There’s an identity crisis in the world of Russian startups.
Too many young entrepreneurs are failing to define themselves clearly enough for investors, threatening to put the brakes on the development of new business, a U.S. startup accelerator has told sk.ru.
“What we’re experiencing with Russian startups is that when it comes to understanding who they are, what they do and why they’re doing it, there’s a lack of clarity,” said John Harthorne, CEO of U.S. startup accelerator MassChallenge, a non-profit organization based in Boston.
Skolkovo's startups attending pitch training sessions in Moscow
He spoke to sk.ru on the sidelines of an accelerator program in Moscow tailored for a dozen Skolkovo resident startups, some of which proved his point - painfully - in dry-run product pitches.
“Too often Russian businesses focus on the ‘what,’ without giving any thought to ‘why,’” Harthorne said.
“They need to understand that investors make decisions emotionally, and rationalize that decision later. They need to peg their product to an idea, a feeling, an emotion - the kind of things we all have inside us - and make that the start point for their pitches,” he added.
Harthorne pointed to Apple as an example of a company that sells a lifestyle first and the product itself almost as an afterthought.
Harthorne
“Don’t get me wrong, Russian entrepreneurs have incredible skills. Great math skills, great history knowledge, languages – so talented and capable. Russia’s also great at art, it’s great at poetry. It has a very powerful soul but the soul has become disconnected from those skills,” Harthorne added.
Harthorne, who calls himself an “entrepreneurial evangelist,” controls millions of dollars’ worth of grant money that MassChallenge attracts from sponsors. The organization issues grants with no strings attached and no equity taken in return, in any industry in any country.
Russia is no slouch when it comes to entrepreneurial potential, says Harthorne, whose wife is Russian.
“Russians have learned to take things into their own hands and fix things for a long time,” he said.
“They’ve already developed a lot of these entrepreneurial skills to solve these problems. … So I think the mentality is right, the infrastructure is missing and just beginning to be put into place.”
So where do systems like Skolkovo fit into the picture?
“Skolkovo’s a good start, but ultimately you need more than one entity doing it, so you need more diversity. I think it’s a worthwhile effort and it will have an impact.”
“There’s incredible hidden talent in Russia that’s not being efficiently used,” Harthorne said.
Skolkovo was set up in 2010 by then-President Dmitry Medvedev with a mandate to reduce Russia’s dependence on oil and gas.