Former senior Vice President of Sberbank Viktor Orlovsky one was a representative of one of the largest funds in Silicon valley. The head of the Fund directly with the guest called Apple’s CEO Tim cook and started to find out his opinion about one of the startups. Orlovsky understand what it lacks. “If I had the opportunity to call the head of Apple or Google co-founder Larry page, and ask them questions, we’d know whom to invest and whom to sell the projects,” says a former top Manager of Sberbank. In July one of the funds under its management invested in the manufacturer of warehouse robots Fetch Robotics.
Sberbank in the Valley
Orlovsky moved to the valley in 2016, he recently extended his three — year visa to build a top venture Fund need ten years. The management company is called Fort Ross, which manages two funds. One of them — SBT Venture Capital I — Sberbank has organized in 2013. Its volume of $100 million, 90% of this sum was invested by the Bank, and 10% Orlovsky himself and his partner Jacob Nakhmanovich.
Life in the Valley different from life in Moscow, says the investor. Once he canceled a business call at five in the morning and he decided to go to the gym early. “But when I got there, it turned out that in the gym are always Packed,” laughs the investor.
In the valley of the histogram is shifted towards an earlier rise, but finish the work staff also used: the tube starts at five p.m., five to six people try to part on houses, tells Orel about the peculiarities of life in the most famous in the world innovation center.
In the chart opposite: all the work in the evening and almost none of — early in the morning. “When I propose a meeting in Moscow at eight in the morning, looking at me with surprise. While in the valley we with many partners to meet at seven in the morning,” says the investor. In the valley is almost impossible to imagine that someone appointed business dinner at eight in the evening local residents go to bed early or spend time with friends.
“The way of life in the valley closer to the way of life in the village and the village gets up early and early to bed”, concludes Orlov.
One of the reasons why Fort Ross started looking for startups in the valley, and not, for example, in Singapore, that in the valley don’t need to start from scratch: here the Sberbank brand is well known not only as a Bank but also as the innovator, says the investor. “Heads of the savings Bank every year I go to the valley and communicate with startups, large companies and universities” — lists Orlovsky.
His words were confirmed by the managing partner of Capital Gagarin Nikolay Davydov, who also lives in the valley. “German Gref is friends with the investor and PayPal co-founder Peter Thiel, very many know the savings”, said Davydov. Sberbank is also one of the biggest customers for corporations from the valley, for example, in the Bank — the largest Oracle implementation in the world, adds Davydov.
The Russian market, according to Davydov, is not interesting to anyone except those who want something to sell to the savings Bank or the companies of oil and gas, energy or mining sector.
To Russia with Orel
This is Orlovsky. The Russian market looks attractive for many companies from the Valley, he says. Of the 150 million people in about 120 million use the Internet, many major corporations and 5 million businesses and fast-growing market of e-Commerce and online services, he enumerates the advantages. “Maybe it’s not China, but American and Israeli start-UPS in China, there is a fair wind — all niches are occupied by local companies. And in Russia we provide startups with a fair wind and when the wind blows in their sails,” rasskazyvaet Orlovsky.
Those who accept an investment from the Foundation brought to Russia, where they meet with large companies. The last time such visits Fort Ross organized in may and June. Orlovsky hopes that the startup will thus be released to the Russian market — find customer locates a product and grow. “We don’t take money for it, we beneficial cooperation with the Russian startup companies: startup grows and gets the market, and we are in the future — good exit,” he says. For example, the Israeli developer of Tufin from the first Foundation of Fort Ross helped show the product, explain its value and give evidence of health for several potential clients, including Sberbank. In addition to the Tufin Sberbank works with portfolio companies Fort Ross Ventures not only in Russia but also in other countries and is a customer and partner projects such as Moven, eToro, LendingHome and others, told in the press service of the Bank.
Of the 13 companies, which invested in the first Fund, half worked in the Russian market. In the second Fund these companies was three out of ten, but their number will grow, promises Orlovsky. Among the Russian “clients” Orlowski not only the savings Bank and “Megaphone”, NLMK, MTS, X5 Retail Group.
Fort Ross is one of the largest funds operating in the valley, with the Russian capital, says the head of strategic projects and partnerships “Megaphone” Anton Uvarov. “MegaFon” began to cooperate with Fort Ross in the spring of 2019: “they’re the only ones we officially signed the agreement on strategic partnership and cooperation in the field of innovation, while constantly communicate with dozens of funds,” says Uvarov. Operator was attracted by the fact that Fort Ross was already working with Sberbank. In 2018, “the Megaphone” has created a separate area for testing startups technology sandbox, adds Uvarov. May Fort Ross shares with the “Megaphone” of information on projects with several of them, the operator may launch pilot projects. The main selection criteria — the ability to conduct pilot worth up to 3 million rubles. for three months.
Far from top League
Fort Ross invests in startups from USA and Israel, his range of interests includes five fields — FINTECH, machine learning, and artificial intelligence, marketplaces, Internet of things, and heavily loaded IT platform where technology helps to optimize infrastructure.
The companies, which seeks to invest Orlovsky, in California it is worth all of the funds. For example, a service that installs on machines taxi advertising boards FireFly from San Francisco or the company Dynamic Yield. “Almost all companies in our portfolio receive more investment proposals than it can accept money,” says Orlowski.
Fort Ross invests only in those companies that are growing every year two times, and if we are talking about the marketplace, then they need to grow three or four times a year. In the valley for such companies Orlovsky has to fight: “you have to give a startup more than just money.” Startups strive to obtain investment from top funds such as Greylock Partners, Sequoia Capital, Benchmark, not just so, says the managing partner of Fort Ross. Funds “of the higher League” know the market tactics of development of a startup, help to find staff and to find the right customers, says Orlowski. But admits that while Fort Ross is far from what is called a top venture capital Fund. “If we want to become the top Fund in our portfolio should see a lot of companies such as eToro and Tufin or one such as Facebook,” he says. Financial platform eToro is worth more than $1 billion, estimates Orlovsky. However, while the company failed to attract new investments for this evaluation.
Some companies from the portfolio managed to sell. In March 2019 the company Dynamic Yield, which specializiruetsya on personalization of commercial offers, bought McDonald’s. Orlovsky did not disclose exact figures, but said that Dynamic Yield has brought investors more than 220% per annum. In April, the software developer in the field of cyber security Tufin Israel held an IPO on the new York stock exchange. Orlowski expects that the internal rate of return (IRR) is 45%.
The new Fund
Now Fort Ross collects second Fund, SBT Venture Capital II, a $230 million Share of the savings Bank will be reduced to 15%. The Fund has invested in some 40 private investors, including the head of the civil “LANIT” Philippe gens, founder and CEO of the company “Motor” Andrey Romanenko, the businessman Ivan Tavrin. Despite the fact that the share of Sberbank in the second Fund declined markedly, Fort Ross uses his expertise free of charge: the Bank conducts due diligence of startups in which the Fund invests. “The Bank gives us the resource that we ourselves can’t contain,” says Orlowski.
“I wanted to understand how investing in the valley. And Fort Ross have long been integrated into this system, and shows good financial results,” he told Forbes Philip of gens. Many potential investments of gens attracts expertise “LANIT”: analyzing these projects, the company realizes global IT trends and the Fund receives technological expertise, he adds.
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