J son partners

Presentation 4th April 2012

"Connecting Mentors with Startups”

Karl  Johannesson  J’son  &  Partners    

Topics

Intro: -Global trends -Russian trends -Kazakhstan status

Role of Mentors:- Why mentor- Ideal mentor- Mentors for Kazakhstan

Startup Key Factors: -Phases

Recommendations - To develop a VC industry ecosystem- Create legislation- Funding mechanism

 About Karl Johannesson

About J’son & Partners

� 30+ years as Management Consultant [since 1981]� Founder of J’son & Partners � Worked in Europe, US, Russia and Central Asia� Vaste International expertise in ICT� Large International Contact Network� Understands Kazakhstan ICT sector:

o Digital Communications 2010 & 2011o Many client projects for Kazakhtelecom, GSM Kazakhstan, Zerde, NIF, KazTranscom , MCIMINT etc etc.

� Management Consultancy� Offices in Moscow, Almaty, Astana, Brussels,� Business Plan, Strategies, Research etc.� 100+ clients in ICT� Famous “brand” in Russia

FinanceBusiness

Plan

StrategyProjects

Market Analysis

Swedish  Na+onality  Speaks  5  languages  fluentlyResident  in  Luxembourg

Number 1 Satellite Operator

Sample  big  and  successful  projects  -­‐  J’son  &  Partners  

Number 3 IT Company

Number 1Central Asia ICT Hub ???

Special+es

M&A

¢ Fundraising – < 100 M equity deals in Russia¢ M&A for clients – internet, mobile, mobile content, portals¢ Business Plans and Investment Teaser across Russia and Central Asia

Several successful seed- and start-up ventures:

Sample:

¢ Founded Sotovik.ru with $50K and developed to #1 mobile portal in Russia. Sold to private investor after reaching monthly net profitof +50K per month

In Kazakhstan

¢ Mentor 3 start-ups in the field of ICT and digital media¢ Assist in raising financing for 3 start-ups+¢ Develop plans for “Mobile Applications Center” [web developers]¢ Platform for start-up fairs at DigitalCom 2011 and 2012

Alexey Trusov,Project manager

of iStartUp

“As a specialist, who supervised start-up projects I would like to say that it is great that we were invited, and the necessary conditions were created and organization of the event, which

can get the best start-up projects.

Today Digital Communications is the most important event in the field of ICT in Kazakhstan.”

Managing Partner of Almaz Capital Partners Alexandr Galitsky participated in Press-conference for startup projects and gave

master-class for startup project managers on how to create a real business from an idea

Alexandr Galitsky,Managing Partner of

Almaz Capital Partners

In Kazakhstan there is more venture money available than “worthwhile projects”. In the US the other way around with a factor of X 1000

Seed Stage Early Stage Later Stage IPO Stage

Seed Capital

Venture Capital

Venture Capital & Acquisitions

Pre-IPOInvest-ment

Profit

Risk

The basics

Venture capital-backed companies are a driver for growth

Venture capital-backed companies produce 21 % of U.S. GDP and 11 % of employment in the private sector, despite accounting for less than 0.2 % of

all businesses – this shows how critical Venture Capital is ! Kazakhstan <500 times less Venture Capital to GDP ratio in 2011.

¢ Requirements for getting a start-up funded by VCs is increasing.

¢ VCs are now more selective and will focus even more on picking only the really good deals.

¢ The evaluation of a start-up should add up to a multi-million market potential before the start-up becomes interesting from a VC perspective.

¢ Also they want to see ideas that present a clear value proposition.

¢ Team behind the start-up is critical. Proven record and experience with dealing with critical stakeholders to your start-up is regarded as highly valued.

Also

¢ Show your ideas and get feedback from mentors.

¢ Don’t be afraid of having ideas stolen. Good ideas can get lost because mentors could not provide feedback.

¢ Your pitch has to be perfect first time

1/3 of world total venture capital is located in Silicon Valley. Another 1/3 of the remaining capital is located in the rest of the US, while the remainder is

“Silicon Valley’s culture can be explained by its interconnectivity and blurring of boundaries between contributors to the ecosystem. The culture has been created by all stake holders – founders, mentors, investors, lawyers, bankers, PR people, journalists, bloggers – supporting the entire business lifecycle, overseeing success from idea and inception through to access to capital, expansion, exit and even failure”

In effect Silicon Valley is a big Mentor Park

Silicon Valley Magic

Venture Comment

#1 Russian Online Travel

60 million game downloads in the first year from initial release without venture money

Best Offer service - Highest revenue growth in Russia’s internet history: from zero to $15 million monthly revenues in one and a half years

Browser toolbar creation service

High-performance web server, reverse proxy and e-mail proxy software provider

Lady Fashion E-commerce

Web recommendation and discovery service to end-users.

   “Sexy”  Russian  Web  Start-­‐up  Plus

largest internet startup funding in Russia $55MSource:  Forbes

Consumer  Electronics

Mobile  Communica+ons

Emerging  

Established

Internet  

Narrow  @me   Long  @me

Biotech  

Broadband

Ar@ficialIntelligence  

Web  5.0

Cellular  Communica+onsInforma+on  Technology  

Computers

Informa+on  Society

Web  2.0

Entertainment

Digital  Content

Content  

Television

Media

Adver+sing

Digital  Devices

Body  TechnologiesRobo+cs

Nano  Technologies

Space  Technology  

Satellite  Communica+ons

Global  Networks

Environmental  Technologies

Disrup+ve  Technologies Big  Impact

2010 2015 2025

Ci+zensTechnologies

LOW

HIGH

MEDIUM Virtual  Reality

Telecommunica+ons

Legend  Segments

Mobile  Communica+ons

Cellular  Communica+ons

Informa+on  Technology  

Entertainment Content  Television

Adver+sing Satellite  Communica+ons

Telecommunica+ons

Informa+on  Society

Transformed

EnvironmentalTechnologies

DigitalBrain  Applica+ons

IndustrialValue

Time

2015 2025

Kazakhstan is on halfway towards becoming digital and could focus on

Source:    J’son  &  Partners

The Bra

ve N

ew

Digita

l World

Source:    B&H,  Corpora+ons,  J&P

 You  are  in  the  wrong  part  of  the  World  J

There is a direct relationship between R&D spend and technological, know-how and new ICT industrial activity including start-ups and spin-offs.

Kazakhstan is not on the radar screen yet.

A mentor is “a trusted friend, counselor or teacher, usually a more experienced person.”

¢ Benjamin Graham acted as a mentor for Warren Buffet¢ Plato mentored Socrates¢ Aristotle mentored Plato¢ Alexander the Great had Aristotle¢ Steve Jobs had Larry Ellison ¢ Kivi had professors at KBTU

Source:  Wikipedia

Mentors are unique because they know about all the mistakes you can possible make and they have a great network. And they are typically inexpensive. If they like your idea they can help you tremendously. But you must take the decisions

and execute. The might take a small piece of your equity.

Typical ICT start-up

1 or 2 person typically starts Pomegranate using savings or other fixed revenues

No hardware is needed as in prototyping phase or making a mobile application.

Pomegranate is likely to survive for only 6 months. Has 10% chance of achieving breakeven, another 10% chance to breakeven in the next 3

months.

With the help of mentor-s Pomegranate success chances areincreasing dramatically

Developing Prototype

Pitching

Finish Prototype

Start Selling

Marketing 4P

Modify

Scale Up

MENTOR

MENTOR

MENTOR

MENTOR

2012

2014

2013

Minimal Viable Product

Investment

Tipping Point in Kazakhstan ?

When will Kazakh Investors [angels, seed-financiers] want to invest their money in Kazakh start-ups or companies rather than putting money in real estate, stocks taxi business or on the bank ?

This will happen when ?

¢ Few local success stories that has made it and can be role models¢ Investing into start-ups is “getting popular”¢ Tax- and risk taking initiatives are introduced for privates and corporates [too invest

in start-ups]¢ When ICT and application environment is more mature [compare Russia in 2000-2005

and Russia in 2012]¢ When broadband and mobile & fixed internet penetration reaches critical mass

in 2014-2015¢ When targeted start-up Funds start appearing [one announced April 3rd 2012 J]¢ + When the stock market in Kazakhstan is reformed, including enabling “baby-IPOs”

Setting up of a Mentoring Programme in Kazakhstansponsored by the government and private businesses

� Connect business leaders with entrepreneurs who have achieved success already. � Introduce Mentor Program within universities and networks of SMES.� Create processes supporting this. Review Board and coaching.� Public presence

Connect Profitable big businesses with start-ups through seed-finance mentor projects; Beeline, Samruk-Kazyna, Kcell etc. allocating funds for mini-projects and/or seed-projects with “guaranteed” success

� Attract and allocate small scale project financing $5,000-25,000 with managed pay-out

Create a Mobile Innovation Center [ecosystem]

� For existing and smaller start-ups can get the first critical know-how, access to hard ware, application environment and soft skills e.g. a“leg-up” to get the idea off the ground.

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Setting up of a in PPAP (public-private-academic partnership) Program in Kazakhstan together with public sector players like Zerde and Alatau IT Park and large and small enterprises, and universities (both local, e.g., KIMEP, SDU, etc., and foreign, e.g., U. Texas, Austin in the US, Lancaster U. and Newcastle U in the UK, and Waseda U. in Japan). Quote Ramesh Kini, KBTU

Introduce a comprehensive Package of Legislation [after consulting with SMEs, investors and start-ups and other stakeholders] to unlock the full potential of Kazakhstan’s entrepreneurial spirit ! U.S. introduced such a scheme recently.

Find and/or create a VC Fund ready to focus on Students – future stars. Give: business planning skills, crucial to young entrepreneursMake: shortlist selected by a judging panel made up of active angel investors and sponsors.Make: Vetting workshops on pitching, accounting and legal advice, networking and

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There will be an internationally structured “Start-up Fair” with real investors and real projects.

So get ready !!!!

Karl  Johannesson

E-­‐  mail:  [email protected]:  +  7  777  017  1900

I  am  ready  to  contribute  as  Mentor    to    any  viable  Kazakh  start-­‐up    !