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Russian startup event more international than ever

This year’s Startup Village in Moscow was attended by more international companies and investors than ever before

In its sixth year, Startup Village, Russia’s largest startup conference for tech entrepreneurs, attracted over 20,000 attendees from more than 80 countries.

The event ran in its traditional venue, the tech hub Skolkovo on the outskirts of Moscow, on 31 May and 1 June 2018.

This year’s event was more international, compared with previous events, Sergei Khodakov, operations director at Skolkovo’s IT cluster, told Computer Weekly. “The number of international startups taking part was noticeable higher,” he said.

Over the conference’s two days, 4,500 startups presented their projects to about 1,000 investors.

“This year, we had special focus on corporate innovation and startups’ best practice,” said Khodakov. “Participating corporations and startups were able, for instance, to get answers to questions on how to develop and implement innovations, what partnership opportunities are available for them, and how industries, to which they are offering solutions, will be developing in the short run.”

Most foreign participating startups came from Japan, France, Italy, Bangladesh and Korea. “They were mostly testing the market, looking for partners for entering Russia and potential investors,” he added.

Alina Akinshina, executive director of Online Patent, a digital system for managing trademarks and patents, told Computer Weekly why her company attended. “Startup Village is one of the largest annual startup events, gathering many innovative companies and representatives of large corporations and investment funds, which is important for us,” she said.

“The event turned out to be useful for us in all respects, and we are continuing communication with potential investors and clients whom we met at the event.”

She said the signing of an agreement between Online Patent and n’RIS, a national platform for registry, storage and turnover of intellectual property, was announced at this year’s Startup Village.

Attracting investment

It was just one of a number of deals announced at Startup Village, many of which involved venture funds. Among them was also a RUB300bn ($4.8m) investment in the venture fund Skolkovo Ventures from state-run corporation Russian Helicopters.

Another state-controlled giant, the United Aircraft Corporation, invested the same amount of money in Skolkovo Ventures. Meanwhile, the country’s largest online lender Tinkoff struck deals with three Skolkovo resident startups.

Attracting investment remains one of the main motivations for startups’ participation in the conference.

According to the Skolkovo IT cluster’s Khodakov, the number of attending investors was roughly the same as last year. “Investment capacity of the Russian market is limited, and in that respect, Startup Village’s advantage is attendance by international investors,” he said.

Meanwhile, as initial coin offering (ICO) has not always proven to be successful for startups, many are turning back to traditional venture capital.

“ICO was last year’s trend,” Khodakov claimed. “Recently, ICO has been losing its attractiveness as a funding tool, and startups are starting again to look closely at venture capital. ICO isn’t always effective, so, startups’ interest in classical tools, such as venture capital, is back to the level at which it was two years ago.”

Blockchain craze

This year’s Startup Village was held roughly one year after the blockchain craze began in Russia and signified gradual migration of that technology from hype to specific implementation in the economy.

Skolkovo was among the first to embrace the potential of blockchain in Russia. Back in 2016, it launched a competence centre for blockchain technologies, which currently hosts 20 companies operating in such diverse fields as financial technology (fintech), health technology (healthtech), the internet of things (IoT), gaming and entertainment.

Now, the main focus is on finding applications for blockchain-based solutions in the real economy.

“I think we are at a point where blockchain is moving from a hype stage to an application stage, and companies are looking at blockchain-based solutions for solving their business tasks,” said Khodakov at the Skolkovo IT cluster.

“We had several companies that offer blockchain-based solutions, and their number has been constantly on the rise,” he added. “This is a positive trend and, overall, the use of blockchain is now considered to be a startup’s competitive advantage,” he said.

While blockchain-based solutions are yet to find customers on a grand scale, other cutting-edge technologies are already popular among prospective buyers.

At this year’s Startup Village, there was high demand from production companies for predictive analytics and big data solutions.

Tech in demand

Demand for virtual reality (VR) and augmented reality (AR)-based simulators for training personnel to work with complicated equipment or in difficult conditions, also increased, while artificial intelligence (AI) remained among the technologies in the highest demand.

Startups demonstrated their creations. “Our AI-based solution allows companies to create a customer management system, optimise operational workload and improve cross-sales,” Julia Demkina, project manager at Heedbook, told Computer Weekly.

“Using computer vision and speech recognition, the system can process video and audio streams from the front line’s employee in background mode,” she added.

Based on behaviour information on customers and employees – which include nearly two dozen parameters, such as emotions, attention, intonation and pauses – Heedbook’s solution can evaluate customer satisfaction, rate employees by the quality of their work, determine peak workload and idle periods, helping to improve scheduling.

Read more about Startup Village Russia

2017: Just days after Russian president Vladimir Putin announced the development of a digital economy as one of the government’s priorities, open-air tech festival Startup Village attempted to fuel partnerships between startups and big business.

2016: In spite of the Russian economy’s poor state and sanctions imposed by the European Union and the US over Ukraine and Crimea in 2014, the local tech startup scene is developing rapidly, cashing in on government policy to favour local suppliers and the lower costs caused by the weak national currency.

2015: Some 14 agreements totalling just over £178m were signed on the first day of Startup Village 2015 in Russia.

Another current trend on show was technologies that support smart cities.

“This is a significant trend,” said Artem Kukharenko, founder of NtechLab, which provides smart city technology for facial recognition with the use of surveillance cameras. “Companies from several cities and countries presented their products. Everyone’s approach was different, and it was useful to compare notes.”

Currently, the facial recognition product from NtechLab is used with 1,500 surveillance cameras across the city, where, according to the company, the technology has already helped to detain dozens of wanted criminals by law enforcers.

Similar systems are to be soon launched in all major Russian cities. However, there are challenges. “The main challenge is in finding the right balance between privacy and new technological opportunities,” concluded Kukharenko.

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