From ‘TechMafia’ to ‘Hack Temple,’ Russian investors nurture startups in Silicon valley

Last week Sberbank, Russia’s national savings bank, the Internet Initiatives Development Fund (IIDF, or FRII, Russia’s largest early-stage startup investment fund) and FortRoss Ventures (formerly known as Money Time) announced the launch of a platform called Global Pitch to help Russian tech entrepreneurs develop in the USA.

At stage one, the partners want to pick 20 project teams and put them in touch with large investors, VCs and corporations in Silicon Valley next spring.

The selection started on November 29 during Russian Startups Go Global 2017, an international conference supported by the IIDF. Global Pitch expects to introduce 60 startups to the US investor community and help them acquire international and experience.

“Our role is that of a vehicle to integrate talented Russian entrepreneurs with Silicon Valley’s advanced venture market. By investing in Silicon Valley, we bring innovation to Russia’s largest companies. By bringing Russian companies to Silicon Valley, we build ties with the local venture community,” said FortRoss Ventures Managing Partner Viktor Orlovsky.

Global Pitch project participants will be eligible for TechMafia. Behind this judiciously chosen name is a three-month acceleration program for Russian startups, including one month in San Francisco, to help them start their business on the US market.

Another support program for Eastern European startups in the USA is Starta Accelerator. Supported by Russian fund Starta Capital, this accelerator launched in New York City in 2015, providing startups with investment, workspace, and coaches. Several dozens of startups from Russia, Ukraine and the Baltic states as well have participated so far.

Toxic atmosphere

However, amid the toxic atmosphere in the USA concerning all things Russian, developing a Russia-related tech business in the country is not easy.

Pavel Cherkashin, a Russian serial entrepreneur who now manages an investment fund in the Valley, gets skeptical questions from local entrepreneurs as soon as they hear his accent, he told The New York Times.

“Prospective partners and startups invariably ask the same question: Is his money clean? I don’t think people would ask this question to a manager from another region,” Cherkashin complains.

Backed by a group of investors, Cherkashin has invested more than $11 million to turn a church in San Francisco into a tech space. He planned to call it ‘Hack Temple,’ but is now having second thoughts about the name.

Potential local tech partners worry they may accidentally get into business with the Russian government, notes Julian Zegelman, a lawyer who represents and invests in startups with Russian roots. “They don’t want to be invested or dealing with companies whose technical talent is captive in Russia,” he said.

From hysteria to business focus

Cybersecurity firms, big tech companies, government customers and large venture capital firms may also be wary about working with new Russian immigrants, in spite of their technical excellence, the lawyer added.

The New York Times reports that several Russian-born engineers claim to be treated differently socially and in their companies. Meanwhile, to protect sensitive data, some tech firms are installing tighter security measures applying to foreign-born coders specifically.

“Yet, some startups and small investment firms are more interested in Russian talent now,” Zegelman believes.

Russian entrepreneurs should not feel intimidated or discouraged, and focus on the business perspective, said Katya Dorozhkina, co-founder of Starta Accelerator, in a media interview earlier this year.

“Since we’re a business accelerator that brings in strong tech companies that then become US companies, as far as American investors and others in the business are concerned, this is all about making money. If the investor is smart and understands where the money is, they don’t care about politics,” she believes optimistically.

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