Rocket Internet Is Heading North - Launches CupoNation in Finland With Norway And Russia Next On The List
Rocket Internet is one of those companies that create a lot attention and there are mixed feelings about what they do. However, it is hard to argue with their success, as most of the companies that are a part of Rocket Internet are largely highly profitable.
EBRD Report: Russia Scores Poorly In International Innovation Rankings; Government’s Top-Down Approach Shows Mixed Results
The European Bank for Reconstruction and Development has just issued a 96-page report on the Russian economy. The report takes a detailed look at policies that can help achieve the country’s economic diversification.
“Ending [the Russian economy's] heavy reliance on exports of oil, gas and minerals, [is] a very specific and difficult challenge,” the report states, with two chapters dedicated to the development of innovation and related issues.
Here are some excerpts from the report.
- In terms of innovation, Russia has continued to lag behind other countries – advanced ones as well as leading emerging markets.
The Russian Ministry of Education and Science has announced the start of a public debate over this country’s new long-term intellectual property (IP) protection strategy, portal Science and Technologies Russia reportedearlier this week.
The document is reported to have accumulated opinions and suggestions from Russia’s leading experts who represent VC funds, venture companies and larger corporations, and offers a set of draft rules to regulate the national IP market and foster the creation of this country’s competitive economy based on knowledge and high technology.
The Helsinki region is a natural gateway from Russia to the EU, and Russian companies are finding a new home in the Greater Helsinki region. We spoke with Olivier Bonfils, Senior Business Advisor at Greater Helsinki Promotion, where they determined the three main drivers why Russian companies move to Greater Helsinki Area. A few of the reasons seem obvious to anyone that has done business in Finland, but one factor was surprising, to say the least. They determined that first, Helsinki is an easy gateway to European markets. Second, in Finland you have access to an innovation environment that can provide easier conditions to do research and development. And third, for many Russian companies Finland is a good place to do production and assembly of their products.
Looking for a fitness instructor, plumber, or hairdresser? Need an appointment with a doctor or want to hire a performer? You will probably find the professional or small business you need using one of the eight service marketplaces of Eruditor, a startup that claims to have served 300,000 users since its launch in 2007.
“Eruditor’s vertical platforms – some of which are more advanced than their US analogs – are tapping into markets which can represent billions of dollars in Russia alone,” Intel Capital Russia Director Maxim Krasnykh said in an exchange with East-West Digital News.
The fund has just led a Series A round of $4 million with the participation of Runa Capital, a Moscow based international venture fund, in exchange for a minority stake in the Moscow-based startup.
An estimated forty-three percent of Russian employees use unlicensed copies of software at work, copies that in a majority of cases were installed by their employers, revealed a survey conducted by Russian online job site HH.ru earlier this month. Employers’ greed is the main culprit, according to the respondents, who suffer from a range of negative consequences, from software or system errors to functional limitations to update restrictions.
However, the survey also revealed that, compared to two years ago, a growing number of employees now use legally licensed software.
One thing I think we should all be surprised about is how few startups in the Nordics go after the Russian market. Startup opportunities abound. Russian internet services haven't quite matured meaning there are still holes to fill and a growing market to take advantage of. On top of that, huge funding round numbers are thrown around all the time, hinting at massive valuations and future payouts.
We have a cross-publishing agreement with East West Digital News, and every now and then we'll try to add in a story from Russia. They have some interesting analysis that we share, but I also try to pick out the big funding stories to show what's happening in the region.
While visiting Russia for the first time earlier this week, Facebook’s founder paid a visit to Prime Minister Dmitry Medvedev after meeting with unidentified IT businessmen and technical teams.
A high tech aficionado, Medvedev – who served as Russia’s President for four years before becoming Prime Minister last March – personifies the Russian government’s effort to develop innovation in the country. So far, however, Medvedev has failed to update his work status on his own Facebook account, where he still appears as President.
“The conversation was very good,” the Russian news agency RIA Novosti quoted the Prime Minister’s spokesperson Natalya Timakova as saying. “[Mr Zuckerberg and the Prime Minister] discussed Facebook’s potential presence in Russia not only as a social network, but as a company that works on cutting-edge products.”
Young Russian film makers, musicians, fashion designers, game developers and tech innovators are now offered a new way to raise the early stage financing they need. Several Russian language crowdfunding platforms have been developed lately, allowing would-be creators and entrepreneurs to advertise their projects and secure financing based on Internet users’ micro donations.
Backers are rewarded in various ways, from receiving a slice of the revenues generated by a successful film or music album to being able to enjoy the pre-release edition of a new product.
Only a few weeks after its launch, the newest of these platforms, Boomstarter.ru, is hosting hundreds of projects. For some of them, crowdfunding has exceeded expectations: a cartoon named ‘My Heart‘ has received 89,000 rubles, almost $3,000, or 149% of the sum that had been requested, 11 days before the deadline that had been set for receiving donations.
Yandex, the NASDAQ-listed Russian Internet search giant, intends to lauch its own browser later this year or in early 2013, the Russian business daily Vedomosti learned last week from industry sources.
In addition to the standard web version, the Yandex browser would be made available for mobile devices under iOS and Android operating systems.
Silicon Valley isn't the only place where we see huge numbers thrown around. In Russia, the online video service ivi.ru recently closed a $40 million funding round led by Baring Vostok, a private equity firm. Other investors inculde ru-NET Ltd., Tiger Global, Prof-Media, and Frontier Ventures.
The site is bringing movie and TV streaming to Russia, much like Netflix has done in the U.S. and UK. This news is interesting to put in to context with Netflix and HBO's plans to bring a streaming service to the Nordics by the end of this year, which is a safer bet, but much smaller market by comparison.
While Russia has the most internet users out of any European country, the adult population is still just getting online for the first time. A 2011 poll found that only half of all adults in Russia use the internet monthly, an increase of 15% from the year before.
These new internet users (and some experienced ones) haven't built up a healthy dose of cynicism when browsing the web. "Free Viagra? This looks legit," they think. But now, Russian internet powerhouse Mail.Ru group has launched a new version of its browser that integrates Helsinki-based Web Of Trust's crowdsourced website reputation rankings.
The Sunnyvale, California headquartered Plug and Play Tech Center officially opened its Moscow branch last month in partnership with GVA, a venture investment company that bridges California with emerging markets.
After multiple official speeches and presentations, the grand opening event featured a startup battle, already quite a familiar format for the Russian tech community. Travolver, a trip planning startup, won first place and was granted an internship and an option for joint investment from GVA and Plug and Play.
Right after the event, Jena Wuu, Plug and Play’s International Relationship Manager, gave East-West Digital News a wider perspective on the tech business accelerator’s concept and goals.
Yandex, Russia's largest search engine, has invested an undisclosed amount in Seedcamp, the London-based incubator. Seedcamp's sponsors include internet giants like Google, Microsoft, and PayPal, but this is the first time a major company has hopped on board as an investor. The company therefore gains an indirect share in all of the participating countries, and will participate in the selection of the startups.
Those of you who pay attention to other tech news sources may have heard of the controversy surrounding the app "Girls Around Me," which took location-based checkins to a creepy level, allowing you to see grabbed public check-ins from Facebook and Foursquare of girls that are around you. Apple has since removed the app from the app store.
The startup was funded by i-Free, a St. Petersburg based venture fund, which we covered the funding of last July. The app itself was created by a team at a startup company called Places By Me, which aimed to help people find the more popular leisure venues. But rather than sticking to its model, the application pivoted to the Girls Around Me angle, which the company and i-Free claims had no particular gender bias.
On Wednesday, Vimpelcom, a major Russian mobile operator, announced it will deploy the NFC-based contactless payment system it implemented in St. Petersburg last year within the Moscow subway. Widespread commercial launch in Moscow is scheduled for the end of the year.
While most offline and online purchases made in Russia are still paid in cash, contactless payment experiments have been flourishing in several Russian cities over the last two years. Last October, Megafon, another leading operator, also launched NFC payments in the St. Petersburg subway, in addition to using the system for loyalty programs with several local banks and retailers.
Two years after the Groupon fever hit Russia in March 2010, Leonid Gluzman, the founder of daily deal site aggregator Zina.ru, recalls the history of this thriving industry and shares its key figures and trends for the future. This interview is an excerpt from an in-depth research paper on Russian e-commerce that will be released next month.
How many daily deal sites are there in Russia today and who are the leaders?
In Russia, there are approximately two hundred such sites today. The two leaders are Biglion and Groupon Russia, with an approximate turnover last year of 3.8 billion rubles, or approximately $126 million, Biglion being number 1 with 2.2 billion rubles, or $73 million. Then you have a number of rather strong sites, including Vigoda.ru, Kupikupon.ru, Kupibonus.ru and Bigbuzzy.ru, whose monthly turnover can reach 50 million rubles, or $1.6 million.
Among US business angels, Esther Dyson is probably the one who has invested the most to date in Russia. Her portfolio includes no fewer than 15 Russian startups as well as Yandex, the search giant which she advises as a member of its board of directors.
In this exchange with East-West Digital News, Esther Dyson speaks openly about her business successes and failures. She also reveals why she considers Russia her “second country,” and why she thinks that information technologies could bring a better future to Russia by “reducing the cost of being honest.”
Is Russia becoming a new frontier for US venture capitalists? With local startups and incubators springing up like mushrooms, a number of foreign tech investors have started to operate in the country, which is striving for modernization.
Exemplifying the invest in Russia trend is Tiger Global Management, a New York-based international investment management firm. Over the past two years Tiger has invested twice in the Russian e-commerce platform Wikimart.ru – $5 million in 2010 and another $7 million in 2011 – and contributed $10 million in a round of financing for online travel sales site Anywayanyday.ru.
In an unprecedented experiment to ensure election transparency, most of Russia’s 94 300 polling stations were equipped with webcams offering a live broadcast of the recent voting.
The broadcast, which started at midnight, Moscow time, on election day, ended after all vote counting operations were completed. It was followed by up to 400 000 simultaneous Internet users on a dedicated website, Webvybory2012.ru. As many as 1 600 operators were hired to support a toll-free hotline to answer questions from site users and receive their feedback about technical problems.
In a renewed round of innovation cooperation in the post-Soviet area, the Skolkovo Foundation, the Russian organization in charge of building a world-class technology hub near Moscow, is expected to start screening and funding technology start-ups from the neighboring CIS countries.
The CIS Economic Council will vest the Foundation next month with full powers to run a ten-year interstate collaboration program, the Armenian Mediamax news agency reported.
Online advertising spending surpassed print advertising for the first time in 2011, the Russian Association of Communication Agencies (AKAR) annnouced in its annual report, published this week.
According to the report, the Russian online advertising market reached $1.4 billion, up 56% from 2010, demonstrating the fastest growth among the different segments of the market. In 2010, online advertising spending had grown by 42%.
Print advertising represented $1.36 billion in 2011, up 6% from 2010, while TV advertising grew by 18% to $4.4 billion. Total advertising spending increased by 21% to $8.85 billion, an impressive growth rate despite a slowdown in Q4.
Russian business daily Kommersant reported from unnamed sources on Friday that VTB Capital has invested $10 million in Oktogo.ru, a leading Russian online hotel booking startup, in exchange for a stake of 30 to 35 percent in a capital increase operation. VTB Capital declined to confirm or comment.
Founded in 2010, Oktogo now shows daily traffic reaching 18,000 users on average and up to 25,000 on peak days, project founder Maria Kolesnik told Kommersant. Oktogo’s revenues reached $10 million in 2011 and Kolesnik expects them to triple in 2012.
Gecko Systems is a Finnish technology company that has taken an out-of-the box approach to location based services and markets. Instead of thinking of the obvious (which by Nordic standards usually means Western markets, USA, etc.), they have turned east towards Russia and their solutions, namely Glonass, a competitor to the GPS (Global Positioning System).
Apple with the release of Siri for the iPhone 4S has had everyone praising the feature. It is no doubt a great addition to the iPhone, perhaps the only notable one in the new generation of the iPhone. While that goes for the iOS devices, there is one for the Android, Speaktoit. The application comes from Russia and is in for a challenge from Siri and Vlingo.
There is a need for virtual assistants and to be honest, with Siri in the playground we will definitely be seeing a rapid increase in improved versions. I tried my hands with Speaktoit and it does the job fairly well. You can ask questions or commands directly to the Speaktoit assistant on your Android device and the client processes the same, executing what is being requested. Of course this requires that your commands be specific enough for it to recognize and execute.
I talked to Marina Treshchova, CEO of Fast Lane Ventures, a Moscow based early stage venture capital firm a few weeks back about the investment market in Russia. Fast Lane Ventures is quite a young investment company, but during their 18 months in operation they have invested in almost 1 company every month. Treshchova summed up the situation that there are so many opportunities in Russia at the moment that they have to run really fast.
In this day and age, what could be worse than making a phone call to arrange a taxi? It sounds too much of a hassle, and while it might be effective for many, the concept sounds too medieval. This is just my personal opinion, but gladly some firms are keen at bringing Cab facilitation online. The idea is to help ease the task for arranging taxis via one single destination. Yandex has started doing exactly that.
The Russian online giant is leveraging its popularity online in Russia to launch a Yandex Taxi Search Service. Yandex.Taxi sends request for booking a cab to all taxi services and accelerates the process of finding a cab for travellers. To start off, Yandex.Taxi has succeeded in partnering with 11 Taxi Service providers. Currently this service is just in beta and the operations are limited to Moscow alone.
Yandex has had an eventful year: it rolled out a whole set of new features, invested into quite a few start-ups and enlisted on NASDAQ, raising almost $1.5 billion. Though after the initial hype of the IPO their shares were in decline. According to Q3 financial results released this week, the company is doing very well.
Their revenues jumped 65% from last year to $161.9 million and their net income grew a staggering 93% over the last 12 months reaching $53.5 million. However, their share of the Russian search market slightly dropped from almost 65% to 62.7%. Lost market share went to Google, who is trying to grow their market share in the region with the help of their browser, Chrome (popular especially among young people). Though, as Arkady Volozh, Yandex's founder and CEO retorted to Reuters: 'In the long run, clear market leadership is more important to financial performance than the magnitude of that lead which is likely to fluctuate over time'.
Geolocation services are on the rise: more and more start-ups are building applications around check-ins, places, events and social media. Hyperclap, a Moscow-based start-up, decided to join the trend and offer their take on how best to combine all those aspects in one app. Their iPhone app lets you follow locations like bars, restaurants and clubs and instead of checking-in to those places users report from locations through messages and photos. The idea behind Hyperclap is to give a tool for movers and shakers to see what's happening in their favorite locations when they are there or when they are away. The app also generates trending spots to display the most popular places in towns.
This news is already a bit outdated by internet standards, but important nevertheless. Yuri Milner, the billionaire chairman of Mail.Ru has sold $59.5 million worth of Mail.Ru stock through his DST Global company. The sale happened towards the end of September, Forbes reports.
The move is significant for a few reasons. Firstly, the company went public in November 2010 so selling so much of his personal stake in the company so soon isn't a very good signal to the market. Furthermore, the stock has been heading downhill more or less since the IPO and this sale further pushed the stock down that day.