How can a Russian startup overcome Death Valley?
43 minutes, at the Office Developers conference in February, Bill Gates presented the Xobni start-up product (Inbox, on the contrary, the Outlook plug-in). Now Microsoft is negotiating the purchase of the company for $ 20-30 million, and shortly before the conference Xobni became a graduate of YCombinator. Another “success story” of this program.
YCombinator - perhaps the most successful and well-known of business programs. With investments up to $ 20 thousand. some of its graduates showed fantastic returns of 200-300 times (for example, Zenter, which was sold for $ 6M Google or Reddit - sold for $ 3M Conde Nast) for a company of 5-10% ownership, most graduates attracted the next round of investment ( Loopt - $ 5M, Scribd - $ 3M, etc.)
The success of the business model inspired us. On August 10, we launch the AddVenture program. This is a “dynamic development program”, and not an “incubator”. The problem of incubators in Russia is their number, or rather their inefficiency and the discrepancy between the resources provided and the real needs of entrepreneurs. Start-ups need contacts of investors, experts and first clients, help in forming teams, in business development, and not an accountant, printer and cooler.
The main task of AddVenture, as we formulated it for ourselves, is to help overcome the “Death Valley” - a start-up development period in which venture capital investments are not yet available, because the product is not tested by the market, the team did not work out, there are no sales, the cash flow is negative and the risks are too great for the funds.
In the west, this “structural hole” is silenced by business angels, in Russia the class of these investors is in the process of formation and institutionalization. So, at the stage of investing $ 100K-1M - the “dead zone”, other players should appear.
The AddVenture model of work is determined by 4 main tasks of the IT start-up at the beginning of the journey:
1. Create a beta version or prototype.
This allows you to remove technical risks, check the technology. Check team performance. Justify further investments and performance in the business plan. And finally, to show the product to the investor in order to cause him an emotional wow-effect. For example, the project 8aweek.com during the presentation to investors YCombinator in real time showed the functionality of its service.
2. Achieve first sales or enter into agreements of intent.
Getting the first partners, testers or customers is important not only because of cashflow receipts, but also for real field testing of the product. For software companies, it is especially important to focus on the opinions of real users, rather than on their own guesses and add features to them gradually, rather than trying to develop the final product right away.
Real data on the need, willingness to pay will allow to justify the calculations for the investor. In addition, sales allow you to check the real involvement and ability of the team, because transactions can be closed for a long time.
3. Form an involved team.
One of the most effective and dynamic start-up teams was formed by Maxim Levchin in the PayPal payment system (sold for $ 1.6 billion). According to Fortune, “They came, they ate shit food all day and slept under their desktops.”
Max Levchin hired ambitious workaholics like him without an MBA, consulting experience and wealthy parents who are able to speak several foreign languages ​​and know mathematics well.
An unusual selection method brought results. PayPal has assembled an outstanding team with atypical thinking. Subsequently, PayPal Mafia founded many start-ups (Slide, SpaceX, Yelp, Geni, LinkedIn, Tesla Motors, Solar City, Kiva.org, etc.), invested in Facebook, YouTube, Digg, etc.
4. Develop dynamically. The countdown has gone.
Slow development is the most dangerous signal for an investor, it means that either the team does not know how to overcome difficulties, or is not focused on doing business, but has a different motivation (lifestyle, building a personal brand, research).
The only certainty in the start-ups - "everything goes wrong." It is known for certain that a business plan will become obsolete before the ink dries. So, you need to be able to adapt and play outside your “comfort zone”, to be able to find solutions.
Development is necessary because competitors do not sleep. The barrier of many IT companies is the number of users and the high cost of switching to a new service. This means that most often the first player who offered the right solution to the problem gets users and, as a result, a big “premium” to the company's evaluation (Facebook leader is 15 billion, clone sites can only dream of similar numbers). The first player removes the cream, and the rest remain at the bottom of the list.
AddVenture
AddVenture helps you accomplish these tasks and take the first step of traveling a thousand li from idea to a Fortune 500 company.
The program teams are given the necessary resources: $ 10-50 thousand of investments, working space and negotiation and main resource - “smart money” - constant development assistance, feedback from program managers, experts and successful entrepreneurs (skype-conferences, dinner once a week ).
The selection of 8-10 projects for AddVenture will take place on August 3 at iCamp - the most unusual 4-day conference in the Moscow region for 500 bloggers, Internet researchers and web gurus. The requirement for the winners is to move the majority of the team for the time of the program to Moscow (an office in the Technopark of Moscow State University) or Troitsk in order to keep abreast of and really add value. Troitsk is a scientific cluster with a multitude of programmers, 15 km from Moscow, without traffic jams, with cheap housing and a ready-equipped equipped room of a local incubator.
AddVenture forms an active environment with positive (seed funding, publicity, access to investors and a pool of experts, entrepreneurs) and negative incentives (tightly limited time, competition).
Each start-up team has a clear goal - a quick start (creating a beta or a prototype) and should be developed dynamically, because Presentation to investors will be held in 3 months. A start-up modifies the vision of a business, formulates a strategy and business model, examines customer needs and existing solutions on the market.
The AddVenture team keeps a “hand on the pulse” of projects and brings a deep knowledge of innovative business, because everyone has experience creating start-ups. We attract experienced investment experts - A. Dvornikov (President of AmBAR), V. Dolgov (head of Google-Russia), N. Mityushin (ABRT), serial entrepreneurs - A. Sergeev (DataMash, Sundera, Epsylon, etc.), R. Mandrik (Xan, TV-Click, ArtyTalk) and others. Our technology experts are such IT companies, partners of Troitsky Incubator, such as Sun Microsystems, Google Inc., IBM Development Center, R-Style, RBC, NCC, CROC, Aichi, Ai-Teco.
Program partners: AmBAR is the association of 3000 Russian professionals in Silicon Valley and venture funds: they expand the expert network and act as potential investors, the source of projects.
At the end of the program, “Investor Day” is held - the projects are presented to venture funds, angels, and the press. The dynamic development of the best projects, the results achieved, the formed teams will positively highlight the AddVenture projects from a number of other start-ups.
As a result of dynamic work within 3 months, the foundations are laid for the future of a successful business. And companies that left AddVenture are a cut above other start-ups, because first results were achieved in them (agreements of intent were signed, a demo version or product prototype was made, first testers, customers or partners were involved, a team was formed, etc.)
YCombinator - perhaps the most successful and well-known of business programs. With investments up to $ 20 thousand. some of its graduates showed fantastic returns of 200-300 times (for example, Zenter, which was sold for $ 6M Google or Reddit - sold for $ 3M Conde Nast) for a company of 5-10% ownership, most graduates attracted the next round of investment ( Loopt - $ 5M, Scribd - $ 3M, etc.)
The success of the business model inspired us. On August 10, we launch the AddVenture program. This is a “dynamic development program”, and not an “incubator”. The problem of incubators in Russia is their number, or rather their inefficiency and the discrepancy between the resources provided and the real needs of entrepreneurs. Start-ups need contacts of investors, experts and first clients, help in forming teams, in business development, and not an accountant, printer and cooler.
The main task of AddVenture, as we formulated it for ourselves, is to help overcome the “Death Valley” - a start-up development period in which venture capital investments are not yet available, because the product is not tested by the market, the team did not work out, there are no sales, the cash flow is negative and the risks are too great for the funds.
In the west, this “structural hole” is silenced by business angels, in Russia the class of these investors is in the process of formation and institutionalization. So, at the stage of investing $ 100K-1M - the “dead zone”, other players should appear.
The AddVenture model of work is determined by 4 main tasks of the IT start-up at the beginning of the journey:
1. Create a beta version or prototype.
This allows you to remove technical risks, check the technology. Check team performance. Justify further investments and performance in the business plan. And finally, to show the product to the investor in order to cause him an emotional wow-effect. For example, the project 8aweek.com during the presentation to investors YCombinator in real time showed the functionality of its service.
2. Achieve first sales or enter into agreements of intent.
Getting the first partners, testers or customers is important not only because of cashflow receipts, but also for real field testing of the product. For software companies, it is especially important to focus on the opinions of real users, rather than on their own guesses and add features to them gradually, rather than trying to develop the final product right away.
Real data on the need, willingness to pay will allow to justify the calculations for the investor. In addition, sales allow you to check the real involvement and ability of the team, because transactions can be closed for a long time.
3. Form an involved team.
One of the most effective and dynamic start-up teams was formed by Maxim Levchin in the PayPal payment system (sold for $ 1.6 billion). According to Fortune, “They came, they ate shit food all day and slept under their desktops.”
Max Levchin hired ambitious workaholics like him without an MBA, consulting experience and wealthy parents who are able to speak several foreign languages ​​and know mathematics well.
An unusual selection method brought results. PayPal has assembled an outstanding team with atypical thinking. Subsequently, PayPal Mafia founded many start-ups (Slide, SpaceX, Yelp, Geni, LinkedIn, Tesla Motors, Solar City, Kiva.org, etc.), invested in Facebook, YouTube, Digg, etc.
4. Develop dynamically. The countdown has gone.
Slow development is the most dangerous signal for an investor, it means that either the team does not know how to overcome difficulties, or is not focused on doing business, but has a different motivation (lifestyle, building a personal brand, research).
The only certainty in the start-ups - "everything goes wrong." It is known for certain that a business plan will become obsolete before the ink dries. So, you need to be able to adapt and play outside your “comfort zone”, to be able to find solutions.
Development is necessary because competitors do not sleep. The barrier of many IT companies is the number of users and the high cost of switching to a new service. This means that most often the first player who offered the right solution to the problem gets users and, as a result, a big “premium” to the company's evaluation (Facebook leader is 15 billion, clone sites can only dream of similar numbers). The first player removes the cream, and the rest remain at the bottom of the list.
AddVenture
AddVenture helps you accomplish these tasks and take the first step of traveling a thousand li from idea to a Fortune 500 company.
The program teams are given the necessary resources: $ 10-50 thousand of investments, working space and negotiation and main resource - “smart money” - constant development assistance, feedback from program managers, experts and successful entrepreneurs (skype-conferences, dinner once a week ).
The selection of 8-10 projects for AddVenture will take place on August 3 at iCamp - the most unusual 4-day conference in the Moscow region for 500 bloggers, Internet researchers and web gurus. The requirement for the winners is to move the majority of the team for the time of the program to Moscow (an office in the Technopark of Moscow State University) or Troitsk in order to keep abreast of and really add value. Troitsk is a scientific cluster with a multitude of programmers, 15 km from Moscow, without traffic jams, with cheap housing and a ready-equipped equipped room of a local incubator.
AddVenture forms an active environment with positive (seed funding, publicity, access to investors and a pool of experts, entrepreneurs) and negative incentives (tightly limited time, competition).
Each start-up team has a clear goal - a quick start (creating a beta or a prototype) and should be developed dynamically, because Presentation to investors will be held in 3 months. A start-up modifies the vision of a business, formulates a strategy and business model, examines customer needs and existing solutions on the market.
The AddVenture team keeps a “hand on the pulse” of projects and brings a deep knowledge of innovative business, because everyone has experience creating start-ups. We attract experienced investment experts - A. Dvornikov (President of AmBAR), V. Dolgov (head of Google-Russia), N. Mityushin (ABRT), serial entrepreneurs - A. Sergeev (DataMash, Sundera, Epsylon, etc.), R. Mandrik (Xan, TV-Click, ArtyTalk) and others. Our technology experts are such IT companies, partners of Troitsky Incubator, such as Sun Microsystems, Google Inc., IBM Development Center, R-Style, RBC, NCC, CROC, Aichi, Ai-Teco.
Program partners: AmBAR is the association of 3000 Russian professionals in Silicon Valley and venture funds: they expand the expert network and act as potential investors, the source of projects.
At the end of the program, “Investor Day” is held - the projects are presented to venture funds, angels, and the press. The dynamic development of the best projects, the results achieved, the formed teams will positively highlight the AddVenture projects from a number of other start-ups.
As a result of dynamic work within 3 months, the foundations are laid for the future of a successful business. And companies that left AddVenture are a cut above other start-ups, because first results were achieved in them (agreements of intent were signed, a demo version or product prototype was made, first testers, customers or partners were involved, a team was formed, etc.)
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Source: https://habr.com/ru/post/29942/
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