ALMATY, Kazakhstan - It’s springtime in downtown Almaty, though winter is blowing its last frigid gusts off the snowy peaks of the Zailiyskiy Alatau mountain range and around the city's skyscrapers and Soviet-built housing blocks.
At a downtown oak-paneled restaurant, two dozen suited-and-booted Kazakh businessmen and women trickle into a function room.
They are followed, a few minutes later, by a handful of casually dressed Russians in high spirits.
What happens in the next two hours may one day be described as the birth of the angel investment community in Kazakhstan.
Evgeny Taubkin, right, and Alexander Borodich at the angel investment event in Almaty. Photo: sk.ru
The Skolkovo Business Angels Club announced its arrival in this Central Asian nation this month in the hope of building such a community with links to the existing Russian network.
The ultimate goal is to share the burden – and risk – of investments in high-tech startups across the CIS, and with bigger pool of money available lure more innovators into making the leap into entrepreneurship.
The traveling band of investors are on the same mission inside Russia, but the first visit outside the country for the Skolkovo-organized Startup Tour, on the sidelines of which the event was held, provided the perfect pretext to expand their activities abroad.
“We are here to help you make money,” announced Evgeny Taubkin, the executive director of Skolkovo’s Investment Service. “The more investors we have, the more money we can make.”
The meeting in Almaty was a joint event of the Skolkovo Business Angels Club and the Closed Business Angels Club of Russia, and hosted by the Kazakh Club of Young Entrepreneurs – an organization founded recently to build a startup community in the former Soviet republic.
Welcome to Almaty! Photo: sk.ru
Much of the evening was devoted to a question and answer session on the specifics of angel investment featuring Russia’s most serial entrepreneurs: Eduard Fiyaksel, Alexei Girin, Igor Koloshin and Alexander Borodich.
Perhaps the loudest message of the night came from Borodich, who heads up the Closed Business Angels Club of Russia.
“If you’re not an experienced business angel and you come to us with a startup you want to grow, I would advise you not to bother, and go to the casino instead,” Borodich said.
“I don’t know a single investor who made money on his first deal.”
Alexander Borodich. Photo: sk.ru
With that disclaimer hovering in the air, the talk could turn positive, and angel investor Alexei Girin named two main reasons the group was in town.
“We are here to show the local community of angel investors, and those considering joining the community, the benefits of investing in early-stage projects,” said Girin.
“Investment is such a global process that an individual who starts investing in a project in Kazakhstan can take it to Russia, then to Israel, then to the United States, and so on, because investors simply look for the most suitable habitat for the investment,” he added.
“It’s easier to start where you know about everything, and Kazakhstan in many ways is similar to the Russian market. Here, we will share our knowledge about the entrepreneur and investment process in Russia. We want to see as many angel investors involved in this process as possible because these angels can support the projects that we have invested in. At the same time, they can bring their projects to us for co-investment and we can act as experts. So this would open up a kind of pipeline,” Girin said.
“The other reason we are here is that we want to see what kind of projects Kazakhstan has to offer. It’s clear that we as investors from Moscow who work on the global market, with America and so on, we can probably be of assistance to the local projects, in sharing experience, and we can be used as a conduit to the West,” he added.
Modern-day Kazakhstan is ready for an angel investment community, experts say. Photo: sk.ru
Should Kazakh angel investors such as Ruslan Zhemkov join the Skolkovo Business Angels Club, he would be able to spread the investment burden of startup projects from Kazakhstan across the entire angel community, which lowers risk for its members.
Speaking to sk.ru, Zhemkov, the general director of the Eurasian Media Forum and a serial entrepreneur, said he was, first and foremost, seeking advice on the investment criteria for startups.
“We have huge potential in the Kazakh market, but there is no order. I want to understand how to pick and choose the right startup to maximize my chances of an exit,” he said.
“The guys from Skolkovo have been down the path that the Kazakhstan is yet to tread. That is why they are so valuable,” Zhemkov added, likening the Kazakh startup scene to a bazaar rather than a supermarket. “It’s unclear where to put your money because the parameters of each company are so different and hard to judge.”
Zhemkov added he would like to become a member of the Skolkovo Business Angels Club, but only when he acquired sufficient experience.
Access to the club is by no means a given: Potential investors are strictly screened to ensure they share the passion of existing members and will devote the energy necessary to forming a winning team, said Eduard Fiyaksel, a Nizhny Novgorod-based entrepreneur who is perhaps Russia’s first-ever angel investor.
Eduard Fiyaksel discusses his rise to the top of the Russian investment community. Photo: sk.ru
“We are looking for like-minded people,” Fiyaksel said. “We want to see those who are ready to put all their energy into unearthing the most interesting projects and supporting the startup community.”
Fiyaksel is one of Russia’s most successful angel investors, having made millions of dollars from a Russian company that was sold to Richard Branson’s Virgin Telecom.
But those sorts of deals are rare: What is needed in the CIS, Borodich stressed, is the creation of an “investment lift.”
“Currently there’s no investment lift available,” he said. “One angel invests, the startup spends the money and nothing comes of it. We need to create an investment lift.”
He defined that as a cycle of investment financed by multiple funds and syndicates upon which a startup can rely, as long as a series of goals are met along the way.
Photo: sk.ru
Borodich proceeded to explain the qualities that investors look for in a startup as they weigh up whether to allocate funds.
The first, and most important, criterion, Borodich said, is seeing “burning eyes” in the innovator – the will to succeed. Secondly, the technology must have serious potential domestically and in foreign markets alike. The project must also have high scalability – the ability to expand to accommodate demand; and, fourthly, it must have high exit potential.
The angel investors went on to explain their vision of the Russian-Kazakh investment community and how it can grow over the next few years, starting a new discussion that was peppered with spontaneous bursts of laughter and applause and went long into the Almaty night.