What’s Ahead for Russian Startups?

RBTH publishes an annual rating of tech companies with the most potential on the international market. Which startups made it into this year’s Top 50?

As the country’s economy continues to shrink, some of the hottest tech startups are targeting foreign investors and consumers, looking for access to international markets.

Success abroad and at home

Russian tech companies that plan to expand abroad have greater chances to secure investment even within the country, according to Vasily Belov, senior vice president for innovation at the Skolkovo Foundation, an organization that supports the transfer of local technology to the international market.

Venture funds are keen to work with Russian startups that want to take their products and services to foreign markets

Dmitry Kalaev, director of accelerator programs at the Russian Internet Initiatives Fund, agrees with Belov’s point noting that investment depends on the state of startup development. “There are those who already are successfully operating abroad for several years, as well as companies that just started their international expansion this year. The first group has already attracted the attention of international customers. Now they have to prove their potential to foreign investors.”

Among the success stories are space technology company Dauria Aerospace, which has already attracted $70 million to develop and launch 10 satellites to monitor life in some of the largest cities in the world, and Tesla Amazing, which raised almost $250,000 via crowd-funding in 2015 and secured an exclusive distribution deal from the largest office supply retailer in the U.S for its product Magnetic, an innovative sticky note.

But there are many other Russian startups that have a long way to go to prove to foreign investors and customers that their ideas are working.

Looking for the “hacks”

Alex Romanenko, CEO and founder at 2for1, a Russian-Ukrainian startup that aggregates the best sale deals of the most-visited online stores in the U.S. and Europe, said that some of the challenges facing Russian startups breaking into foreign markets are the same any young company would face.

“In a smaller market you have to focus on grabbing the entire market; in a bigger one you have to differentiate from the competition,” Romanenko said.

You are competing with tens of thousands of sites and apps, from multi-billion dollar corporations with marketing budgets of over $10 million per month, to highly aggressive startups with hungry and smart teams

“The main difficulty for Russian startups trying to succeed abroad is a lack of personal connections that local startups have built up for years. Also, we don’t have the same knowledge of specific characteristics of the local market. Basically, we have to build everything from scratch.”

Romanenko said that 2for1 has several strategies for overcoming these difficulties. “We are growing our business network and looking for so-called ‘hacks,’ which help us grow with a limited budget,” Romanenko explained. “We also found local advisors from multi-billion dollar corporations who help us tackle the challenges.”

Not impacted by politics

This year’s top startups can look to the success of their predecessors for inspiration. Last year, a number of Russian tech startups were recognized internationally. N-Tech.Lab won a global challenge in face recognition algorithms organized by the University of Washington, beating more than 100 other systems, including one created by Google. Astro Digital, a platform for accessing satellite data, took second place at Slush, one of the largest events for high-tech companies in Europe.

“Recent international tensions have not impacted Russia’s excellent reputation for tech talent, and Russians still win international programming contests, and develop hi-tech products that sometimes are international hits,” said Adrien Henni, editor at East-West Digital News, a media outlet dedicated to the Russian digital industry.

Startup founders say they do not face discrimination for political reasons. “Our company is registered in the U.S., and our lawyers and bank are based there,” said Daniel Pavliuchkov, CEO and founder at Mailburn, a new email technology service.

The fact that our team is based in Russia doesn’t bother anyone, especially the users

RBTH announces Top 50 Startups

The past two years have been a challenging time for the Russian economy, but a new generation of tech startups are fighting to overcome these challenges and expand into international markets. RBTH is proud to be a part of this dynamic process through its annual Top 50 Startups rating.

The Russian Startups Rating system is based on a number of criteria, including Audience Interest; Unique Idea; Commercial Potential; and Social Impact.

During the selection process, the startups had to satisfy certain requirements, showing its appeal for the international market. To see the RBTH Top 50, please go to: startups2016.rbth.com

Standards of beauty, by A.I.

Moscow-based Youth Laboratories may be best-known as the first company to hold a beauty contest for humans — judged by robots. In November 2015, Youth Laboratories organized “Beauty.AI the first-ever beauty contest with a jury made up of artificial intelligence.

Participants uploaded selfies and basic biographical information — age, sex, height, etc. — to the Beauty.AI mobile app for iOS and Android.

The selection of the most beautiful faces was made by three robots, each using a different algorithm. The RYNKL algorithm estimated the number of wrinkles in participants’ skin compared to their age group; amother algorithm, MADIS (Model Alliance Digital Intelligence Scout) compared the similarities of each person’s features with those of famous actors and models; and the symmetry evaluation algorithm assessed face structure.

Finally, the algorithms chose 10 men and women as the winners in five age categories. They received prizes and earned the right to call themselves the first people in history whose beauty was determined by artificial intelligence.

Youth Laboratories’ main goal is to solve the problem of aging, according to company founder Alexei Shevtsov. He considers the robot-judged beauty contest one step towards this goal. “Our company specializes in machine-learning technologies that can analyze digital images of skin in order to identify biomarkers of aging and make a general analysis of a person’s health,” Shevtsov said.

The company’s employees are specialists in biology and deep-learning algorithms, who combine their expertise.

In addition to the robot-judged beauty contest, Youth Laboratories marked a number of other milestones in its first full year of operations. The company secured $12,000 to develop its first app and signed several contracts with medical companies in Europe and the United States.

The company’s next challenge is to teach a computer to determine the condition of a person’s health based on their face. The startup is already negotiating with private clinics in Moscow to market this technology.

Victoria Zavyalova
Discover more at rbth.com

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