Accelerating Russia: The Internet Initiatives Development Fund (IIDF)
Series
HS
Type
case study
Date Issued
2018
Author(s)
Li, Jiatao (J.T.)
Abstract (De)
Internet Initiatives Development Fund (IIDF) is a venture capital (VC) fund plus start-up accelerator launched in 2013 by Russia’s Agency for Strategic Initiatives at the behest of the country’s president. Kirill Varlamov is the executive director of IIDF. The case covers the launch of IIDF, its acceleration model, and key strategic challenges.
The case can be summarized as follows:
i. The principal role of IIDF is to identify early-stage technology and Internet firms in Russia and supply them with advice and inexpensive capital. IIDF’s mandate was to nurture start-ups through growth stages toward success.
ii. Having set the foundations for the business by helping to introduce legislation that would benefit the Russian business sector as a whole, IIDF had now to contribute to Russian entrepreneurship. It aimed to do so with state-of-the-art acceleration programs tailored to Russia’s emerging market needs and leveraging the country’s most valuable resource: its young technological talent.
iii. IIDF’s acceleration model consisted of four tiers centered on offline/online initiatives, each with its own positioning and objectives: 1) tier 1: a three-month Moscow offline acceleration program, 2) tier 2: a two-month regional offline acceleration program, 3) tier 3: an online industry acceleration program, and 4) tier 4: technology flipped-classroom university acceleration.
iv. IIDF focused on investing in technologies that “have practical use,” so it never invested any money in blockchain projects (of course, blockchain technology might still be a software layer or part of the technology stack of some projects). In 2016 IIDF invested in Robot Vera, a venture aimed at developing AI that replaced basic personnel recruitment. In January 2017 the first revenue trickled in at about USD5,000 per month. According to IIDF, by December, monthly sales amounted to USD200,000. In early 2018, financing rounds in the USA were considered, and it was thought that the venture had a USD15m premoney valuation that could reach USD100m by the end of 2018.
v. IIDF, however, faced a number of strategic challenges. Kirill knows that success at IIDF means building a strategic tripod consisting of achieving internationalization, focusing on exits, and generating good financial returns.
The case can be summarized as follows:
i. The principal role of IIDF is to identify early-stage technology and Internet firms in Russia and supply them with advice and inexpensive capital. IIDF’s mandate was to nurture start-ups through growth stages toward success.
ii. Having set the foundations for the business by helping to introduce legislation that would benefit the Russian business sector as a whole, IIDF had now to contribute to Russian entrepreneurship. It aimed to do so with state-of-the-art acceleration programs tailored to Russia’s emerging market needs and leveraging the country’s most valuable resource: its young technological talent.
iii. IIDF’s acceleration model consisted of four tiers centered on offline/online initiatives, each with its own positioning and objectives: 1) tier 1: a three-month Moscow offline acceleration program, 2) tier 2: a two-month regional offline acceleration program, 3) tier 3: an online industry acceleration program, and 4) tier 4: technology flipped-classroom university acceleration.
iv. IIDF focused on investing in technologies that “have practical use,” so it never invested any money in blockchain projects (of course, blockchain technology might still be a software layer or part of the technology stack of some projects). In 2016 IIDF invested in Robot Vera, a venture aimed at developing AI that replaced basic personnel recruitment. In January 2017 the first revenue trickled in at about USD5,000 per month. According to IIDF, by December, monthly sales amounted to USD200,000. In early 2018, financing rounds in the USA were considered, and it was thought that the venture had a USD15m premoney valuation that could reach USD100m by the end of 2018.
v. IIDF, however, faced a number of strategic challenges. Kirill knows that success at IIDF means building a strategic tripod consisting of achieving internationalization, focusing on exits, and generating good financial returns.
Language
English
HSG Classification
contribution to education
HSG Profile Area
SoM - Business Innovation
Publisher
Harvard Business Publishing
Publisher place
Hong Kong
Number
1
Subject(s)
Division(s)
Eprints ID
256363