How to find an investor. Ravshan Kurbanov on the startup industry in Tajikistan

Ravshan Kurbanov, city — Dushanbe, CEO of the investment management company FIFTYFIVE GROUP, founder of Tajikistan Venture Capital, Instagram

About Me

I am the CEO and manager of FIFTYFIVE GROUP, which includes more than 10 partner companies. My main task is strategic management of the company.

Additionally, I am the founder of Tajikistan Venture Capital — the only organization in the country that develops venture investments, conducts educational programs, assists with legislation, attracts investors, and connects them with startups. We also have a small business angels club.

About Investments

For an investor, two key qualities can be highlighted:

1. The ability to work with financial models. This is necessary to deeply understand business processes, evaluate profitability, and project prospects.
2. Skills in working with large volumes of data. This is important for accurate forecasting and analysis to anticipate the effectiveness of the business model, potential risks of the investment project, as well as possible difficulties.

Based on my experience, I will note two main challenges in investing:

1. Understanding the endurance of the founders. A startup is, above all, a story about the team. Yes, the business idea, the presence of an MVP, metrics, and other factors are important, but the main thing is the people we invest in. If the team burns out in six months, abandons the project, and leaves, it becomes a serious risk.
2. Determining whether the problem the startup solves actually exists. Sometimes it looks more like a problem invented in the founders' heads that they are trying to solve. It is important to understand whether this problem really exists and whether it will be in demand.

Overall, the startup industry in the region has been active for the last five to six years. However, it is still difficult to say that we have a developed startup ecosystem like in Europe, the Middle East, South and Southeast Asia. We are still in the nascent stage.

Our current experience is mainly related to processing a large number of startup applications, participating in demo days and pitch sessions.

One of the most successful examples is zypl.ai. We believed in the team and the founder even at the embryonic stage, when there was not even an MVP, and today zypl.ai is a successful startup.

I have several key characteristics of a startup:

1. A technological solution.
2. Capable of disrupting existing business models or creating new ones.
3. With the potential for rapid scaling.

When we talk about rapid scaling, in the modern world this implies at least covering the region. Of course, we consider foreign startups. However, if we decide to invest, one of our key goals and conditions is considered to be the possibility of implementing the startup in Tajikistan.

Since the market is only developing, we do not have a clear checklist for selecting startups. We communicate with any startup, regardless of the industry.

How do we assess the potential of a startup?

1. It is desirable to have a clear and understandable business model.
2. There must definitely be an MVP — we do not consider startups at the idea stage.
3. It is desirable that there is already some investor in the Cap Table, or we need to see that the founders, or at least one founder, have already invested their own money in the project, at least some part.

Just bare financing is not suitable for venture investments. The essence of venture investments lies in the combination of money and the smart component. These two aspects always go together.

For a startup and a young team, in addition to financial support, we can also provide other smart components: networking, the opportunity to test our hypothesis on our existing projects, consultations in the field of legislation and jurisprudence, access to other venture funds, and finally, commercial expertise available in FIFTYFIVE Group.

The minimum check starts at $50,000. It is difficult to name the maximum range due to indicators and other nuances.

We started engaging in venture investments only two to three years ago, so there are no exits yet. Our strategy is to help startups develop for a long time and remain in the Cap Table. We do not adhere to the business angel approach with short investment terms; we are more attracted by the opportunity to make a positive impact on society, the economy, and youth development.

Advice from an Investor

— sign NDAs if possible. This may seem like an archaism in the startup industry, but the level of venture culture currently requires it.

— in the investment agreement, it is desirable to specify not only financial assistance but also other forms of support from the venture investor, for example, SMART Money.

— demand that the investor not interfere in operational activities. He can give advice and recommendations, but not demand execution.

How to prepare for attracting investments:

— the more digital data and metrics, the better
— prove your commitment and dedication to the development of the startup
— show passion and tell your story, why you are doing this
— pay special attention to the go-to-market strategy — how you will bring the product to the market and what marketing tools you will use.

Where to find investors

In addition to venture funds active in the region, you can turn to business angels clubs, corporations, grant programs of international donors and organizations, as well as to successful entrepreneurs who can become business angels.

Plans

Startups in the field of artificial intelligence are of special interest to us, since AI is a new stage of human development that can be compared with such important inventions as the steam engine and the internet.

Besides AI, we are also interested in FinTech, e-commerce, tourism, aviation, and MedTech.