A RUSSIAN venture investor with US$100 million under management, described as Europe's most active seed fund, has set its sights on Singapore as its gateway to Asia.
The Internet Initiatives Development Fund (IIDF) is looking to partner firms and investors from Singapore to help its portfolio startups expand to Asia, particularly South-east Asia, China and India, said Kirill Varlamov, a general partner of the fund.
He told The Business Times on Tuesday: "Singapore is a good starting point. It has capital and strong intellectual property support and investment structure. Our strategy is to find next-level investment from here."
He, together with IIDF regional coordinator Evgeny Fell, are in Singapore this week as part of Russian president Vladimir Putin's delegation for the 2018 Asean Summit.
Speaking to BT on the sidelines of the event, Mr Varlamov said that two of IIDF's portfolio companies are conducting pilots of their technologies with two large companies from Singapore. He did not name the companies, but said that IIDF forms startup-corporate partnerships that enable big global firms to adopt new technologies and its portfolio startups, to trial and validate their products.
"In Russia, there is not enough demand from big corporations. They are still not paying enough attention to new technologies. They traditionally use their R&D (research and development) departments for innovation. But in modern markets, they can't afford to behave like that anymore."
Mr Varlamov said IIDF tries to plug this gap through education and by connecting the large enterprises to the "right startups".
He identified another gap in Russia's startup ecosystem - the lack of venture money, which is in part caused by the insufficient attention paid to startups by corporations.
But this is changing; entrepreneurial and investment activity in Russia kicked up a few notches in the last year alone, he said.
On Wednesday, IIDF signed a Memorandum of Understanding with IPOS International (IPOS-I), the international arm of the Intellectual Property Office of Singapore (IPOS).
Under the MOU, IPOS-I will give Russian enterprises, including IIDF's portfolio companies, access to strategic IP management consultancy services, bespoke patent search and analytics, and customised training programmes and workshops. In return, IIDF will offer Singapore enterprises knowledge of and access to the Russian innovation ecosystem.
This is the second time IIDF has signed a MOU with an innovation body in Singapore. In September, it inked a partnership with the Action Community for Entrepreneurship to enable startups from Russia and Singapore to access networks, markets and resources in both countries.
Asked what lessons each country could offer the other, Mr Varlamov said: "In terms of developing an ecosystem for innovation and startups, we can learn more than teach.
"In Singapore, there are a lot of institutions - government agencies, universities and the stock exchange - that are very well connected. In Russia, they are not that well connected.
"It's a cultural thing: Everybody works within their own strategies and areas; they don't always accept the idea that together, we can create something bigger."
Russia's advantage, on the other hand, lies in its large talent pool of software engineers, programmers and mathematicians, he also said.
"We have really bright mathematicians. If you know of a successful Russian startup, in most cases, there is a great mathematician behind it."
IIDF was founded in 2013 by the initiative of Mr Putin to develop Russia's Internet ecosystem. An evergreen fund, it backs early-stage startups and runs an accelerator programme. Since its founding, it has invested more than US$53 million in some 400 startups, and amassed some 250 corporate partners globally. Its current portfolio value is about US$75 million.
Among its portfolio startups is the St Petersburg-based Strafory, which has created a robot that can help firms to whittle down a pool of candidates for a post. Named Vera, the robot uses artificial intelligence to narrow down applicants based on their resumes; it can interview hundreds of applicants at the same time, either via phone or video chat. Strafory counts Pepsi and Ikea among its clients.
Another IIDF portfolio startup is Moscow-based Cinemood, a maker of portable projectors for families. All of 7cm in size, the gadget is able to stream Disney, Netflix and Amazon Prime videos any time and anywhere there is a flat surface on which it projects images up to 4m in size.
Mr Varlamov said: "We tend not to call our portfolio companies 'startups'. We call them 'scaleups'. This is by virtue of their sales volume or revenue. If you make at least US$1 million in revenue a year, you may call yourself a scaleup."