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How investors are priming Russian startups for Silicon Valley

Last week Sberbank, Russia’s national savings bank, the Internet Initiatives Development Fund (IIDF, or FRII, Russia’s largest early-stage startup investment fund), and FortRoss Ventures (formerly known as Money Time) announced the launch of a platform called Global Pitch to help Russian tech entrepreneurs develop in the U.S.

Global Pitch expects to introduce dozens of Russian startups to the U.S. investor and corporate communities, thereby helping them to acquire international experience.

“Our role is that of a vehicle to integrate talented Russian entrepreneurs with Silicon Valley’s advanced venture market,” said FortRoss Ventures Managing Partner Viktor Orlovsky. “By investing in Silicon Valley, we bring innovation to Russia’s largest companies. By bringing Russian companies to Silicon Valley, we build ties with the local venture community.”

Global Pitch project participants will be eligible for TechMafia, a three-month acceleration program, including one month in San Francisco, designed by the IIDF to help Russian startups kickstart their business Stateside.

Other support mechanisms for Eastern European startups in the U.S. include GVA Capital in San Francisco and Starta Accelerator in New York City. The latter, supported by the Russian fund Starta Capital, provides startups with investment, work space and coaching. Dozens of startups from Russia, Ukraine, and the Baltic states as well have participated in this accelerator since its launch in 2015.

Toxic atmosphere

However, amid the toxic atmosphere in the U.S. concerning all things Russian, developing a Russia-related tech business in the country is not easy.

Pavel Cherkashin, a Russian serial entrepreneur who now manages GVA Capital’s activities in the Valley, is often subjected to skeptical questions from local entrepreneurs as soon as they hear his accent, he told The New York Times.

“Prospective partners and startups invariably ask the same question: Is your money clean? I don’t think people would ask this question to a manager from another region,” Cherkashin noted.

Backed by a group of investors, Cherkashin has invested more than $11 million to turn a church in San Francisco into a tech space. He planned to call it ‘Hack Temple,’ but is now having second thoughts about the name.

Potential local tech partners worry they may accidentally get into business with the Russian government, added Julian Zegelman, a lawyer who represents and invests in startups with Russian roots. “They don’t want to be invested in, or dealing with, companies whose technical talent is captive in Russia,” he said.

From hysteria to business focus

Cybersecurity firms, big tech companies, government customers, and large venture capital firms may also be wary about working with new Russian immigrants, in spite of their technical excellence, the lawyer added.

The New York Times reported that several Russian-born engineers claim to be treated differently both socially and within their companies. Meanwhile, to protect sensitive data, some tech firms are installing tighter security measures applying to foreign-born coders specifically.

“Yet, some startups and small investment firms are more interested in Russian talent now,” Zegelman said.

Russian entrepreneurs should not feel intimidated or discouraged, and focus on the business perspective, added Katya Dorozhkina, co-founder of Starta Accelerator, in an interview earlier this year.

“Since we’re a business accelerator that brings in strong tech companies that then become U.S. companies, as far as American investors and others in the business are concerned, this is all about making money,” she said. “If the investor is smart and understands where the money is, they don’t care about politics.”

This story originally appeared on Www.ewdn.com. Copyright 2017

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Ms. A. C. Kennedy
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