Global Startup Platform_Market Research Report_2012

Virtual Entrepreneurship Lab TEAM

Global Startup Platform
Market Research Report v.4

“WHEN ENTREPRENEURSHIP
BECOMES A LIFESTYLE”

18.06.2012

Market Research Report ǀ GSP Team

Abstract .......................................................................................................4

Acronyms ....................................................................................................4

Introduction ................................................................................................4

Objective .....................................................................................................5

Summary 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 ................................. 15

Methodology and Types of Market Research............................................... 16

Part 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 ..................................... 26

Part 2 – Analysis of International/Russian Reports on Startups and Internet
Economy 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.


Part 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)” ......................... 62

Part 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 ....................................................... 79

About the Team ......................................................................................... 80

Version of the Document ........................................................................... 81

List of Figures............................................................................................ 82

List of Tables ............................................................................................. 84



Abstract
The purpose of this report is to present and analyze results of the Market
Research held on in order to understand possible market value of the Startup
project called “Global Startup Platform”.

Acronyms
GDP Gross Domestic Product
GEM Global Entrepreneurship Monitor
GSP Global Startup Platform
SR Search Request

Introduction
Entrepreneurship and starting up ventures has been the main driver of
innovation in all economies throughout the world and centuries. Solow-Swan
Growth Model1 proved that increasing wealth of nation is impossible without
innovations in the country. GDP growth is highly dependent on amount of money
invested in the Innovation, Startups and R&D. Thus, an innovation is a key factor
of success to the country’s prosperity.

World is heterogeneous and each country has its unique combination of historical
background, economic, political, cultural models, etc. There are examples of
countries that prove the theory of Solow into practice, such as USA, Sweden,
Germany, Canada, Australia, Singapore and others. These countries are
characterized by high levels of investment in innovation, and high level of
entrepreneurial activities. They sometimes also referred to as countries with
economies of innovation2. However, there are countries with as much potential,
but with still immature economic and political systems. BRICI countries are one
of the possible examples, where the knowledge, technology, patents, etc. are
present but underdeveloped3.

One member of BRICIs is Russia. It is a country where there is the lack of
innovations due to several reasons such as investment climate, lack of platforms
for meeting of Russian entrepreneurs and global businesses, cultural differences,
language barriers, lacks of communication with Western and Asian
entrepreneurs, lack of international experience, etc. nowadays.

1 http://en.wikipedia.org/wiki/Neoclassical_growth_model
2 http://en.wikipedia.org/wiki/Innovation_economics
3 http://en.wikipedia.org/wiki/BRIC



At present Internet provides society with such tools as eCommerce, Social Media
and Communities (facebook), Wikis (Wikipedia). All this tools and projects
connect millions of people and organizations with different aims, diverse
backgrounds and in different ways. This brought to the world many
opportunities, one of them is to startup businesses using virtual communities
and creating networks of entrepreneurs, mentors, investors, experts.

We see tremendous opportunities presented today and still underdeveloped4 in
the entrepreneurship world especially in developing and BRIC countries. Global
Startup Project (GSP) is the international project which is developing by
multinational team that is dedicated for creating such kind of online platform.

Objective
In this report we reveal in-depth research about what is online virtual incubator
could 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 online
surveys, 9 reports on startups, entrepreneurship climate and internet economy in
Russia 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 toward
developing GSP project and helping entrepreneurs throughout the world starting
up 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



• 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 Platform

GSP as a "virtual business incubator" with a wide range of services for
entrepreneurs, investors, mentors, teams and companies in Russia, BRIC and
CIS economies. Main distinctive feature of this platform is combining social
network with different tools and services for startups (such as strategy
consulting, financing, online database of projects and entrepreneurs,
predeveloped business ideas, tools for managing and developing a startup, etc.).



Summary of Findings
Main 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 GSP

Problems
Startup 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:



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 – 3,18

Problems 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.6

3. 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.



• 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 scaling

Internet Penetration and Economy Problems
Barriers (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
• Etc

SMEs 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%.



Services
Table 0 – Category of services
Service Number of Voices Overall Percentage
Financing 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 Overall
Service
of Voices Percentage
Community and network of entrepreneurs, mentors,
34 72%
business angels
Mentorship by experienced entrepreneurs from
30 64%
Russia, Silicon Walley, other IT Parks
Develop 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%
projects
Testing 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, 1
Optimization of office rent and other resources, 1



Use of IT technologies (enterprise information systems
1
for small companies),
Coding know how, 1
“I dont get the idea of the platform”. 1
The library of tips, hints, solutions to the
major problems startups face along life-cycle (for
1
example, 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 – startup
stages. (Guy Kawasaki book)
Startup Events
Access through platform to American, European
and foreign examples and best practices, business
ideas from abroad
Startup Education (Videos, audiobooks, texts)
Startup Fair (Buy/Sell a startups)
Startups Catalogue
Business Idea for Countryside
Investor Tools (risk assessment, portfolio analysis,
goals
Startup Blogs, Forum

Potential 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 Conditions



Russia
• 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.



Market Size

Figure 0 – GSP Market Size Estimation

Growth Potential

Internet Economy. Internet impact on Russian GDP was $19,3 bln or 1,6% of
GDP (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’s
contribution to GDP will be up to 3,7% (or 5% of GDP excluding oil and gas
industry) 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.



eCommerce in Russia is $7,4 bln.
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.
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 will
be covered in the next version of Report.

Market Niche

IT 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 37

List of cities:
1. San Francisco
2. Singapore
3. Bangalore
4. Sydney
5. New York
6. Melbourne
7. Toronto
8. London

According to Google Insights Tool we received that list of locations and cities
which uses the word “startup” more often than the others. Index 100 shows the
maximum score.



According to that Index we could see that Brazilian, Russian market have very
low index. This could be due to several reasons. One of them possibly that Google
is not so wide spread among Russian Users as local Search Site (Yandex). It could
be the same in Brazilia. We didn’t validate that yet. India and Indonesia show
quite stable indicator around 60 and 37.

In conclusion, we can state that this indicator shouldn’t be the only one. But it
give some useful insights on what is happening around the globe.

Features of the Platform
We 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 Channels
This wasn’t the main purpose of the survey but we found the most popular
Internet resources in Russia and also popular marketing tools among Russian
Internet 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%



Social resources:
• Clients’ comments – 42%
• Pages in the Social networks – 23%
• Blogs – 19%
• Twitter – 5%

Methodology and Types of Market Research
Market 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 Team

Methodology
This is a semi-qualitative and empirical online-survey of the responses of 46
participants. Google Docs Forms tool was used for creation the Survey and
gathering the responses.
You could find our Survey by clicking the following link:

https://docs.google.com/spreadsheet/viewform?formkey=dEhHUERGTmxk
SXotZlQyRFhNWHMtY1E6MQ

Questions were divided into two categories. First 46 Participants passed
was aimed on gathering information about through the Online Survey
participants:
• 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?



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 out
separate 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 following
sources 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 since
15th of May 2012. Results for this report were Survey was published on 18th of
collected on 31th of May 2012. New surveys May. Second set of results was
will be designed to test hypothesis about collected on 31st of May.
payment possibilities of customers in local
markets.

Figure 1 – GSP Online Survey. Number of daily responses

Main assumptions behind online-survey were:
• Time period of survey was 16 days.



• 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.



Results of the Online Survey

Information about respondents

Mainly all participants were from Europe with dominating figure around
60%, North America (6%), South America(4%), Africa(4%) and Asia & Pacific
region took equally 15%. 72% of respondents were men.
Age of participators lies between 18 and 45 years with prevailing group of
people 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 has
professional 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 biggest
groups (17% and 30% respectively). Student’s percentage is 15%. However, there
is group “Other” which contributed with 13% (the second largest group). Detailed
analysis showed that it consists of 6 different professions: HR, student (pointed
out different caption), office workers (2), Media specialist, and empty field. This
gives us changes in results, making students the third largest group with 4
people.



Figure 4 – GSP Online Survey. Sphere of industry

Global Startup Platform – testing hypothesis

Name of the project

In 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 Platform



• 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 Entrepreneurship

What 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 Platform
Service Number of Voices Overall Percentage
Financing 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 Solution



Approximately 74% of respondents found this idea useful. This data is shown in
the 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 Business

Types of services people expect to get from the Platform

Answers were grouped into several categories and presented in a graphical and
table form because of the importance of information gathered.
Green sector consists of services that got more than 50% (particularly between
51 and 72%). Orange sector consists of services that got 30-50% of votes. Blue
area 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 Platform



Table 2 – Services of the Platform
Number Overall
Service
of Voices Percentage
Community and network of entrepreneurs, mentors,
34 72%
business angels
Mentorship by experienced entrepreneurs from
30 64%
Russia, Silicon Walley, other IT Parks
Develop 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 plans
Lists and collections of funds for venture capital
21 45%
projects
Testing 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, 1
Optimization of office rent and other resources, 1
Use of IT technologies (enterprise information systems
1
for small companies),
Coding know how, 1
“I dont get the idea of the platform”. 1

It is important to highlight that people People perceived the Platform as
perceived this platform as network or virtual
tool which will allow mentors, a social network of entrepreneurs
entrepreneurs, business angels to be and set of virtual tools which
connected to other interested people all over
the world. Important services are also Legal allow mentors, entrepreneurs,
Advice, Developing of Business business angels to be connected
Strategies, Marketing of new projects and to other people interested in
having access to Online database of
advices, draft business ideas, startups all over the world.
predeveloped business plans.

What types of specialists you would like to see on the platform?



Basically people voted for Experts, Entrepreneurs, Mentors, Venture Investors
almost 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 Platform

Will be the physical infrastructure relevant for the global technology
business? If yes, what kind?

This part of survey made the most amount of different proposals coming from the
audience. 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 Infrastructure

Industry Sector that should be addressed by the GSP



Leading sectors are IT 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.

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 Platform

Implementation of Cross-cultural analysis in the Platform

Figure 10 – GSP Online Survey. Cultural analysis and Advices on the Platform



What could be the period of time your organization can use services of this
platform?

Figure 11 – GSP Online Survey. Period of time for using the Platform

Voices distributed almost equally between each period of time. However, it is
important 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 Survey

1. We tried to correct mistakes we made. They were stated in the previous report
and 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.



• 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. Following
questions 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 possible
field 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.



Part 2 – Analysis of International/Russian Reports on
Startups and Internet Economy in Russia

Report 1. Global Entrepreneurship Monitor Russia 2011
(source http://www.gsom.spbu.ru/en/research/eship/projects/gem/, available
only 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 years

Results connected to our project



Startup 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 conditions
figures are pretty the same. In 2011
evaluation of the conditions for starting favorable to startup. Population in
a business non-entrepreneurial sector of Russia feels lack of knowledge and
the population was very pessimistic, only
skills in entrepreneurship, fear of
19% of this group found conditions
favorable to startup. Entrepreneurs failure and see no good opportunity
were more optimistic in assessment the to startup a business.
environment - about 37% of them called
the conditions favorable for starting a 37% of entrepreneurs in Russia are
business. satisfied with the enabling
conditions.
Age Attitude
There is the difference in perception of
entrepreneurs. Thus, career attractiveness of an entrepreneur declines with the
age. 63% of young generation below 25 years find it attractive, percentage for
respondents above 55 years is lower and around 48%.

Entrepreneurial potential



Potential entrepreneurs are persons who have not started their business, but have
a positive view on their own entrepreneurial skills and the prevailing market
conditions. In fact, potential entrepreneurs are in a state of "unstable
equilibrium", deciding to work them self-employed or start their own business.

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. There is no significant gender difference in this group. However, the
percentage of males (8.54%) is higher than the level of women (7.09%).
The level of entrepreneurial intentions in Russia is the lowest among the
countries participating in the project (lower only in the UAE).
In 2011 in Russia, only 5.8% of respondents planned to start their own
business in the next three years.

Figure 13 – Dynamics of entrepreneurial intentions entrepreneurship 2011, %

40% of respondents with entrepreneurial intentions have already started at least
one project; new comers represent only 3,6% of total Russian population in
2011. 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 2011



Figure 14 – Beginning entrepreneurs: women and men, 2006-2011, %

Gender and age
Average age of Russian • Survey shows that 25-44 group has is
entrepreneur is 37 years.
Evidently, there is a prevalence the largest one
of “25-34” year’s old group • 80% Russian entrepreneurs have high
among new entrepreneurs.
or unfinished university education
Among established entrepreneurs
the most significant groups are
35-44 – 34% and 45-54 – 33,5%. We think that these people already run a
business and potentially are free to open new ones.

Figure 15 – Distribution of established and early entrepreneurs among age
groups, %

Education



80% of entrepreneurs have unfinished or finished high education or professional
education.

Figure 16 – Education of entrepreneurs in Russia, %

Investments
Russian 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 not
significantly.

Figure 17 – Investment in Startups in Russia, %

Experts Interviews



Experts evaluated conditions and entrepreneurship climate in Russia using 5-
grades scale. According to experts’ opinions there are several problems that
Russian 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 – 3,18

It’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.



Report 2. Entrepreneurship and small businesses in Russia: A
review 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.



Report 3. OPORA Russia. All-Russian Non-Governmental
Organization 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.


2010 - The key activity indicators of the Russian SME entities in the 1st half of
2010

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



- 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 trends

Bank loans to SMEs in 2011 (on 01.03.2011) from 30 biggest banks were around
343 524 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, %



Figure 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 Russia



Figure 22 – Vision of innovative system structure in Russia (according to OPORA)



Report 4. Yandex Report – Development of Internet in Russia
2012
(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.


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.



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, Mbs

Major 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 a



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, MySpace



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.



Report 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.


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 Population
12-54, '000
45178,7 21771,9 48,2 23406,8 51,8 3692,2 8,2 7857,8 17,4
Internet 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 Doesn't work

Row% Row% Row% Row% Row%
Russian
Population 12-
54, '000 12558,5 27,8 9966,7 22,1 11103,6 24,6 31614,7 70,0 13564,0 30,0
Internet
Audience 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.
•



Table 4 – Russian Internet Audience (by jobs)
Russian Population
12-54 (answered the
Managers Specialist White Collars
question about
occupancy)
Row% Row% Row% Row%
Russian Population 12-54 44702,1 100,0 5678,2 12,7 10774,7 24,1 6333,3 14,2
Internet 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 Doesn't work

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 6,6
Internet 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 Russia



Report 6. Russia Online: impact of Internet on Russian Economy
2011 (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.


Figure 26 – Internet Economy in Russia, 2009

Main figures of Internet economy of 2009 • Internet impact on
are:
• 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.



Figure 27 – Structure of Internet Economy and Invesments in Russia, 2009

Main 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 2009



Russia 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 2009
Marketing 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 in
the Internet).



Figure 30 – Main barriers for more active Internet usage in 2009

Barriers (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
• Etc



Figure 31– Growth of the Internet economy (prediction up to 2015)

Main conclusions:



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 year

11 Data is not actual and updated in the Report 4. Yandex Report.



Report 7. Russia in 2011-2021: diagnosis and trend
(…to be accomplished…)



Figure 32– Russia in 2011-2021: diagnosis and trends



Report 8. OPORA’S INDEX 2010-2011 (business climate report
throughout 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.

Sample

The survey covered more than 6000 respondents in 40 regions.

Figure 33 – OPORA Survey. Structure of the sample

Figure 34 – OPORA Survey. SME Development environment Index



Figure 35 – OPORA Survey. Spread of corruption in various areas

Figure 36 – OPORA Survey. Illegal payments to government officials

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.
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%



Figure 37– OPORA Survey. Barriers for SMEs in Russia during last 2 years

Companies 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 (including
Russia). The share of SMEs that have admitted to facing difficulties or barriers in
the last two years is shown to each country. As can be seen in the figures (and
the total number of rankings is 9), in most cases Russia gets placed in the lower
half of a ranking, and in some factors is an obvious underperformer. As can be
seen, Russia is most seriously lagging behind in such areas as access to
financing, availability of skilled personnel (and highly qualified management
in particular), and the implementation of new technology.

Limited access to financing is a barrier for 38% of Russian companies, which
corresponds to the next to last position in the ranking shown for each country.
For comparison, the EU average is 21%.



Figure 38 – OPORA Survey. Barriers to business (international comparison)



Figure 39 – OPORA Survey. Barriers to SME Development

Main 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%.



Report 9. Startup Genome Report 01 (A new framework for
understanding why startups succeed)
(Source - http://www.slideshare.net/Startupi/startup-genome-report, date – May
28th, 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 money

Additional Results

1. Founders that learn are more successful: Startups that have helpful
mentors, track metrics effectively, and learn from startup thought leaders
raise 7x more money and have 3.5x better user growth.
2. Startups that pivot once or twice times raise 2.5x more money, have 3.6x
8734`better user growth, and are 52% less likely to scale prematurely
than startups that pivot more than 2 times or not at all.
3. Many investors invest 2-3x more capital than necessary in startups
that haven’t reached problem solution fit yet. They also over-invest in solo
founders and founding teams without technical cofounders despite indicators
that show that these teams have a much lower probability of success.
4. Investors who provide hands-on help have little or no effect on
the company's operational performance. But the right mentors
significantly influence a company’s performance and ability to raise money.
(However, this does not mean that investors don’t have a significant effect
on valuations and M&A)



5. Solo founders take 3.6x longer to reach scale stage compared to a
founding team of 2 and they are 2.3x less likely to pivot.
6. Business-heavy founding teams are 6.2x more likely to successfully scale
with sales driven startups than with product centric startups.
7. Technical-heavy founding teams are 3.3x more likely to successfully
scale with product-centric startups with no network effects

founder 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 than
experience or money.
10. Founders overestimate the value of IP before product market ﬁt
by 255%.
11. Startups need 2-3 times longer to validate their market than
most founders expect. This underestimation creates the pressure to scale
prematurely.
12. Startups that haven’t raised money over-estimate their market
size by 100x and often misinterpret their market as new.
13. Premature scaling is the most common reason for startups to perform
worse. They tend to lose the battle early on by getting ahead of themselves.
14. B2C vs. B2B is not a meaningful segmentation of Internet startups
anymore because the Internet has changed the rules of business. We
found 4 different major groups of startups that all have very different
behavior regarding customer acquisition, time, product, market and team.



Part 3 - Research and Analysis of Related Online Surveys

Survey 1 – Online survey “Opinion of Russian Internet audience
about 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 total


57% 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 Internet
audience 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.



Survey 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.


"Experts" (12% of respondents) - the most active and skillful Internet
audience. Information technology - a key point of their life style. They are
confident with the computer, but does not necessarily have a technical
education. Internet access to them - an opportunity to meet both individual needs
and resolve issues related to employment or professional activities.

"Working horses" (15%) - people who use the Internet primarily for utilitarian
purposes. Computers are mainly used in order to more effectively and to work
quickly to solve problems. Therefore, for them, the Internet is also primarily a tool
for a very special and vocational information. For most of them Internet has
evolved into a primary and indispensable source of information.

"Power users" (46%). For them, the Internet - is it possible to satisfy both
individual needs and resolve issues related to employment or professional
activities. Most often they use the Internet from work and concentrate on getting
useful information. A significant part of the user time just wandering around on
the web.

"Sociable" (24%) - a user-oriented social aspects of the Internet. On-line, meet
many people. They are often found at conferences that discuss social issues,
current problems. Spend a lot of time traveling, surfing the Internet. They want to
know more about the web. For them, the Internet - is primarily a place of
entertainment and leisure facilities.

"Inexperienced users" (3%) - only recently started using the Internet, so familiar
with 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.


Global Startup Platform_Market Research Report_2012

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