Interview with Ekaterina Dyachenko, the founder of Skolkovo business angels club, investment director of Skolkovo foundation
- Ekaterina, what inspired the Foundation to establish a club of business angels?
- Around 80% of the companies-participants of Skolkovo, which currently require external investments - that's more than three hundred projects - are in the early (seed) stage. Whereas investment funds prefer to work only with the startups that have already launched the sales of their product. In this situation, business angels could play a very important role. As a rule, companies in the early stages require relatively little money, and more importantly - they need mentoring, business contacts, and business advice. All of these are the function of business angels.
- How will the Angels' Club work?
- We work in two directions. The first one - organisation of meetings between investors and technological entrepreneurs.
Currently our portfolio has 70 to 80 of these attractive projects, ready for angel investing. On 23 July was the first meeting of the Club in Moscow, after which two companies have attracted funding. By the end of the year we plan to hold another 4 meetings in Moscow and 6 meetings in the innovative regions, from 28 September to 4 October, in the framework of the Week of the National Association of Business Angels (NABA)
The second direction is an online platform of the Club, on sk.ru, where potential business angels can communicate online, view, rated and discuss investment opportunities, at any time of the day or night, from anywhere in the world - whether sitting in their office, on a countryside terrace, or on the beach.
The staff of the Skolkovo Foundation and regional members of the National Association of Business Angels are ready to render expert assistance to novice business angels and to support initiatives of the experienced angels.
- If business angels are so important for Skolkovo, why has the Foundation started working with them only recently?
- There's a simple reason. A fairly large part of companies-residents of Skolkovo Foundation came to the innovation centre with the investments from business angels. Our market is showing a very impressive dynamics and, according to Dow Jones, has entered the five largest venture investment markets in Europe. If in 2009 the volume of venture investment in Russia was estimated by the RVC at $18 million, by 2012 it has already reached $300 million. Therefore, the time has come when we can say that Russia has a domestic venture capital market, with both supply and demand, and that individuals wishing to invest in startups now have new opportunities to "exit" from angel investments.
- Who are business angels?
A business angel is a person who is wealthy and often financially independent, who invests his or her own money in high-tech startups on the condition of their independence from him or her, in return for a minority stake. It is important that in exchange for a stake the person invests money, rather than advice or information as a consultant. It is important that the company remains independent and does not belonged to investor or his / her relative. It is important that the angel gets only a minority share, and not a controlling stake. Because otherwise this would be ownership and not angel investing.
- Are there many people in our country that meet these criteria?
- Quite a few. According to statistics, our country has from 97 to 137 thousand dollar millionaires. However, many of these have not yet tried to capitalise on the Russian innovative boom of 2009-2013, when in a short time, with initial investments from the State, venture funds, innovation companies and various intellectual property objects available for commercialisation began to spring up one by one. People carry the difficult experience of the nineties, they are afraid to show their financial capabilities. Even though these concerns have no freshly confirmed grounds, in our country one still tends to think that these kinds of risks are awaiting at every corner.
- How much, on average, does a business angel invest in technology startups?
- As an example, let's compare a Russian and, say, an American business angel. A classic American business angel is a retired ex-business owner of over 55, who sold his company and is not looking for new opportunities to earn money. At the same time, he is still quite energetic and wants to share the knowledge, contacts, and more with other businesses. On average, he invests 150 thousand dollars in one startup. As a rule, one business angel in the USA takes up three investments.
A Russian business angel is a current top manager of a corporation or an entrepreneur, who knows how to make money in business. He or she is about 40 years old, and one average the investment is 50-70 thousand dollars in one startup.
Another important point: business angels rarely invest alone. As a rule, this would be a group of investors, friends and colleagues. As a result, a company can attract more money than an average investment of a single business angel. In the West the informal groups, which from time to time invest together, are called clubs. Our Club, which already has 80 members, is also informal - without membership fees, without a chairman, without bureaucracy.
- You've mentioned that thousands of new business angels can appear in a certain period. Are there any more specific forecasts for the development of the club?
- We expect that by the end of 2013, we will have a group of 200 active potential business angels. Maybe not each of them will have time to make an investment but still their willingness and presence of the necessary infrastructure will be evident.