While still a student, Ruslan Tymofieiev (Ruslan Timofeev), the founder of the Ukrainian venture capital fund Adventures Lab, created the CPA partner network Everad that turned out to be very successful. However, the aspiring businessman soon became interested in investing and fully focused on this activity, selling his stake in Everad. Today, Adventures Lab’s portfolio includes several high-profile projects such as Reface, EduDo, SALO, and others. Another two promising startups, the American marketing platform Narrative BI and the Ukrainian music and video production service Pibox, have recently joined the fund’s portfolio.
The businessman explains how the fund selects projects to invest in, what mistakes novice investors make most often, and why even a very promising startup may fail.
What mistakes should novice investors avoid?
Today, Ruslan Tymofieiev is a successful businessman, but at the beginning of his investor career, he made mistakes as well. One of his first investment projects was a Kyiv taxi service that worked on the principle of Uber. Tymofieiev believes that the project failed because its founders did not take into account that it was an operational business, and it was not enough just to develop an application for its efficient operation. As a result, the businessman lost about $100,000. Subsequently, he financed several more not very successful startups. However, he sees his failures as an important experience that every investor should gain.
Ruslan Tymofieiev is convinced that most mistakes can be avoided if one studies the theory and the other investors’ experience well. A profound analysis of their mistakes will help save you money and will keep you from ill-advised acts. It is important to assess the niche the project plans to develop in, the founders’ capabilities, as well as how high the competition in the market is.
The Adventures Lab founder emphasizes that even a seemingly promising startup with a good team may not generate the desired profit if the market is “overheated”. For a startup, a growing market can be the key to success, even if there are no experienced managers in the founding team.
How does Adventures Lab select startups for investing?
According to Ruslan Tymofieiev, Adventures Lab finances one or two projects out of hundreds under consideration. What is more, the fund starts with examining the market, its “overheating” level, the competitiveness of the niche, as well as external factors affecting the market. And only then do the fund experts analyze the startup’s team.
The fund focuses on unlimited markets, so it often has to reject projects with good ideas, an experienced team, and a systematic approach. But Tymofieiev is convinced that you need to turn down good startups in order to invest in the best ones. Sometimes, the risk turns out to be very high, but in the end, the profit will be much higher. For example, a startup’s check is $500,000. Of course, this is a risky investment, but if the project “makes a hit”, then the potential profit will be unlimited and will allow financing several dozen more projects with the same check.
What should a startup founder be like?
The investor is convinced that the project founder must have the proper level of competence. At the same time, the expert emphasizes the possibility of replacing the founder or the manager, and the project should not suffer from this. As an example, Ruslan Tymofieiev (Ruslan Timofeev) cites the manager replacement at Reface. According to the businessman, the company must either raise a person capable of taking over the corporate governance or hire one.
Moreover, the founder’s network effect is important. The more acquaintances they have, the more effective is the company’s access to useful information that will help take the lead in the niche.
