We talk to startups and investors, you get the value.
Eugene Golban is an investment broker from Moscow and a partner of investclub.vc. For more than ten years, Eugene has been working in venture capital, helping investors find promising startups and startups — find investors. Previously, he did it sporadically, but in 2020 he decided to make this activity a prior one for himself.
Eugene told us about his attempts to launch a startup, interesting projects that he met as an investment broker, and how he finds clients.
We talk to startups and investors, you get the value.
— In 2010, I left the corporate world for the venture capital industry. During that time, I was involved in startups and tried to create my own. However, I learned that for me, it’s easier to be not a part of the team, but to be outside and help it from there.
Many venture capitalists say that as an investor, you can participate in the creation of many success stories — and I do agree with them. I am not an investor, but I am looking for investments for startups and sometimes for big businesses. In plain English — I’m an investment broker. Thus, it seems I help these projects develop.
In more detail, my job is quite simple: projects that need money come to me. Basically, these are investments to enter international markets. It also happens that the founders or co-founders are ready to come out at a good price and are looking for buyers for their share, and sometimes you need to find buyers for the entire business.
— Since I have been in venture for a long time, seen the formation of many projects and even funds, I have a fairly large network in this area. In addition, I am subscribed to various mass media that publish information about successful startups, deals and business in general.
If I see an interesting project or an investor who I don’t know, then I just find their contacts and contact them directly. I can also directly ask startups a wonderful question: “Do you need money?” Usually, the answer is positive. Of course, startups can be offered not only money, but also the opportunity to expand their pipeline of investors and get alternative offers.
Most recently, I spoke with a startup that has been waiting for money from an investment fund for a long time. The founder himself is no longer very sure whether the deal will happen and it’s probably the pandemic influence. This is a very situation where alternative proposals are in great need, in order not to depend on investors and close the rounds as quickly as possible.
Besides the fact that I am looking for projects on my own, startups also recommend me to their friends. “Rumour mill” really works.
Eugene is an international partner of the investclub.vc. Investclub.vc was created for business angels and venture funds, who actively invest in startups at early stages. We regularly send tracktion reports of the startups from our pipeline as well as startup reports on 4 metrics (product, market, business model, team) from the venture fund analyst, and post announcements about the beginning of the fundraising process. The club focuses on b2c/b2b2c startups in EduTech, Influence marketing, Entertainment, Mental Health, Messengers & Communities, Bot, Game mechanics directions. If you want to receive useful materials from the Club, please send us a request to firstname.lastname@example.org.
— Back in 2011, I tried to create a portal for virtual tours. “Spheres 360” used to be quite popular back then, when you could stand in the center of a virtual room and rotate the viewing screen in all directions: up and down, left and right. Such “Spheres 360” could be created in apartments, restaurants, offices and even, for example, in cars. My partner and I have done several virtual tours of this kind.
The idea of our startup was to create a portal where you can “paste” photos into the spheres of houses and make a full-fledged virtual tour out of it: such a solution would be suitable for renting out premises and apartments. For the early 2010s, it was an interesting product. Now it is absolutely irrelevant, such spheres are simply made by a smartphone. Unfortunately, the project could not survive: we did not receive enough revenue to cope with requests so that we closed it.
After attempting to launch a startup, I was involved in a high-fidelity indoor navigation project for shopping malls, airports and public spaces. I was not a co-founder, so I was able to get a closer look at what options might look like. Later, in 2016, I left the project, as the focus was on the foreign market, where my competencies would not be so valuable.
In the following years, I tested virtual reality real estate business and weekend tours for expats. The feedback was good, but thanks to testing, I assessed all the risks that were not immediately apparent, and realized that I was not ready to develop this topic.
As a result, I returned to what I once did sporadically from time to time: people who need investments contacted me, and I know those who want to invest their funds. The main thing here is to competently build communication so that people got interested in the project and subsequently invested. In 2020, despite the pandemic, I made this activity for myself the main one and so far it has been quite successful.
— Unfortunately, I cannot talk about most of the projects. Without naming the company, I can tell you about the project that determines the early stages of Alzheimer’s disease. This is a disruptive technology in medicine, when a person’s condition is examined by a non-invasive method instead of taking cerebrospinal fluid, as it was before. The development allows you to look inside the eye using a special camera and determine the predisposition to disease. The back of the eye is examined, as it is close to the brain, and then a diagnosis is made. According to analysts, this technology has a great future — it is clear that this is a revolution in this area of medicine. Despite the fact that it is a foreign project, we discussed it with Russian investors who are interested in it and have even already invested up to $1 million.
There is an interesting startup called SeaRadar — a service for booking yachts around the world. It was founded by guys from Russia; at the moment their focus is the European market, and most of the sales are already done there.
Another great project is OpenFace — an AI skin diagnostics and cosmetics by subscription. The idea behind the product is that in the app you take photos of your face and fill out a short questionnaire. After analyzing the data through the AI engine, the app gives a recommendation on which skin preparations should be used, and a subscription allows you to get these cosmetics. The team of this project is from Russia, but they are already entering international markets and doing integrations with influencers. The project has a good unit economy.
I work with various startups, so I am quite diversified in this matter. On the one hand, there are requests from investors, they say that they are interested, and on the other hand, promising projects often appear, and my team and I start working with them.
— Currently, my team is quite optimized, many things are done on outsourcing and on a project basis. If I need to do an assessment, analytics and other things, I involve consultants from the industry. My goal is to grow into an investment boutique, when the tasks are performed in-house: financial model analysis, presentations, teasers, legal support, etc. Probably, an investment boutique is the best option when the flow of customers is already established and services can be provided independently from contractors.
— Business angel syndicates come in first place, second are venture funds and family offices come third.
It seems to me that business angel syndicates are more about opening the venture capital market in recent years. Collecting a large sum to close the round in a syndicate is quick enough if the project is good.
If we talk about funds, then it is better to divide them into public and private. I can’t say for sure what the statistics on deals are now, but I know from the founders that it is more convenient for them to work with private funds. I can only assume that decisions are made faster in private foundations.
There are also private investors who aren’t systemic business angels. They have their own capital, which they are ready to diversify. Usually, they already have a formed investment portfolio and, in addition to stocks, bonds and real estate, for example, they are ready to experiment with venture capital.
— This period varies within 3–5 years. During this time, the invested asset manages to grow well. If the project gets good traction in three years and the next investor believes that the increased capitalization is justified, this may be a good time to exit.
For an investor, there are often two points when it comes to exiting a project.
First, if you leave this project, even on a good estimate, what else will you invest in? And do you believe that you have other alternative opportunities with even greater profitability?
Second, there are often some legal restrictions and there is no way to quickly exit the project.
— “Don’t show us projects with the Ruble revenue, show us projects with the currency revenue,” is now the most popular request that I hear. Investors often specialize in specific industries and don’t look at alternative ones. They do this because they don’t want to waste time on a thorough study of projects in which they may lack competencies.
At the same time, I would single out AI solutions, MedTech, EdTech, Gaming and SaaS solutions for business among the most popular investors’ requests. But we have to admit that there are groups of investors, family offices, who look at this rather opportunistically, and if they see that some topic is in demand, they consider these opportunities without any problems.
— I see potential in cooperation with investclub.vc in several directions. Firstly, the investors of the club may be interested in my projects, I have already published them on the rocketdao.io website and also presented them to the club manager. Secondly, I have a fairly large network and, perhaps, projects from the investclub.vc list will be relevant for my friends-investors.