Expanding to Russia (tech sector)

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Expanding to Russia (tech sector)

  1. 1. ••• •••………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... ••• Expanding to Russia with love••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com
  2. 2. •••Just one small step for space agencies…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... In 2010, NASA and ROSCOSMOS agreed on a 1 billion dollar deal to send US astronauts to the International Space Station using Soyouz on Baikonur launchpad. Even NASA has a strong confidence in Russian technology and business relations. … a giant leap for Russian technological credibility••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 2
  3. 3. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...•••So, how does the new Russiantechnology sector look like ?…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...
  4. 4. •••Table of content………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. The Russian Innovation Model 2. A promising economy 3. Developing tomorrow’s potential 4. The Russian Tech Recipes 5. Summary••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 4
  5. 5. •••Table of content………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. The Russian Innovation Model 2. A promising economy 3. Developing tomorrow’s potential 4. The Russian Tech Recipes 5. Summary••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 5
  6. 6. ••• High Voltage Research Installation, Moscow………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........•••The Russian innovation model••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com
  7. 7. •••Russia has a strong technological and engineeringculture…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... « To catch up, and to surpass! » Soviet slogan for Science and Technology, introduced by Lenin. The fate of Soviet civilisation has long been linked to its success in its Science and Technology field. Unlike in the US, where they are called geeks, engineers and scientists are often considered national heroes. The Russian innovation model is leveraging on world-class scientists, famous mathematicians, taught in Moscow or St. Petersburg Universities and science-dedicated schools.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 7
  8. 8. •••…in which social networks have and still play a majorrole………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Russia has a tradition of networks for simple day-to-day survival, due to the country’s totalitarist past. Since, Russians have developed extensive social networks with high levels of political capacity, which are important means for the diffusion of democratic ideas in Russia. Russians view the internet as « the most valuable source of information, including word-of-mouth through social media where their friends or others with similar interests can share information with each other.» Sources:Business Week, DreamGrow/ LLP, ComScore, Synovate, American Journal of Political Science••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 8
  9. 9. ••• Russian constraints drive usages and innovation ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………......... 80 .. 1 millions, of Russian- Worldwide rank in size 2 Worldwide rank in speaking internet of illegal media time spent on social users sharing ($300 million 10 networks in music piracy) Average number of hours spent monthly on internet social Physical networks; world isolation average is 5 Rough climate Poor urban Mistrust in State- planning controlled mediaSources: EWDN, ComScore ••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 9
  10. 10. •••This innovation model gave birth to Yandex, a truesuccess story………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Founded by two Russian mathematicians. Ilya Segalovich They wrote a search algorithm for Arkady Volozh Russian-written files in the early 90s. That’s 6 years before Google’s Page and Brin started their research at Stanford University. With that in mind, some would rather say that Google is the US Yandex, than Yandex being the Russian Google… Sources: EWDN.com, Yandex Corporate Website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 10
  11. 11. •••Google’s twin brother…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 440 million dollars revenues in 2010 66% growth (b/w Q1 2010 & 2011) 65% share of search-engine traffic in Russia (Google 2nd with 22%) 60% share of Russia’s online advertising revenues 80 web products in total (mostly the same offer as Google’s) Sources: EWDN.com, Yandex Corporate Website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 11
  12. 12. •••… that even goes beyond its cadet.………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Real-time traffic 4 years before Google #1 Photos Web Portal #1 Traffic previsions #1 Weather … • New products: TV Schedule, E-cards, … • But most of all, a higher precision algorithm than Google’s due to the specificities of the inflective Russian language. Sources: EWDN.com, Yandex Corporate Website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 12
  13. 13. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...•••So, what about the well-knownRussian « copy-paste innovation »model?…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...
  14. 14. •••The copy/paste innovation: a perfectly well-acceptedpath into innovation………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... A casual glance at new Russian site BigLion shows you that the creators not only copied Groupon’s business model, but they also just ripped the site design and navigation off completely, too. The sites look nearly identical, even down to the smallest details.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 14
  15. 15. •••We can find many examples of copy-paste innovation inRussia…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Web initiatives in Russia are often perceived as pure and simple copies of successful Western companies, which business models, designs and brandings are faithfully replicated. Here are a few examples of the most significant ones : Original company The Russian copy “The Russian Internet could almost be described as tabula rasa with huge potential for opportunity and growth. [So] we just looked at what had been done in other countries, chose the models that proved their relevance and then adapted them to the Russian market.” Marina Treshchova, CEO Fast Lane Ventures••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 15
  16. 16. •••… but they eventually leapfrog their original model.………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Vkontakte looks and feels very similar to Facebook, but… … Vkontakte has developed some specific and local functionalities that might even raise strong barriers for Facebook. This example testifies of how Russian services can emancipate from the original model by leveraging on their own strengths to build a unique capability.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 16
  17. 17. •••Beyond a simple copycat, Vkontakte beats Facebookbecause of many key features………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Launched in 2006, it has more than 110 million active accounts (vs. 5 million facebook users in Russia). It is the 4th most visited Russian website. • Facebook faces difficulties penetrating the market for two reasons: • Facebooks Russian users are generally of the wealthier, well- traveled, cosmopolitan variety, have foreign friends and tend to live in Moscow and St. Petersburg. • Facebook does not offer content sharing services Sources:Les Echos, ComScore, Vkontakte.ru••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 17
  18. 18. •••Vkontakte created a very efficient network, far from itsmodel………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Millions of free pirated copies of domestic and foreign movies dubbed into Russian make it the biggest illegal downloading website in the world and the biggest pornographic video library. • The search engine allows users to look for the nearest ‘active’ single woman in the region, and escorts. • The website also plays its part throughout Russian protests through events like “Revolution Square Saturday” that took place after the December elections Sources:Les Echos, Social Times, BBC••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 18
  19. 19. •••Table of content………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. The Russian Innovation Model 2. A promising economy 3. Developing tomorrow’s potential 4. The Russian Tech Recipes 5. Summary••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 19
  20. 20. ••• International Business Center, Moscow………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........••• A promising economy••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com
  21. 21. •••Europe’s largest internet market by number of users...………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 50 42 Million Russian Million French internet users internet users Strong growth potential. e-commerce size: $8 billion e-commerce size: $45 billion Online advertising: $1,5 billion Online advertising: $3 billion Sources:EWDN, Obeservatoire de l’e-pub, fevad, ACSEL••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 21
  22. 22. •••… and the market has yet to expand!………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... France 75% 46% Europe 70% 50% Population Russia 58% 25% 15% Users 2% Total 46% 0% 2000 2005 2010 Total 2011 Evolution of the Internet internet penetration penetration in Russia • Almost three quarters of all Russian Internet users live in the European part of Russia: a huge market is still to be conquered! • Considering a target market penetration of 70%, it would represent a total of 100 million internet users. Sources: internetworldstats, ITU, census bureau••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 22
  23. 23. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...•••Some Russian companies have alreadyseized this appealing opportunity……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...
  24. 24. •••From a mail-service website to one of Europe’s largestInternet groups………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Mixed growth model: from innovation, one fusion and acquisitions. Multiple sources of investment, both local and foreign. Official objectives: COMMUNITAINMENT INNOVATIVE SERVICES Communications Improve the + Internet market Entertainment Sources: Mail.ru Group Corporate Website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 24
  25. 25. •••Mail.ru Group: the Runet colossus………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Email, IM, social Games Navigational Media projects E-commerce networks Services Mail 40 MMO Search News Travel Agent (IM) 47 games for social Answers Weather Goods MyWorld (MIR) platforms Maps Entertainment Property OK Mobile Hi-Tech, Auto, Lady, Money ICQ Rating (Analytics) Kids, Health Work Blogs Cards Headhunter Dating Mailing Free-lance Futubra $325 million revenue in 2010 from diverse sources: Market leader in display 11% advertising, internet Advertising 39% Games communications, and in 20% Paid services social. Other 30% Sources: EWDN, Mail.ru Group Corporate Website, Mail.ru Annual Report 2010••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 25
  26. 26. •••Mail.ru Group has given birth to a financialgiant: DST………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • A major late-stage investment fund • Invest minimum around $100M, for companies valuated at least $1b • Goal: to give liquidity to tech companies in order to delay their IPO, so that they can focus on product development instead of liquidity. • Large network outside Russia via direct partnerships or co-fundings: Facebook, Zynga,… Accel, Greylock, Kleiner Perkins… Sources: TechCrunch’s 2010 Yuri Milner interview••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 26
  27. 27. •••DST’s Investments (undisclosed shares)………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........An impressive portfolio including many of the hottest tech firms of themoment… … probably starting the first bridges between Russian and Western companies. Sources: TechCrunch, WSJ, EWDN••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 27
  28. 28. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...•••These connections with the WesternWorld raise the question of theRussian firms internationalization.…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...
  29. 29. •••Is Russia’s tech companies weak international presencea real issue?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Why do firms internationalize? Growth & Performance Ideas & Innovation New clients Exclusive information Tax Benefit Cultural mix Economies of scale Technological advantage … … But there is plenty of both in Russia! Their weak international presence is not necessarily a concern, as many examples show that Russian tech companies successfully internationalize when needed…••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 29
  30. 30. •••VimpelCom’s strong international presence………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... A strong international presence, on several continents Europe• 181 million mobile Russia, Ukraine, Armenia, Georgia, Italy subscribers around the world Asia Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan, Vietnam,• $10.512billion dollars Cambodia, Laos, Bangladesh, Pakistan revenue in 2010 Africa Algeria, Burundi, Zimbabwe, Namibia, Central African• Based in Amsterdam Republic• 10 Brands North America Canada Beeline, Kyivstar, djuice, Wind, Infostrada, Mobilink, Leo, Banglalink, Telecel, Djezzy VimpelCom is showing that there’s no such thing as a Russian tech failure to cross Russia’s borders… Sources: VimpelCom’s 2010 Annual Report, Datamonitor••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 30
  31. 31. •••Kaspersky, a long-date international actor………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • One of the world’s leading antivirus research and software companies • Founded in 1997 in Moscow • Fast expansion to : India, Germany, France, the Netherlands, the UK, Poland, Romania, Sweden, Japan, China, South Korea, and the USA. They recently enrolled Jackie Chan as their product spokesman in a move to conquer China. Sources: Wikipedia, Official Website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 31
  32. 32. •••Which countries are mostly targeted by Russian firms?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........4 types of links to Russian companies: Historical Technological Strong potential Proximity• Both cultural and • Example for innovation • Market in development • Land connection geographical proximity management • Geographical proximity • Within quick flight reach• No language barrier • Experimentation • Existing networks from• Existing networks • Innovation harnessing other industries Ex-soviet countries USA South East Asia EuropeExamples:••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 32
  33. 33. …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...•••Alongside internationalization,investment power is developing fastin Russia .…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...
  34. 34. •••DST is developing, extending its network to Asia………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... DST Global II Raised in May 2011 A capital of about $1billion to invest Expected to be invested in Asia, following the path of previous investments (Alibaba, 360buy) Russian tech investments are not only focusing on high profile Western companies, they are also getting key shares in soon-to-be Eastern giants. Sources: EWDN.com••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 34
  35. 35. •••Public initiatives foster the development of investmentsin Russia………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • 120 billion rubles ($3,72b) from the • State funded venture capital company Russian Federation created in 2007 • To give Russia a leading position on the • $1.25 billion capital to fund VCs nanotechnology sector while accelerating investments using a 5% loan without the commercialization of nanotech asking for stocks in the companies. products (inside and outside Russia) • Two goals: Investing in Russian tech • 2010: 44 projects approved, 47.1 billion while attracting and developing VC rubles invested, total budget of the networks in Russia. projects 146 billion rubles Sources: Rusnano’s 2010 Annual Report, CNET News••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 35
  36. 36. •••Top VC firms invest in Russia………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........US VC firms’ investment is clearly expanding to Russia… Top 15 VC firms from Forbes 2011 Midas List Accel Partners Kleiner Perkins Caufield & Byers But also… Andreessen Horowitz New Enterprise Associates Mangrove Capital Partners Benchmark Capital Redpoint Ventures General Catalyst Partners Bessemer Venture Partners Sequoia Capital and more… First Round Capital SV Angel FLOODGATE Union Square Ventures Founders Fund Venrock Greylock Partners Already publicly investing in Russian startups … a move that we can expect even more thanks to the growing relations with DST. Sources: EWDN, Corporate websites••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 36
  37. 37. •••Table of content………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. The Russian Innovation Model 2. A promising economy 3. Developing tomorrow’s potential 4. The Russian Tech Recipes 5. Summary••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 37
  38. 38. ••• Skolkovo Innovation Center, Moscow………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........•••Developing tomorrow’s potential••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com
  39. 39. •••Developing tomorrow’s potential………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. An overview of the Russian innovative markets 2. A strong network of incubators supporting new initiatives 3. The Russian boiling innovative ecosystem: Startups 4. Some barriers to keep in mind••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 39
  40. 40. •••Up-to-date Russia: mobile phones are extremelypopular…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... A strong mobile phone penetration 186 million Total mobile phones 140 million Total population There are 1.5 SIM cards per Russian inhabitant Sources: newmediatrendwatch, emarketer, AC&M••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com
  41. 41. •••…and are spreading internet technologies!………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... While households’ internet access grew by 10% in 2011, the household broadband penetration remained flat: mobile phones internet users account for most of the new internet users Still, only 7% of subscribers have access to the 3G network Smartphones penetration is still low (11%) but is quickly growing: +118% between 2010 and 2011 Sources:informa telecoms&media, newmediatrendwatch••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 41
  42. 42. •••Mobile phones are creating an opportunity: youngerusers are driving mobile internet growth…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Users by age (Aug 2011) 100% 90% 80% internet users mobile internet users 70% 60% 50% 40% 30% 20% 10% 0% age 12-17 age 18-24 age 25-34 age 35-44 age 45-54 age 55+ Sources:informa telecoms&media, newmediatrendwatch August 2011••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 42
  43. 43. •••… creating a fast-expanding market for mobile content………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... At the end of 2010, touch screen phones accounted for about 30% of all phones sold in Russia The Russian mobile content market could reach as much as $1.8 billion this year In 2013, the overall mobile content market could exceed $3 billion. Sources: ewdn, informa telecoms & media, newmediatrendwatch••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 43
  44. 44. •••Even with homemade solutions, the social networkmarket is up to date………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... LiveJournal.com Vkontakte Odnoklassniki.ru Blogging, social media Russia’s 1st social network Russia’s 2nd social network Intellectuals express Similarities: facebook Face detection, dating themselves freely 116 million accounts Similarities: Classmates 30 million monthly in Russia 45 million Moi Krug – ‘My Circle’ MoiMir – ‘My World’ Job seeking, pro networking Blogging Similarities: LinkedIn Similarities: Myspace 1 million users (vs 0.5 on Russian 20 million visits per month LinkedIn).••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 44
  45. 45. •••The e-commerce market is developing………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... The Russian e-commerce market is still emerging but is expected to grow fast in volume and result. $30 bn $18 bn $8 bn $10 bn 2010 2011 2015 2020 Forecast••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 45
  46. 46. •••What will be driving Russian e-business in the next fiveyears?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • The potential market growth in Moscow and St. Petersburg in terms of new users is reaching its natural limit. • Most new users will come from other Russian regions, typically recent Internet users from larger cities making initial online purchases. 2010 2015 Moscow+ Started using internet before 5.6 5.1 2011 St. Petersburg Started in 2011 or after Total 5.6 2.5 7.5 78 Regions Started using internet before 2011 8.4 7.6 million Started in 2011 or after 13.2 Total 8.4 20.8 Internet users Total Russia 13.9 28.3 in 2015••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 46
  47. 47. •••Developing tomorrow’s potential………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. An overview of the Russian innovative markets 2. A strong network of incubators supporting new initiatives 3. The Russian boiling innovative ecosystem: Startups 4. Some barriers to keep in mind••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 47
  48. 48. •••A network of incubators demonstrating the recentdynamism of the startup ecosystem………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... A sample of the most active and significant Incubators launched in Russia, that show the willingness and dynamism of an emerging ecosystem dedicated to innovation and entrepreneurship. …••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 48
  49. 49. •••HSE Incubator………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... MOSCOW • Founded in 2006 by students and professors of HSE. • A pool of 6 startups • Startups get an equipped office space as well as administrative and consulting support. • HSE(10K) similar to MIT(100K) startup competition • Former incubated startups: SmartKniga, Skillopedia.ru, Native Speakers Club, Roomix, PensiaMarket, TimePad. (19 startups so far) Sources: Official website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 49
  50. 50. •••Academy of National Economy Incubator………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... MOSCOW • Founded in 2010 by the Academy • Classic incubator : office, advisors, classes, events. • Provides an “Accelerator” program with early stage funding • Lot of partners ranging from Microsoft BizSpark to Yandex, includes investment partners and a huge number of information partners Sources: Official website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 50
  51. 51. •••Moscow State UniversityStudent Business Incubator………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... MOSCOW • Founded in 2010 with a startup competition aiming at recruiting the first batch of teams (Webils, Maxigen, Introvision, Idata, Web-constructor) • More than traditional support to its startups, MSU SIB provides exchange programs with US Ivy League’s universities such as MIT and Harvard. • Partners have invested more than 50 million rubles in the startups • The advisory board includes representatives from top-level companies and funds : Microsoft, Alliance Rosno, Rusnano, Russian Venture Company,… Sources: Official website, Direct contact••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 51
  52. 52. •••Fast Lane Ventures………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... MOSCOW • Leading developer of internet companies, Fast Lane Ventures was founded in 2010. They target B2C markets. • Has launched 15 internet start-ups, • Unique model: the ’Fast 50’ enables it to launch a new internet business within 50 days. • Has attracted $50M from different investors • The team brings together 700 internet developers, and holds classes and training sessions along with help in finding funds. Sources: Official website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 52
  53. 53. •••Farminers Startup Academy………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... MOSCOW •Founded by former Vice President of Mail.ru, Igor Matzanyuk, in August 2011. The Fund invests in Russian projects. •Selected projects receive up to $150,000 USD to prepare a project prototype, an office space, and computers. •After three months, the prototype will help the Farm find investors for the project. •Farminers will generate funds for a period of three to six months in exchange for a 40 percent stake in the project. •Targets online projects, compatible with mobile devices, and mass-market. Sources: Official website, lenta.ru••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 53
  54. 54. •••Ingria Technopark Business Incubator………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... ST PETERSBURG Ingria future technopark • Founded in 2008 by the Inngria Technopark. • Among Top 5 most efficient business incubators in Russia (Forbes) • Two programs: • Pre-incubation, 6 months (cost 500 RUR/month) • Incubation, 11-33 months (cost 1500 RUR/month) • Network of partners • 70 residents: IT, Ecology, Biotech, Medicine, Energy, Material Science. Sources: Official website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 54
  55. 55. •••Tex Drive………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... MOSCOW • Founded in 2011, TexDrive is a member of the Techstars network, and is supported by Springboard, two worldwide well-known start-up accelerators. • TexDrive offers 12-week programs that help start-ups define a business model, find investors and solve legal issues. Selected projects get $25K at the start, then $100K at the end of the program, while TexDrive gets a small share of the company in return. • Own funds and TexDrive investors network represent potentially $3B in venture capital funds. Investors are local wealthy individuals, entrepreneurs and investment managers. • First program launched in January 2012 Sources: Official website, Marchmont Capital, EWDN.com••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 55
  56. 56. •••Skolkovo: can Russia build its own Silicon Valley ?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • The Skolkovo Innovation Centre, still under construction and completed by 2014, is the most remarkable and emblematic example of the Russian initiatives to foster innovation and put Russion on the “technology map”. • The strategic goal of the Skolkovo Innovation Centre is to concentrate international intellectual capital, thereby stimulating the development of break-through projects and technologies. To help Russian innovators liaise with international VCs, Skolkovo has also opened offices in UK and in the Silicon Valley. • Mainly fund by the Russian government, Skolkovo gathers innovation clusters, a technopark, a university and a city- laboratory, near Moscow. The innovation centre cooperates with a number of foreign tech giants, including Cisco, Ericsson, Nokia. Microsoft and SAP are launching R&D centres in Skolkovo. • The innovation clusters cover the following fields : • Information technologies • Energy Efficient technologies • Nuclear technologies • Biomedical technologies • Space technologies and communication • At the moment, the Skolkovo Foundation already supports an estimated 350 Russian innovation companies, with 220 of those coming from 30 different regions in Russia. Plans are to increase the number of residents to 500 companies this year.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 56
  57. 57. •••Developing tomorrow’s potential………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. An overview of the Russian innovative markets 2. A strong network of incubators supporting new initiatives 3. The Russian boiling innovative ecosystem: Startups 4. Some barriers to keep in mind••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 57
  58. 58. •••Already some extremely innovative companies arecoming out of this ecosystem………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... A selection of some highly innovative start-ups “made in Russia” that offer a disruptive value proposition, and testify of the dynamism of Russian entrepreneurs.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 58
  59. 59. •••Yota………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Yota (4G internet) is the first Russian high-speed wireless network based on Mobile WiMAX. • Those actors have entered the telecom market by providing access only, differentiating with disruptive distribution models. • Yota operates in Russia, Belarus and Nicaragua. Yota offers fixed, nomadic, and fully mobile wireless broadband Internet access, through dedicated mobile devices. Yota also offes to stream movies, TV programs, and online music in its mobile services catalogue. It focuses on high density urban areas.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 59
  60. 60. •••Displair………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • DisplAir offers an interactive non-screen display which ‘floats’ in mid-air. • The ‘air screen’ consists of vapor particles which do not leave any traces of moisture • It can be seen, heard, smelled and touched • Images on the display can be static or animated, in 2D or 3D • The device shows potential for use in advertising, entertainment, education, and medicine. For instance, the multitouch management of the image creates opportunities for brands to promote new products with visual, tactile and olfactive experience. • Displair has been producing and selling its first prototypes since 2010. The device may cost as little as a few thousand US dollars when manufactured in large quantities. • Displair won numerous Innovation Prizes, of which Innovate Russia that gave them the resident status at Skolkovo and the Technovations Cup, another national innovation cup.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 60
  61. 61. •••ResumUP………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • ResumUP is a service for personal data visualization aimed to set a new standard in career management, online and social recruiting. • Basically, it gathers your data from multiple sources (LinkedIn and Facebook Connect so far) and transform it into a clear visualization. • Then with a special algorithm, it can rank your profile and match it to job offers. • ResumUP is expected to launch as a recruiting service but could expand its services as a plugin to other websites.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 61
  62. 62. •••Good Roads………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Goodroads is a mobile mapping service that collects data about road surface quality. The system is paired with an iPhone application which gathers data and runs an algorithm that evaluates road conditions. The project was launched in 2011 and won the Opera Software Startups Award. The site was created by a team of students at the St Petersburg State Polytechnical University, helped by the QD incubator.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 62
  63. 63. •••Developing tomorrow’s potential………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. An overview of the Russian innovative markets 2. A strong network of incubators supporting new initiatives 3. The Russian boiling innovative ecosystem: Startups 4. Some barriers to keep in mind••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 63
  64. 64. •••The Russian Business “Folklore” : myth or reality ?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Elvira Nabiullina, Russias minister of economic development, left, and Pascal Lamy of the W.T.O at a ceremony in Geneva, on December 6th 2011. WTO membership is expected to shine light on the regulations and corruption that dog the Russian economy.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 64
  65. 65. •••Business in Russia still faces many challenges………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Foreign investors and business developers are often discouraged by the historical barriers that are still deeply attached to the common image of the Russian economy : • Rules of law that fail to match countries such as the U.S. and Western Europe; • Bureaucracies are confusing and cumbersome; • Corruption is rampant and is even seeping into the education system; • Powerful oligarchs dominate key industries; • Few Russian people actually speak English; • And secrecy in R&D is the norm… Even if those threats are still a reality, it’s yet possible to do business in Russia. Thanks to public and private initiatives that have risen so as to align with Western standards and enable Russia to attract foreign investors and develop international partnerships, those barriers have been substantially lessened.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 65
  66. 66. •••Legal Framework………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... The Russian legal framework is undergoing severe and major improvements. But Russia also exhibits a significant implementation gap, meaning that many laws on the books are poorly enforced. Sources: The Global Integrity Report 2010••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 66
  67. 67. •••Intellectual property………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Since the dissolution of the Soviet Union, the Russian Federation has sought to address important issues surrounding intellectual property and its protection. In a number of areas these efforts have led to greater recognition of intellectual property rights and now provide for a greater degree of protection. • Although the level of IP protection in Russia does not yet match the sophistication of most European jurisdictions, fundamental IP rights are recognized in Russia. A substantial basic regulatory framework exists within which companies may attain protection of their intellectual property assets. The case of pirate softwares Pirated software accounted for 65% of the volume of all software units installed on PCs in Russia for the year — down 2% from 2009 but nevertheless representing a commercial value of approximately $3 billion. A survey conducted by BSA as part of its study of piracy levels in Russia indicates that the majority of Russian respondents understand the benefits of licensed software, including the factors of reliability (86 percent) and access to technical support (69 percent). However, more than half of Russian respondents do not have a clear understanding of what constitutes legal and illegal use of software. Sources: Business Software Alliance (BSA) in its 2010 report on global piracy.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 67
  68. 68. •••Russia’s Underground e-market………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Russian social networks host the biggest illegal media library in the world. Experts estimate that Majors are losing up to 10 million dollars per day on that market. The website was sentenced to fines at the beginning of 2012 for copyright infringement. Informal • Vkontakte groups enable illegal Commercial Vkontakte groups trades and e-commerce. 150 informal groups have more than Dec 2010 Nov 2011 100,000 members on the website. Mobile devices 170000 256000 • Oborot.ru, Russia’s leading online resource and event organizer for e- Fashion 105000 170000 commerce, announced in October Watches 102000 150000 2011 the creation of the Electronic Commerce Association, which aims “to facilitate the development of Childrens goods 80000 16000 online retail businesses and define Cosmetics 70000 105000 the principles of civilized business.” Services 55000 83000 Jewelry 35000 74000 Sources:Les echos, ewdn, thecmuwebsite••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 68
  69. 69. •••Payments are still an issue………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • The Russian economy still suffers from a lack of standardization in payments means, leading to what might appear as a payment jungle. • Russian consumers face a lack of trust when it comes to online payments. • To this day, Russians still prefer to deal in cash for the majority of their purchases. • Cash-on-delivery is the most popular method of payment for online transactions in Russia : the online user agrees to come pick the item up and pay for it with cash. • Russian social networks introduced new payment instruments, including virtual currencies and credit cards. More than 50 internet payment solutions are now available. • President Medvedev signed a law in June 2011 that addresses legal regulation of e-money. New obligations, such as obtaining licenses and increasing authorized capital, have forced many sites to shut down their online payment systems. • Odnoklanisski’s solution couldn’t be integrated in the social commerce sphere and new legislations have stopped official e-payments on Vkontakte. Vkontakte interrupted Ozon’s integration in its payment system. Sources:The Moscow Times, ewdn••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 69
  70. 70. •••Corruption still dogs the Russian economy………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 147th 25th 24th 75th 73rd••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 70
  71. 71. •••Table of content………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... 1. The Russian Innovation Model 2. A promising economy 3. Developing tomorrow’s potential 4. The Russian Tech Recipes 5. Summary••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 71
  72. 72. ••• Goose with apples, a Russian specialty………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………...........•••The Russian Tech Recipes••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com
  73. 73. •••What is specific about Russia?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... Russia has a strong scientific culture. Russia is the largest country in the world: with very diverse density of population… and has still to complete the equipment of its low density areas. Russia is facing a social and technology gap inherited from more than half a century of communism. Russia is well-known for its extremely tough weather.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 73
  74. 74. •••Lots of constraints means a lot of creativity………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... A sense of emergency in Brilliant mathematicians bridging the technology gap Grigori Perelman, the mathematician Constraints and speed lead to technological who solved the Poincaré Conjecture. breakthrough such as Displair New ways to reachIntense indoor usages Health issues underdeveloped areas Russians digging a passage to their Alcoholism is still a major issue in A railroad near Baikal Lake. home after a snow storm in Odessa. Russia, reducing male life expectancy.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 74
  75. 75. •••Brilliant mathematicians create an expertise in algorithms………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... The crafting of high precision algorithm is one of the most mathematical part of IT Services. In Russia, the training of top-notch mathematicians in specialized schools has permitted the emergence of a field of expertise in algorithmic. For example: Yandex’s search algorithm is said to be better than Google’s. Why ? Due to the specificities of the Russian language (strong inflectivity of the language), they had to devise a way to understand the meaning of a sentence by splitting the assembled words and then read each one of them. Results ? Even though this technology is not required in Western languages, it has proved to be more efficient on research. Something Google lacks in its Russian search.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 75
  76. 76. •••Brilliant mathematicians know how to crack the code…and protect it!………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... The expertise developed by Russian mathematicians in algorithmic is not only used in data analysis, it has been used for a long time in cryptology and hacking. Russian hackers are world-known for their creativity and expertise. And when it comes to data security, who is the most relevant expert if not the person who knows how to hack into your system? Even some cryptographic technics are named after Russia: Russian copulation, for example, is a method of rearranging plaintext before encryption. It is now a business in Russia: groups of hackers are paid to test the security of IT infrastructures. Examples of Russian cryptography and hacking expertise: Sources: Friedrich Ludwig Bauer, Decrypted Secrets••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 76
  77. 77. •••Crypto AG is a Swiss-based company, but Russian-based technology………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Crypto Telecommunication Security is «the preferred top-security partner for civilian and military authorities worldwide ». • Its business office are located in Switzerland, but its technical teams are based in Russia, tapping into one the best security experts pools in the world. • They conceive and commercialize top-security communication solutions. • They are about to launch a new product: Nume. It will allow mass market to benefit from encryption-based technology to secure their personal lines. • Nume is certified on multiple Defense standards across the globe (China, South America, Indonesia, India, Middle-East,…). Sources: corporate website••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 77
  78. 78. •••A company specialized in hackproofing: StopTheHacker………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • StopTheHacker’s proprietary technology helps solve web-scale security problems involving malware on websites, hacker attacks and other types of online abuse. • It uses machine learning (ML) and artificial intelligence (AI) techniques, which are monetized on a SaaS model. • StopTheHacker has just received a $1.1 million initial funding from a group of Russian investors but also Brian NeSmith (CEO of Blue Coat Systems). Sources: EWDN••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 78
  79. 79. •••Telecom sector proves Russian ability to adapt toimportant constraints………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Even with the high demand of Russian population for telecommunication infrastructure, telecom companies were facing two main issues in their expansion: • Low solvability of the majority of the population • High cost of implementation due to • Ancient buildings • Foreign and isolated Russian backcountry • Russia now seems to have tackled these issues and numbers of landlines, internet users and mobile users are skyrocketing. Examples:••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 79
  80. 80. •••Inango devised a new way to cut implementation costs………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • Inango offers complete solutions for service providers looking to connect entire communities to the Internet. • Inango solutions are targeted at populations living in higher density areas (high-rise apartment buildings) and where sensitivity to cost is high. • They connect to a high-speed backbone at a local point of presence (typically based on optical fiber) and provide ways of connecting to each individual house- holder. • They use a simple yet efficient technology: they transmit and receive data over existing coaxial cables.••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 80
  81. 81. •••Vimpelcom’s rise shows the effiency of Russianinfrastructure development strategy………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………........... • In 2001, their strategy was to expand Vimpelcom’s infrastructure in all the regions of Russia. They quickly became one of the largest carrier in Russia in terms of subscriber base. They eventually used this experience to expand to emerging markets. Russia Vietnam, Cambodia, Ukraine, Kazakhstan, Laos, Algeria, Uzbekistan, Tajikistan, Bangladesh, Pakistan, Armenia, Georgia, Burundi, Zimbabwe, Kyrgyzstan Namibia, Central African Republic Example of a successful expansion in Cambodia: May 2009: Launch of commercial operations (9th entrant) December 2010: 80% of total population covered 650k mobile subscribers (3rd largest operator) Sources: 2010 Annual Report••• Follow us on twitter @fabernovel ••• Visit our website and discover what we do: fabernovel.com 81

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