Crowdfunding
Another way to fund a startup not only in Russia but in many other countries is through crowd-financing. In Russia, the first platforms developed in 2011 and since then many websites have emerged that concentrate on different types of it. According to J’son and Partners Consulting the market for online crowdfunding in 2014 was around 640-700 million Rubles ($9,743,769- $10,657,248 USD). There are three types of crowd financing: crowdinvesting, “crowdlending” and crowdfunding. The difference in these three options is in what the investors get in exchange for their capital. In crowdinvesting, the investor will get some equity from the company, in “crowdlending” the person is actually lending the money, or giving out a debt, while crowdfunding means that the investor will get some kind of reward or nothing at all in exchange for their investment in the company. Nowadays the different types of crowdsourcing are split this way: 66% crowdlending, 26% crowdfunding, while 8% is crowdinvesting. The biggest online platforrms are Boomstarter.ru founded in 2011, Starttrack.ru, and Fingooroo.ru , both founded in 2014. It is interesting that the most requests for funding are submitted by technological companies (exhibit1), while only 4% of funded projects are in that category (exhibit 2). Thus it is almost impossible to fund a technological startup through crowdsourcing. There may be several reasons for that, but the biggest cause for not being able to fund a tech startup is because on average they require $20,000 more capital than projects in other categories , especially in the category of movies and videos. Crowd-investing is the newest type of funding in Russia that emerged in 2014 and throughout the year the total sum of financing was around $900 thousand dollars. Starttrack.ru actually specializes in crowd-investing and it has 199 registered investors with a potential to invest of $ 22.3 million USD. As of April 2016, the website has 29 active projects requiring investment. According to Alexander Timofeev, managing partner of Weshare (crowd-investing platform), “entrepreneurs are not educated about crowd-investing and the benefits of it. 80% of entrepreneurs who understand what crowd-investing is and how it works will choose to finance using it. But at the same time there are many problems in crowd-investing, some of which are fraud, concretely projects that are not asking money for a non-existent business. Another problem is low protection of investor by law.” Russian legal system has not evolved yet to support the development of platforms like this. Crowd-lending is the biggest sector of online crowd financing platforms. In 2014 its investments were around $7 million dollars. The amount lent is usually very small, ranging from $150-$300 . According to Olga Svyatchenko, CEO of Fingoroo, “Even though the market is far from being utilized, it is increasing because of bad financial situation in Russia and the …show more content…
The most active on the venture market is the Internet Initiatives Development Fund. It was started as a personal initiative of Vladimir Putin in 2012, however doesn’t have a defined political figure backing it up. Utilizing the strategy of Public-Private Partnerships with private investors and strategic partners, the fund focuses on the early stage seed ventures. The average investment is only $30,000, however the fund is currently invested in 122 projects. Another structure is the more marketed Skolkovo Foundation, which was created to replicate the Silicon Valley. Located right outside of Moscow, the Skolkovo Innovation Center and the Skolkovo Business School, provide support to many businesses in terms of resources, grants, deferred taxation, and networking opportunities. Many of these benefits were lobbied by Dmitry Medvedev, who initiated the creation of the business area in 2009 while he was President and continues to serve on the Supervisory Board of it. The CEO is Viktor Vekselberg, a very well know businessman who after leaving the aluminum and oil business with Leonid Blavatnik started to focus more on new technological ventures. Lastly, the biggest VC vehicle created is Rusnano, directed towards developing the Russian high-tech sector. While this vehicle had been under media pressure recently for being unprofitable, its main focus is to commercialize developments in nanotechnology. With an investment portfolio of 138.3 billion Rubles it is by far the largest structure in the startup scene in Russia and is led by an influential politician Anatoly Chubais, who was responsible for organizing mass privatization during early Yeltsin
Another way to fund a startup not only in Russia but in many other countries is through crowd-financing. In Russia, the first platforms developed in 2011 and since then many websites have emerged that concentrate on different types of it. According to J’son and Partners Consulting the market for online crowdfunding in 2014 was around 640-700 million Rubles ($9,743,769- $10,657,248 USD). There are three types of crowd financing: crowdinvesting, “crowdlending” and crowdfunding. The difference in these three options is in what the investors get in exchange for their capital. In crowdinvesting, the investor will get some equity from the company, in “crowdlending” the person is actually lending the money, or giving out a debt, while crowdfunding means that the investor will get some kind of reward or nothing at all in exchange for their investment in the company. Nowadays the different types of crowdsourcing are split this way: 66% crowdlending, 26% crowdfunding, while 8% is crowdinvesting. The biggest online platforrms are Boomstarter.ru founded in 2011, Starttrack.ru, and Fingooroo.ru , both founded in 2014. It is interesting that the most requests for funding are submitted by technological companies (exhibit1), while only 4% of funded projects are in that category (exhibit 2). Thus it is almost impossible to fund a technological startup through crowdsourcing. There may be several reasons for that, but the biggest cause for not being able to fund a tech startup is because on average they require $20,000 more capital than projects in other categories , especially in the category of movies and videos. Crowd-investing is the newest type of funding in Russia that emerged in 2014 and throughout the year the total sum of financing was around $900 thousand dollars. Starttrack.ru actually specializes in crowd-investing and it has 199 registered investors with a potential to invest of $ 22.3 million USD. As of April 2016, the website has 29 active projects requiring investment. According to Alexander Timofeev, managing partner of Weshare (crowd-investing platform), “entrepreneurs are not educated about crowd-investing and the benefits of it. 80% of entrepreneurs who understand what crowd-investing is and how it works will choose to finance using it. But at the same time there are many problems in crowd-investing, some of which are fraud, concretely projects that are not asking money for a non-existent business. Another problem is low protection of investor by law.” Russian legal system has not evolved yet to support the development of platforms like this. Crowd-lending is the biggest sector of online crowd financing platforms. In 2014 its investments were around $7 million dollars. The amount lent is usually very small, ranging from $150-$300 . According to Olga Svyatchenko, CEO of Fingoroo, “Even though the market is far from being utilized, it is increasing because of bad financial situation in Russia and the …show more content…
The most active on the venture market is the Internet Initiatives Development Fund. It was started as a personal initiative of Vladimir Putin in 2012, however doesn’t have a defined political figure backing it up. Utilizing the strategy of Public-Private Partnerships with private investors and strategic partners, the fund focuses on the early stage seed ventures. The average investment is only $30,000, however the fund is currently invested in 122 projects. Another structure is the more marketed Skolkovo Foundation, which was created to replicate the Silicon Valley. Located right outside of Moscow, the Skolkovo Innovation Center and the Skolkovo Business School, provide support to many businesses in terms of resources, grants, deferred taxation, and networking opportunities. Many of these benefits were lobbied by Dmitry Medvedev, who initiated the creation of the business area in 2009 while he was President and continues to serve on the Supervisory Board of it. The CEO is Viktor Vekselberg, a very well know businessman who after leaving the aluminum and oil business with Leonid Blavatnik started to focus more on new technological ventures. Lastly, the biggest VC vehicle created is Rusnano, directed towards developing the Russian high-tech sector. While this vehicle had been under media pressure recently for being unprofitable, its main focus is to commercialize developments in nanotechnology. With an investment portfolio of 138.3 billion Rubles it is by far the largest structure in the startup scene in Russia and is led by an influential politician Anatoly Chubais, who was responsible for organizing mass privatization during early Yeltsin