President of the National Association of Business Angels and one of the most active private Russian investors Vitaly Polekhin told STRF.ru about the most popular areas for innovations on the market, the most favorite and unsuccessful projects, the best model of a startups command and his own motivations.
Vitaly, what did motivate you to become a business angel in addition to the financial part?
Financial part is important, of course. Despite such a good prefix as "Angel", it is an investor, first and foremost. Another thing is that besides the fact that he's just a private investor, he is also a man with a soul. He wants to bring to the company not only money, but also the experience, knowledge and communications.
At some point, in addition to my personal entrepreneurial experience, I wanted to be able to be involved in other companies which are developing interesting ideas, which are close to my personal view on technology and market development. That is why I decided that this is the best way to engage and develop several ideas in one time.
In what ideas and areas you are most interested at?
Every six months these areas are changing. There are some mega-trends, they are wider, for example, financial technologies. One or two year ago different mobile applications for bank sector (transfer simple, account management) might be examples in this area. Blockchain and cryptocurrency also appeared now. Areas in these mega-trends will be new for today, but for tomorrow they will be completely different. The main objective of a business angel is to find interesting area, which will become very popular after a while.
If we are talking about mega-trends, in this case financial technologies and digital health service (there are also a lot of different subgroups - telemedicine, health information technologies) are very interesting. Also, I'm interested in the Internet of things: from simple things like bracelets-trackers and smart clocks to complex, such as improving energy efficiency in the city. I talk about the example, when heating system receives data about the temperature in certain geolocation through the Internet and it is possible to change online the temperature adjusting its schedule.
One more interesting area is a shared economy with a conception that it is possible to share things, rent or lease. Its not necessary to own something or to do something by yourself.
What about the most beloved and brilliant project, you have ever been involved?
Perhaps, the most interesting and challenging project is associated with a digital healthcare. I talk about the device, which can perform brain diagnosis without surgery, ICT or MRI. It can be easily put on a head like headphones and the display will show the state of the brain. This is a very important and breakthrough technology. For example, if a man fell, no one doctor can immediately determine whether he can be allowed to go home or he is urgently required hospitalization. This device is based on an algorithm which allows to determine what happened in seconds with the help of a non-invasive way. The apparatus may be in different facilities (not necessarily medical), where is crowded. The product has not entered the market yet, but it is alomost ready and alredy attracted several stages of investments. I am pleased to be involved in the financing during the angels stage.
And what about the history of an unsuccessful project?
Its always more difficult to tell a story of failure because there are always a lot of co-investors and entrepreneurs who have just relieved that everything is already forgotten, because they do not want to discuss it again and again.
I can tell you in general terms. It was a regional project. There were great guys with great technology. Technology has been a world-class, and the project participated in many exhibitions and won a large number of nominations. However, as it often happens, the project was betrayed by wrong management of the founders. At that moment, when the company reaches a certain level, competent professional manager should be the founder instead. Why? This type of people is capable to manage large organizations.
In my opinion, the main cause of the failure is the inability to manage large organization, inability to build certain and obvious production processes. Unfortunately, this story was a failure not only for me, but for others, more than 20 investors in Russia and abroad.
In your opinion, is it possible to make a scientist out of an entrepreneur?
I think that nothing is impossible and that each model has a right to exist. I would like to see the team with only two people. One of them has to be an entrepreneur, willing to promote the project, and the other is a techie who deeply knows the technical part of the question. Because there are two different functions. Entrepreneur is an extroverted, able to communicate with the world and to be open to it, to arrange with people. This work is feasible, but very hard given to introverts. And the most talented engineers and programmers are basically closed in their product and project people, and this is their strength.
This model is the most common. Popular example is Apple, where worked not only Steve Jobs, open to the world, able to communicate with partners, market and potential customers. But the company had to have someone else, who will be able to implement all of these ideas to life, and this is a classic Steve Wozniak.
In the spring of 2016 you became the president of the National Association of Business Angels (NABA). What prospects does it have?
NABA unites various clubs of business angels and seed funds. And the main task is to build cooperation between these organizations. Each of them has a certain experience, and its not necessary to have a hard way when you are able to exchange information and to develop together. Another task is to represent interests of the participants in government. It should help to change certain things on the legislative level, because there are some basic things that should be made in the legislature. So business angels will be able to syndicate transactions (jointly invest) easier. This is gainful both for business angels and for the state, which receives a serious backlog in the innovation economy, - one of its goals.