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The startup ecosystem of Belarus

Friday, January 10, 2020

At the beginning of this decade, a very little amount of people talked about startups in Belarus, and there were not many innovative entrepreneurial projects. The situation has changed significantly in recent years. In the StartupBlink startup ecosystem rating in 2019, Belarus took 55th place (out of 100 countries), and the capital — Minsk — took 181st place (out of 1000 cities). Now startups are launching, developing, attracting financing — usually from abroad, and take off with noticeable dynamics. A number of projects of Belarusian roots are known worldwide: maps.me, Viber, MSQRD, Flo, PandaDoc, Kino-mo — and most possibly, that you have used something out of mentioned above things, and still it is not the full list of successful startups.

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Let’s see, what is interesting about the startup ecosystem of Belarus, which projects achieved success in recent years and what conditions are there in the country.
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General information

As far back as ten years ago, it was hard to predict how far the Informational Technologies will go in Belarus. Now it is one of the economy drivers. Here are some facts about the development of IT industry in Belarus.

  • The share of the IT industry in Belarus amounts to 5,5%. The IT-services export volume per capita in Belarus amounts to $108. The same volume in the USA is $58, in India — $40, in China — $20. In 2015, the export share of IT-services and products amounted to 0,16% of the whole product and service export volume, and in 2016, this figure was equal to 3,25%.

  • In 2017, the export of High-Tech Park — a special economic zone in Belarus with a special taxation-legislative regime for IT-industry development — overcame the point of $1 billion. And according to the results of the first half of 2019, the HTP export amounted to $908 million.

  • Six HTP resident companies — Bell Integrator, Ciklum, EPAM, IBA Group, Intetics and Itransition — according to the 2017 Global Outsourcing 100 rating, entered the top of the best providers of outsourcing services

  • 10 companies from the Software 500 — the rating of the world largest software companies — have their development offices in Belarus: EPAM, Bell Integrator, IBA, Itransition, Coherent Solution, SoftClub, Artezio. Oxagile, IHS.

  • Belarusian developers provide IT-services to the world’s largest enterprises and organizations, among them, are Samsung, HTC, London Stock Exchange, World Bank, Microsoft, Coca-Cola, Toyota, Google, British Petroleum.

  • The industry employs 107,000 IT professionals. Over the past 10 years, not only the number of professionals in the industry has increased, but its gender structure has also changed. So, if in 2010, 7.5% of girls worked there, then in 2018 this figure grew to 25.4%.

In the 2018 World Bank Doing business rating, Belarus took 38th place. However, in October 2019, when the new data was released, the country moved down to 49th place.

Belarus takes 30th place out of 190 countries in the World Bank Starting a Company rating. In the Information and Technologies Development rating, Belarus takes 32nd place out of 176 countries.

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The startup ecosystem of Belarus

Infrastructure for startups: incubators, accelerators, co-working spaces

Talking about organizations which boost startups development in Belarus, there is a Startup Hub Imaguru that can’t go unmentioned, it helps to develop the ecosystem of technological startups in Belarus and Europe: it offers co-working space to innovative entrepreneurs, holds educational events and meetups, provides access to a large community of venture market representatives of the country, organizes large field-specified conferences (GEW Belarus, Venture Day Minsk).

The first accelerator in the country — TechMinsk Accelerator was founded in 2013 on the basis of Imaguru with the help of USAID, after that, it raised such startups like MSQRD, PandaDoc, Trackduck, StoryLine and others. Currently accelerator’s batches are focused on AI, SaaS, Blockchain, Game and Data-Driven startups.

In February 2019, a Spanish incubator Demium Startupscame to Belarus, it stared operating here in partnership with Imaguru. To participate in Demium Startups program, it is enough to have a desire to become an entrepreneur, the incubator will propose you ideas, that have already proved themselves in different markets. During the program, the incubator creates necessary conditions for project development: it gives a working space, expertise to conduct market researches, a possibility to create an MVP, tools to test hypotheses and define key metrics, also it attracts mentors, in particular from other countries.

EventSpace is an IT event space, that should be separately mentioned among co-working spaces, it is an independent platform, which unites leading technological and professional communities in Belarus. The team annually holds more than 10 international conferences on different technologies, programming languages and IT-management. Every year the platform holds more than 100 meetups: they are organized by communities of independent developers, managers and other specialists in the IT industry. Hackathons, business lunches, workshops — all these are created to unify and develop a local IT-community.

Rocket DAO company offers an interesting product for startups — it is an infrastructural solution, that includes:

  • an investing online marketplace https://rocketdao.io, and also a platform for evaluating startups by independent experts. The aim of the platform is to help startups attract investments, automate the whole investment process and provide convenient channels for interaction between venture projects and investors.

  • Startup Training Camp is an acceleration program, created by the Rocket DAO expert community, a Belarusian business angels network AngelsBand in partnership with an investment company Volat Capital; the aim is to teach and prepare startups to attract investments.

  • Startup Jedi is an online mass media, that is dedicated to venture market; there are posted educational materials, interviews with startup founders, investors and reviews of startup ecosystems

In 2019 more than two dozens business incubators functioned in Belarus, they offered paid and free services to young entrepreneurs. For example, “Future with us” business-incubator offers help to startups starting from the organization of working space, providing accounting and juridical services to attracting investments to the project.

In April 2019, a free Alfa-Business Hub opened in the Minsk, powered by Alfa Bank. The hub is divided into several zones: these are zones for individual work, conference rooms, a classroom, a conventional hall, a relax-zone.

High Tech Park also has its own incubator, to become its member, you have to be registered as a legal entity or a self-employed entrepreneur in Belarus for not more than 3 years, you should not have any budget debts or debts to state non-budget funds. HTP business incubator offers startups an office on favourable rental terms, expert and consultancy support, a possibility of interaction with investors from the IT industry. If a startup manages to become an HTP resident, then this startup receives a privilege of immunity from taxes, including Value Added Tax and profits tax; the individual income tax for employees of resident companies is 9% and is not included in the total annual income; the possibility to work in the framework of HTP legislative regime, having an office in any place in Belarus.

It should be separately said about startup events. Among the most significant regular startup events in Belarus are the Venture Day Minskconference (held at the initiative of the Imaguru Business Club), GEW Belarus (World Entrepreneurship Week in Belarus), the EMERGEtechnology conference, and events held under the auspices of Startup Weekend Belarus.

Regarding education, Belarus is an object of interest for foreigners thanks to projects and high-level preparation of IT-specialists. Belarusian developers are considered as one of the most highly-qualified in the region. Every year, 3,000 programmers replenish the labour market in the IT segment. You can earn a degree in the IT-sphere in metropolitan and regional universities: traditionally, the Belarusian State University of Informatics and Radioelectronics, and the Belarusian State University are the most popular among enrollees. You can also get an IT-degree by enrolling in one of the dozens of specialized schools.

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The startup ecosystem of Belarus

Startups

Almost all Belarusians, who have smartphones know about these projects: Maps.me, Viber, Flo, MSQRD, Weather live. And these are products, better known in the business circles: PandaDoc, Kino-mo, FriendlyData, Dronex, Banuba. What are these most famous and profitable Belarusian startups devoted to?

Maps.me

Thanks to this application, you will never get lost: either you are in your native city or in a place million miles away from it. Maps.me is a free app with step-by-step navigation and an offline-access. It is guided via GPS, it can plan routes for pedestrians, drivers, cyclists and those who are traveling by subway or taxi.

The startup was launched in 2010 in Zurich (where the headquarters was located), and in Minsk (where was the center of development). The founders are Yuriy Melnichek, Alexandr Borsuk, Viktor Govako.

In June 2014 it was renamed to Maps.me, and in November the company was sold to Mail.ru Group. At the beginning of 2019, the number of installations reached 110 million.

Wargaming

Belarusian company Wargaming, that is founded by a businessman Victor Kislyi, has developed gaming products, that cover an audience of 200 000 million people around the world. Wargaming employs 4500 employees, and half of them work in the Minsk office.

The most famous product of the company is World of Tanks, a massively multiplayer online game. Creators pay attention to the action, as well as to historical accuracy: tanks are created according to historic schemes, what is more, 20 historians work in the company.

Viber

A messenger, where you can send messages, make phone and video calls, it is installed almost on every smartphone.

The authors of the project are Igor Magazinnik and Marko Talmon. The first version of the application was developed at the end of 2010. In 2018, the number of installations overcame 1 billion.

In February 2014, Viber was bought by a Japanese company Rakuten, the announced deal value is $900 million. Now Viber is a resident of High Tech Park, in Minsk and Brest there are offices of tech- and customer support.

Flo

One of the best apps for women — Flo Tracker — ranks first among health apps by the number of downloads in the world. In total, 100 million users installed it. The application is created and managed by Belarusian IT-businessman Dmitry Gursky. Yuri Gursky is a co-founder.

In October 2018, the startup announced the closure of the additional investment round. In total, in the A series round, Flo raised $12 million: the first stage of this series ended in August 2017, when $5 million was raised, and another $7 million was raised during the second part of the round.

MSQRD

The application for photo and video editing. Users can try and use different masks on their faces online. The project was developed by a Belarusian company Masquerade Technologies, startup founders are Eugene Nevgen, Sergey Gonchar, Eugene Zatepiakin.

A fun fact — a technology was being developed for several years but the company itself was created during the hackathon in the Imaguru Startup Hub in November 2015. In February 2016, the startup attracted more than $1 million in the seed stage, and in March the application was bought by Facebook.

Weather Live

One of the applications from the Belarusian mobile developer Apalon Apps (founders are Petr Skromnyi and Matvey Timoshenko), the total number of installations is more than 400 million. Besides the Weather Live application, in the Apalon portfolio there is Alarm Clock for Me, Speak & Translate translator and other products.

PandaDoc

The product is designed to optimize electronic document management. Thanks to the software, the user sees everything that happens with the document he is interested in: when it was opened, how long it took to read it, whether it was signed, if there were any comments.

The project was created by Sergey Borisiuk and Mikita Mikado. In June 2015, the startup attracted $5 million, in May 2017, a piece of information appeared, that the startup attracted more investments — up to $15 million. In June 2019, the project managed to attract $10 million within B Series round.

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Banuba

A startup, whose founder is a Belarusian entrepreneur Victor Prokopenia, creates a platform, that will enable app developers to build-in AR-features (face recognition, filters, movement traction) in their products. The startup was founded in 2016 and has already registered dozens of patents in the field of computer vision and Virtual Reality. In November 2018, the company attracted $7 million.

Kino-mo

An innovative holographic 3D-system HYPERVSN is developed in the framework of this project. The system consists of three parts: hardware — floating in the air 3D-pictures, managemental (manages the device and content), content-related.

Project founders are Kiril Chekiyuk and Artem Stavenko.

In 2017, on the annual technology trade show CES in Las Vegas, the project entered the TOP-10 of the best world solutions.

FriendlyData

A startup develops technology for working with databases via a natural-language interface. The author of the idea and its founder is Michael Rumiantsau. Startup clients are large companies creating software for business analysis. In November 2018, the startup was bought by ServiceNow, a large American company, a leader in the Forbes rating of innovation.

Dronex

A startup, that develops a technology of delivering light packages via autonomous drones. Drones are also produced in the framework of the project. The project has already received flight permissions in a number of countries.

At the end of October, Dronex together with Menu.by launched a drone food delivery in test mode in Minsk.

A startup founder is Vladimir Davydov.

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The startup ecosystem of Belarus

Financing

Belarusian startups are trying to attract investments from abroad, nevertheless, there are already some companies, that are ready to invest in innovative projects in Belarus.

Zubr Capital

The first professional company in Belarus managing direct investment funds, that was founded in 2010. One of the investment deals are the investments of April 2018 in the Targetprocess IT-company.

RBF Ventures

A classic venture fund, that is oriented on the financing of Belarusian projects, started its work in 2017. Founders of the fund are Belarusian innovative fund and Russian venture company. The fund is ready to work with projects on different stages — from the seed to the B Series and higher. In 2018, RBF Ventures became the lead investor of the RocketData company.

Bulba Ventures

An investment project, that was founded by Yury Melnichek (the founder of Maps.me, AIMATTER) and Andrew Avsiyevich (in the past, he was the top-manager of “Atlant-M”, “Triple”). The investment company was founded in March 2018, at the moment of creation, it already had two projects in the portfolio — OneSoil (an agrotechnical startup, that increases the effectiveness in agricultural sector and saves farmers’ money thanks to machine learning technology and computer vision) and WANNABY (an AR-startup, that develops computer vision technologies, rendering, so users would be able to interact with the product in the augmented reality; their projects are — WANNA NAILS — an application for the nails polish try-in, WANNA KICKS — an application for sneakers). Recently, Bulba Ventures also invested in VOCHI project (a “photoshop” application for videos) and Zenia — an AI-project for doing yoga.

Haxus

An investment company, that invests in startups on the early development stages. The fields of interest are artificial intelligence, virtual and augmented realities. The company is registered in Cyprus. Its founders are a Belarusian IT-entrepreneur Yuriy Gurskiy (he was a mentor and investor of such startups as MSQRD, Maps.me, Flo, AIMATTER startups), Alexey Gubarev (entrepreneur, co-founder and CEO of XBT Holding which includes Servers.com and Webzilla hosting providers).

European Bank for Reconstruction and Development

The bank can provide a startup with financing in the number of variants. First of all, it can be in the crediting framework. The interest rate is 6–7%, and the credit aid may be in dollars and euro. The EBRD requirement is that its share in the project must be not less than 10%. Secondly, it may act as EBRD Venture Capital fund. however, the fund invests only in the “mature” projects.

AngelsBand

In April 2018, the public association “Network of Business Angels”, or AngelsBand, was registered. The organization enables startups to attract investments in pre-seed and seed stages, receive the experts’ evaluation in different fields of the economy; and technical, marketing, accounting, administrative, juridical support. The organization also holds mentor and pitch sessions. You can apply and take part in such sessions on the website of the network . According to the data on the website, there are 93 members in the AngelsBand today.

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Conclusion

The startup ecosystem of Belarus is interesting from different view angles. First of all, from the point of view of IT-industry development in the country — as this factor influences the development of innovative entrepreneurship. From the very beginning, many startups are “shaped” for the IT-specialists and not for the general audience.

Secondly, from the product point of view — a great number of products in Belarus managed not only to attract investments but also become famous. In such a way, great ideas were released in products. and they were distributed фкщгтв the world.

Thirdly, from the point of view of startup infrastructure development. 5 years ago there was nothing like this in the country. Now dozens of business-incubators are working there and the first venture funds are launched.

Any way you slice it, startups in Belarus are growing and developing. Most likely, that in the nearest year a few new unicorns will appear here — time, conditions and experience of those founders, who have achieved success, favor this to happen.

 

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