The Sunnyvale, California headquartered Plug and Play Tech Center officially opened its Moscow branch last month in partnership with GVA, a venture investment company that aims to bridge California with emerging markets.
After multiple official speeches and presentations, the grand opening event featured a startup battle, already quite a familiar format for the Russian tech community. Travolver, a trip planning startup, won first place and was granted an internship and an option for joint investment from GVA and Plug and Play.
Right after the event, Jena Wuu, Plug and Play’s International Relationship Manager, gave East-West Digital News a wider perspective on the tech business accelerator’s concept and goals.
Why did you come to Russia?
Plug and Play’s mission is to enforce tech startups growth in multiple countries by bridging local ecosystems to Silicon Valley. To be honest, we were not originally interested in Russia. It looked like too big an animal because of language, culture, size. It wasn’t very much on our radar. We just didn’t even know how to start in a country like this. We were actually approached by GVA, by Magomed [Musaev, President of GVA Capital] and Murad [Sofizade, GVA partner], who were interested in helping to build entrepreneurial ecosystem in Russia. Saeed [Amidi, Plug and Play CEO] replied that he was not interested, because we didn’t know anything about Russia, we just didn’t even know how to deal with it. But once this dialog started, we began to appreciate the landscape in Russia in terms of opportunities and talents it represents – a lot of talented engineers here.
There seemed to be already good infrastructure in place too, so we thought this was enough for work. Without any infrastructure and resources available it could be much harder for us to go into a country. By resources I mean venture funds, financial resources, organizations like Skolkovo, RVC [Russian Venture Company], etc. who are interested in working with startups and new ideas. When at least basic infrastructure is in place, we see the market to come into. I like that we started helping to build necessary processes not from scratch but from what Russia already had. So we came here to bridge Russian startups to Silicon Valley ecosystem to give young Russian companies the necessary connections, expertise and investment opportunities.
One thing that we learned from the experience with GVA is that it’s extremely helpful to have a local partner whom you can trust. Our potential here would be nowhere without Magomed and Murad. They are our eyes and ears.
Can Silicon Valley be replicated in other places like Berlin or Moscow?
We are often asked this question. A lot of it is about culture and mindset. Silicon Valley is an incubator in itself – everything there is geared towards entrepreneurship. It’s a completely different mindset even compared with other places in the US, although this difference is still much less than with other countries. In Russia there are a lot of resources and money from old businesses dealing with gas, oil, natural resources. But normally these old industries are not willing to put the money into the new ones, in small tech startups and young entrepreneurs. That’s why it’s very important for us to bring in Silicon Valley financing and bridge Russian market with relevant resources available.
The story is not only about mindsets of VCs, financiers, it’s also about entrepreneurs. In Silicon Valley there is a completely different attitude to making mistakes and gaining experience. Failure there is not even a word – it’s just a kind of result. A bad result doesn’t mean that you fail, and doesn’t mean that you should not try again. The second time entrepreneurs have a better chance to get funding, because VCs know that you’ve learned your lesson and you are willing try again. In contrast, in many other countries – for instance, Germany, if you fail once, it will be very difficult to get funding.
If you try to have an office in NY and tell the landlord that you’re a startup, they will think you are not having money to pay rent. When you’re in San Francisco and you tell you have a startup, they think it’s so cool and exciting and ask for equity instead of rent payment. Accountants, PR, and all other resources are excited by you entrepreneurship. The environment itself helps you – it’s just a completely different ecosystem and mindset, which is next to impossible to replicate.
How do you implement your concept of helping local startups?
In our headquarters in California we have a three-month acceleration program. We are looking for companies that think global and plan to expand to US and other markets.
The selection process consists of two steps. There is an open poll for applicants, and they send us executive summaries. Our venture teams, advisors, VCs together with our partners view and short-list them. After initial screening, we ask additional information and make final selection. For instance, in Austria we had 60 applications, then we short-listed them to 30, and top 16 come for the next year.
The program in Moscow is a little bit of a hybrid. Russian startups here have an option: three-month preparation in Moscow, then two or three in Silicon Valley. This was done because lots of companies in countries we are present in are not really prepared for US market: their product is not mature enough, they don’t know their competitors, clients and potential partners are, etc. They think of the US like they are going to come there, meet Zuckerberg, sell their company to Facebook in three months or other illusions. We don’t want them to waste their time in such an unproductive fashion. So eventually we came up with this type of local program to allow companies to prepare, learn about the US and get ready.
Then there is an option for investment in money, but it’s really on a case-by-case basis.
For instance, Travolver [the winner of the Startup Battle at the opening on June 25th] will get ready in Plug and Play Moscow and then come to Silicon Valley in October, spending 3 month there after 2 months in Moscow.
How do you help projects become global?
We teach them the US way of doing things. Starting from a 1-week boot camp, we help them to develop partnerships, offer intense course, make introductions to VCs, corporate partners. We have 120 events per year in PnP in the Bay Area. You go out, get exposure, you meet people, hopefully you’ll get the connections and financing that you need, a lot of this is about your network and who you know.
Being present in 17 different countries, we’ve built an incredible community of VCs, corporate partners, international connections, startups, having the map very well covered.
What about your concept of “virtual incubator”?
Sometimes people can’t come to US for the whole 3 months. We can do deal flows over Skype. But of course you’re going to get the most out of the program if you’re there. It’s always better in person. At least it’s good if you’re there for the last 2 weeks. Or sometimes people switch off – the CEO comes for 2 weeks, then the CTO comes for 2 weeks. We don’t stipulate when you should be there. We just make all of the program benefits available to you for 3 months.
