Ruslan Tymofieiev (Ruslan Timofeev), the founder of Ukrainian venture capital fund Adventures Lab, shares experience on how to select start-ups for investment and what are the main factors that influence the final decision.
Ruslan started his career path with a development of a CPA network called Everad that became successful. With the sale of the network, Tymofieiev founded a venture capital fund Adventures Lab that has added several profitable world-famous startups in its portfolio over the years. Reface, StreamHero, EduDo, and SALO are funded by Adventures Lab.
Among the latest successful deals, there is Narrative BI (a marketing startup from the USA for automatic generation of actionable data insights) and Pibox (a startup from Ukraine for audio and video content review).
Ruslan Tymofieiev says, he became interested in investing seven years ago. One of the first projects he chose was a taxi service in Kyiv, Ukraine. The founders tried to build “Ukrainian Uber” but failed because neglected operational issues and focused only on an application. The greatest financial loss was around $100,000 but this is the necessary experience that can be achieved through trial and error.
According to the expert, a person who wishes to become an investor has to analyze dozens of investment deals to prevent loss of money and time on unpromising projects. Ruslan Tymofieiev warns to take decisions based on calculations, not emotions, and to put money only after careful assessment. In Adventures Lab, investors analyze hundreds of startup ideas but fund just a few.
The investor tells that some founders with brilliant ideas can receive a “green card” from the venture fund, but their projects also pass a check. First of all, it is necessary to understand the situation on the market, and if there is a niche to occupy, then one should check the competencies of the founders and the team if they can bring to life their idea.
Ruslan Tymofieiev explains that his fund is working with projects that enter markets that growing fast and are not oversaturated with the competitors. For example, if the idea is great but the market is not deep enough, there is no reason for the fund to invest in the project.
“А founder or a manager of the start-up must be replaceable”, says Ruslan Tymofieiev (Ruslan Timofeev). He explains that in Reface it was necessary to change the manager, and the project continued to grow because there was a person in the team who could quickly replace him.
Adventures Lab chooses projects for investment according to the size of the market they are entering. The fund is ready to risk if the potential revenue is substantial. The game should be worth the candle. For instance, Reface was a risky project but it was aimed at the unlimited market and the result exceeded the expectations. With the profit received from this project, the fund invested in 30 new projects later.
According to Ruslan Tymofieiev, the most demanded and attractive for investors will be projects based on such technologies as the Internet of Things, Artificial Intelligence, and Machine Learning. Startups for mobiles will easily attract funding as well.
It is important to note that following the trends does not guarantee a successful investment deal for the founders. Venture funds invest in spheres that they understand, for example, Adventures Lab is experienced in educational and entertainment projects. That is why the task of the founder is to look for unconventional ideas and to work on them.