) aka the ShowmanEgyptCopyright ©2012 GSP team. All rights reserved. Page: 80Prepared by Ryzhonkov Vasily.
  • 81. Market Research Report ǀ GSP TeamVersion of the Document1.0 – Draft of the document. 17.05.20121.1 – Report submitted. 18.05.2012 (28 responses sample)1.2 – Document under construction, (34 responses)1.4 – Document is enlarged by 3 sections (Parts 2-4), online survey (46respondents),Copyright ©2012 GSP team. All rights reserved. Page: 81Prepared by Ryzhonkov Vasily.
  • 82. Market Research Report ǀ GSP TeamList of FiguresFigure 0 – GSP Market Size EstimationFigure 1 – GSP Online Survey. Number of daily responsesFigure 2 – GSP Online Survey. Region of origin & AgeFigure 3 – GSP Online Survey. Sex & Years of professional experienceFigure 4 – GSP Online Survey. Sphere of industryFigure 5 – GSP Online Survey. Importance of the Platform to the GlobalTechnology BusinessFigure 6 – GSP Online Survey. Services of the PlatformFigure 7 – GSP Online Survey. Services of the PlatformFigure 8 – GSP Online Survey. Physical InfrastructureFigure 9 – GSP Online Survey. Sector of the industry presented in the PlatformFigure 10 – GSP Online Survey. Cultural analysis and Advices on the PlatformFigure 11 – GSP Online Survey. Period of time for using the PlatformFigure 12 – Attitudes of Russian population and beginning entrepreneurs towardsentrepreneurship, 2010, %Figure 13 – Dynamics of entrepreneurial intentions entrepreneurship 2011, %Figure 14 – Beginning entrepreneurs: women and men, 2006-2011, %Figure 15 – Distribution of established and early entrepreneurs among agegroups, %Figure 16 – Education of entrepreneurs in Russia, %Figure 17 – Investment in Startups in Russia, %Figure 18 – OPORA Report. Structure of small enterprises, %Figure 19 – OPORA Report. Development of small entrepreneurship in a marketeconomy, %Figure 20 – OPORA Report. Dynamics of SMEs’ development in RussiaFigure 21 – OPORA Report. Federal Program of SME support in RussiaFigure 22 – Vision of innovative system structure in Russia (according to OPORA)Figure 23 – Penetration of Internet in different cities in Russia, %Figure 24 – Speed of Internet connection, MbsFigure 25 – Internet Audience DynamicsFigure 26 – Internet Economy in Russia, 2009Figure 27 – Structure of Internet Economy and Invesments in Russia, 2009Figure 28 – BCG e-Intensity Index in 2009Figure 29 – Use of network resources and Internet technologiesby companies in 2009Figure 30 – Main barriers for more active Internet usage in 2009Figure 31– Growth of the Internet economy (prediction up to 2015)Figure 32– Growth of the Internet economy (prediction up to 2015)Figure 33 – OPORA Survey. Structure of the sampleFigure 34 – OPORA Survey. SME Development environment IndexFigure 35 – OPORA Survey. Spread of corruption in various areasFigure 36 – OPORA Survey. Illegal payments to government officialsFigure 37– OPORA Survey. Barriers for SMEs in Russia during last 2 yearsFigure 38 – OPORA Survey. Barriers to business (international comparison)Figure 39 – OPORA Survey. Barriers to SME DevelopmentFigure 40 – Optimal Startup team sizeFigure 41 – Motivational factors for participation in startup projectFigure 42 – Method to determine market size via key word toolsCopyright ©2012 GSP team. All rights reserved. Page: 82Prepared by Ryzhonkov Vasily.
  • 83. Market Research Report ǀ GSP TeamFigure 45 – Statistics for the term «Стартап»Figure 43 – Statistics for the term «Стартап»Figure 44 – Statistics for the term «Свой Бизнес»Figure 45 – Statistics for the term «Свое дело»Figure 46 – Statistics for the term «Startup»Figure 47 – Regional interest to “startup” (by country)Figure 48 – Regional interest to “startup” (by city)Figure 49 – Affinity Index of Startup key term through Yandex.ruCopyright ©2012 GSP team. All rights reserved. Page: 83Prepared by Ryzhonkov Vasily.
  • 84. Market Research Report ǀ GSP TeamList of TablesTable 1 – Services by the PlatformTable 2 – Services of the PlatformTable 3 – Russian Internet AudienceTable 4 – Russian Internet Audience (by jobs)Table 5 – Set of Key Words usedTable 6 – What do people search in Google?Table 7 – What do people search in Yandex?Table 8 – Monthly searches of keywords in YandexTable 9 – Main search categories vs problems according to YandexTable 10 – Trends in Search Requests in startup area (March, 2012)Table 11 – Trends in Search Requests in startup area (April, 2012)Table 12 - Regional interest in startups (by country)Copyright ©2012 GSP team. All rights reserved. Page: 84Prepared by Ryzhonkov Vasily.