How to find an investor. Daniil Abdyldayev on startups with high investment potential

An investor from the Kyrgyz Republic spoke about the Accelerate Prosperity startup accelerator, the ADVentures venture fund, and shared his plans.

Daniel Abdyldayev, City: Bishkek, Chief Investment Officer, Accelerate Prosperity startup accelerator, Managing Partner, ADVentures Co-Founder, chANGELS angel organization, LinkedIn

About Me

In the past, I was an investment banker. At some point, I became interested in trying my hand at the other side of the table — in operational management. For a while, I worked at the Kazakh ticket operator Freedom Ticketon. It was then that my interest in startups was born.

Then, friends invited me to work for the ololo group of companies — the largest network of creative hubs in Central Asia. I led their venture division, John Galt, for the past five years. After John Galt, I decided to create my own small venture fund — ADVentures, with a size of $5 million. The fund’s goal is to invest in early-stage startups from Central Eurasia. We focus on founders who have global ambitions and want to expand beyond the region.

Recently, I joined Accelerate Prosperity, a startup accelerator operating in four countries, as an Investment Director. I also became a co-founder of the chANGELS angel organization, which trains business angels and helps them invest in companies founded by people from our region.

In my current activities, I enjoy the continuous learning I gain from interacting with founders. This is precisely why my fund is called ADVentures: each startup is a kind of adventure. It is a great privilege and pleasure for me to be part of these adventures, support founders, and help them. This defines my philosophy.

About Investments

In the book "Venture Mindset," Ilya Strebulayev and Alex Dang describe important principles that every investor needs to understand and apply. In investing, one must possess strategic thinking and patience.

Most startups do not survive, and selecting the right companies to invest in — those that can grow and scale — is a difficult task. The principles described in the book help solve this problem. All investors should read this book, and I hope it will be translated into other languages.

Our ecosystem is still young and in the early stages of development in the region. There are not many funds yet, so we are forced to remain agnostic and not delve into specific verticals or stages. Many funds invest at early stages, which is associated with high risk. There is an ironic saying among early-stage investors — "spray and pray" — when a large number of investments are made, and then they pray that something will "take off." At this stage, investments are usually directed at the team, as there are no outstanding performance indicators or metrics yet. And here it is important to choose people who can scale the project in the future.

At John Galt, we invested in the creative industry and established the first fund in Central Asia, the ololo creative impact fund, which invests in this sector. Within the framework of this fund, about 15 companies were supported in the first cohort after completing the acceleration program.

In addition, we invest in Accelerate Prosperity, dividing funds into two main groups: small and medium-sized enterprises, as well as technology companies and startups. So far, we have invested slightly more than $3 million. We have more than 90 companies in our portfolio, 20 of which are IT startups. Within our angel platform, we are just beginning to invest in startups and recently closed our first deal.

We take into account all the classic criteria that investors use when selecting startups. The most important ones are that we write the first checks and work at early stages; we pay the most attention to the team. There is even a saying that it is better to invest in an A-level team with a B-level idea than in a B-level team with an A-level idea. At early stages, when much is still uncertain and there are many risks, we focus on the founder team. We are interested in their track record and background. We particularly value founders with experience who have already gone through exits and have experience working in companies they created or founded.

Venture investing is a risky area, especially when we work at the earliest stages. Our task is to find those founders who can create successful companies. Usually, out of 20 startups invested in, 18 do not survive, and 2 become so successful that they cover all the risk. Therefore, we look for and invest specifically in these two companies that can bring significant profit.

At the Central Eurasian Forum, one Western professor expressed an interesting thought: "The product of investors, venture capitalists, and accelerators is branded money." Money can be found from various sources, but the value is what lies behind that money.

Besides investing, we provide startups with product assistance and operational support. We also help startups raise larger rounds and introduce them to next-level investors thanks to our strong network in Central Eurasia. We also support startups in going public, helping with clients and expanding their network. Currently, at Accelerate Prosperity, we are working on mapping resources and investors for our portfolio companies so they can easily find the necessary resources and attract investments for further growth.

We usually invest small amounts — from $10,000 to $50,000, but in exceptional cases, we can invest up to $100,000. These investments are directed both at small and medium businesses and at technology startups. We use different instruments: we can provide loans through our partner bank, offer convertible loans, or take equity in the company.

Mostly, we invest in graduates of our programs, which include more than 10 incubation and acceleration programs per year. After the demo day, our investment committee, consisting of our team and invited experts, selects the winners. Then these companies undergo due diligence. If the check is successful, they are brought back to the investment committee for a final decision. Depending on the investment amount, additional decision-making stages may be added.

The holding period for investments depends on the financial instrument. In the case of loans, it is simple: there is a clear structure and deadlines, and once the startup repays the loan, our involvement in the project ends. If it is equity investment, we hold it until exit. We are actively working to increase the number of exits, but so far, no such deals have occurred.

Investor Advice

The main recommendation is to treat fundraising as a separate job. CEOs and founders should approach fundraising systematically, like a sales funnel, expanding the list of potential investors and studying which ones are suitable for the company.

We often encounter a mistake when founders send one universal pitch deck to everyone, without considering the investors' stages and verticals. This leads to wasted time. Therefore, it is important to study investors' portfolios, their stages, and prepare for due diligence in advance.

If startups prepare customized pitches, study investors' decision-making processes, and prepare a data room, the process will be faster. There are already many funds in the region supporting early stages, so founders can approach them; it is important to understand in advance which checks and stages interest them.

Plans

One of the main trends in Central Eurasia is the integration and unification of ecosystems. We see that the countries of the region, even large ones like Kazakhstan and Uzbekistan, cannot be interesting for global players individually, so it is important to unite and develop ideas that will be interesting on a global level. These integration processes will continue, and we will see more interconnection between ecosystems.

Within the framework of Accelerate Prosperity, our plans include entering the Uzbek market, launching a venture fund for early-stage startups, and increasing integration between ecosystems. We strive to create a common roadmap for the development of Central Eurasia.
We recently returned from the TechCrunch conference in Silicon Valley, where Silkroad Innovation Hub organized Central Eurasia @Silicon Valley for the first time, presenting the Central Eurasian ecosystem at the largest technology conference on such a scale.

We strive to build bridges with developed ecosystems and create partnership acceleration programs. We need to increase the number of our founders in top accelerators. For example, only one startup from Kyrgyzstan has entered Y-Combinator, and in the entire region, there are fewer than ten such stories. We plan to launch pre-acceleration programs to prepare founders for top accelerators and increase investments in these companies. We also need to work on increasing venture capital in our region, as at the Series A stage, the number of funds is limited, and founders often have to look for investments outside the ecosystem.

Besides investments and incubation programs, it is important to highlight success stories. We thank The Tech media for their work, as such stories inspire others to create companies. Our goal is to increase the number of unicorns in the region, and with their appearance, the path for others will become easier.