Iskander Giniatullin, the partner in Sistema VC, managed media assets in the AFK Sistema before entering the venture industry.
IG: Before coming to venture industry, I worked on how to transform the traditional portfolio of media assets in accordance with the principles of the new economy. At that time it became pretty obvious that venture project investments are most likely the biggest technological breakthrough in investing, economy and the whole world. You are always on the front line, you always get the “freshest” knowledge, and, apart from earning lots of money, it is just cool!
Sistema VC invested in into different high technology projects connected with: AI, machine learning, cognitive technologies, computer vision, big data and more. Iskander distinguishes three requirements for the projects, that just might catch the eye of a professional investor.
Additionally, founders should know how to build good human relations, as the investment field itself stands on networking and communication between investors, founders and, well, people in general.
Iskander admitted he has not invested in blockchain startups and explained his point of view.
IG: Two companies from our portfolio investments are trying to implement blockchain into their existing products, but the main application of blockchain is cryptocurrencies. We don’t invest into cryptocurrencies. What about applied use in the insurance business or any other businesses, you ask? The question is if these blockchain-based startups are independent making something for single industries, or if they implement blockchain technologies into their internal processes by themselves. What it will look like is very unclear. We see few “pure” blockchain startups not connected with cryptocurrencies.
Yury Melnichek, the founder of Bulba Ventures, calls himself an unprofessional investor.
YM: I cannot call myself a professional investor. I sold my previous company, AIMATTER, to Google last year and the deal brought me enough money to start investing. I thought, I know better than many institutional investors in which early stage startups to invest and what areas are worth “voting with my money”. I am happy to invest and either succeed or pay to be proven wrong.
Bulba Ventures, an investment company I founded together with my business partner Andrei Avsievich, invests in machine learning startups. I asked why did he chose this sphere.
YM: Why machine learning? There are two answers – a sincere one and a “correct” one. The sincere answer is that I love machine learning. It is the area I really enjoy working in without getting tired of work. I also think that ML/AI are transforming businesses similar to how software and Internet transformed them a decade ago. There is a nice read about it – Software 2.0. And here’s a correct answer. This is the area I have expertise in that works as a bullshit filter. I can intuitively distinguish a startup with meaningful and valuable component from the one that doesn’t have it, because I was into machine learning as a cofounder of a machine learning company.
Yury Melnichek’s inner filter has three core points:
Yury explained that Bulba Ventures is similar to business angels: participating in the startup’s life help with networking and frequently also with some engineering nuances. From time to time Yuri provides personal guidance for startups.
YM: We actively participate in the lives of startups that need it.
I also asked about blockchain-based startups investments.
YM: We stopped reviewing blockchain startups for now. At the moment there’s a big signal-to-noise ratio in this sphere. Firstly there are many scammers, secondly there are many incompetent startups. Between those that remain we see startups that make worthwhile things, but then there are legal regulations. Another issue is changing attitude towards these startups in the society. Moreover, the core value of many blockchain-startups is that something was made in traditional way and now it is made with blockchain. We review only those startups where machine learning is the core value. And when the core value is in machine learning, minimal viable product can be made without blockchain.
Igor Ryabenkiy, founder and managing partner of AltaIR Capital, shows more trust in blockchain projects industry.
IR: We choose projects that have the potential of becoming global in one market or worldwide. Because blockchain is a technology with the first phase of maturity, we found it quite perspective and, therefore, have been working with it for some years now. We also have a specific department that works with blockchain.
His team uses the following principles when making a choice among blockchain projects.
Igor shared some of the projects he trusts and invests in. Video on Demand is a project that helps structurize and optimize the work from creators and right holders to spectators, raises the affinity, help the film “find” its spectator. There is also another project in the works that makes security measures for IoT devices. At first it wasn’t connected to blockchain, but as the customer base expanded, blockchain seemed like the best solution to provide transparency and decentralization. Igor mentions a huge number of scams, yet still keeps being quite positive about looking into the future.
IR: Blockchain is a good technology and it will be valued… But it isn’t the highest point of development, ain’t no need to praise it.