VCs to Russian Tech Firms: “Go Global”

A fascinating discussion between the heavyweights of Russian tech and venture capital (including a former Soviet defence researcher) started and ended with one simple message: there is no such thing as a local market.

There are several challenges for Russian companies that want to go global. If you only have offices in Moscow, you lack access to the local knowledge of your counterparts with offices in multiple countries, said Leonid Boguslavsky, chairman of RuNet. According to Andreas Haug, general partner at eVenture Capital Partners, European companies won’t touch a company with offices in a Russian town they’ve never heard of. Even though one of his companies sold code to Amazon, the British wouldn’t go near it until they had shifted HQ to the US and established a subsidiary in London. “Now we have Tesco,” he said. And people have this image of Russian businessmen as connected to the mafia, said Boguslavsky.

These are all real obstacles to going global. But, the panellists stressed, if start-ups want to be successful and relevant in the world of tech, they don’t have much of a choice but to go out and conquer.

Edouard Cukierman said there were still a few things standing in the way of Russia becoming a start-up nation like Israel. Both have high-level education and universities, strong government support, an expanding tech sector and a strong defence industry, which is where many future start-ups come from. But what Israel has and Russia lacks is access to international financial markets, entrepreneurial spirit and transparency in government. Once Russia can rely on these three things, it will be able to achieve its goal of being an international tech hub.

Already, Russians are beginning to spread out. The secret may be to start not in America and Europe, which have mature tech industries, but in emerging markets. With experience in Russia, which is somewhat advanced, firms that go to countries such as India can see what has to be done. In Boguslavsky’s words, it’s like knowing what will happen in five years. What more could any tech firm ask for?