How Russia’s HSE Incubator Helps Bring Technologies To Life

HSE’s team at the UBI Awards in Toronto, Canada, 2018

Mikhail Erman, CEO of the Moscow-based HSE Incubator, explains which important qualities the organization looks for in startups, which industries are up-and-coming and which struggles startups in Russia face.

How would you describe the HSE Business Incubator in a few sentences?

The HSE Incubator is the Business Incubator of the Higher School of Economics (HSE). It is the place where you can start the path of a technology startup. We help founders throughout their journey – from their initial idea to scaling their business and validating their product on the market. Through our own expertise, experience, and knowledge of techniques and tools as well as an extensive network we make sure our founders get the support they need to become successful. The UBI World Benchmark Study for 2017-2018 has recognized our efforts with awarding us among the Top 7 University Business Incubators.

We have been operating since 2006 as a structural unit of the Higher School of Economics, and are not only supporting students and employees of the University but everyone who wants to build their own company.

Which kind of programs do you provide for startups?

The main products through which we help startups are our accelerating programs. There is the main program HSE {Pro} for which applications are open every month. For this program, we accept early-stage projects from various sectors.

In cooperation with our industry, investment, and infrastructure partners, we periodically carry out industry acceleration programs such as FinTech, PhilTech (technologies for philanthropy), industry 4.0, media, etc.

Though we don’t invest in startups, we’ve made it our mission to support them in reaching a good market traction and thus attracting investors. In addition to this, we continuously host various events for a wide audience – from educational master classes to lectures and open mic nights for startups – which help bring together and support the communities around the HSE.

Which startups now are a higher priority for you?

Our main criterium is the availability of a technology or innovation in the product/service the startup offers. Industry-wise we are open to B2B and B2C projects from IT (in a broad sense), EdTech, FinTech, AdTech, Digital Health, Deep Tech, Security, AI, Big Data, Industry 4.0, and so on.

So, we work with a lot of projects and have a rather large focus. It’s easier for us to say whom we don’t work with which are HoReCa, medical (drug) startups, and classical businesses.

What do you look for in founders and startups joining your program?

When a person comes to us with an early-stage idea, we look at the person first instead of the idea because an idea can be changed a hundred times. We make sure that this person and their projects have what we are looking for:

1. Adequacy: The ability of the founder and the team to calmly accept and rework criticism and advice, the ability to hear and listen, to receive and consider the words of experts.
2. Ability to execute: The ability of the founder and the team to perform planned actions, get results, draw conclusions. It’s an important criterium in the early stages when success is largely measured by the number of tested hypotheses and committed actions. For later stage projects, this criterium is adjusted into the track record.
3. Critical thinking: The ability to accept the received data of testing your hypotheses without distortion and attraction to the desired result.

We check all of these points during the “trial period” of the acceleration program, the sandbox, in which startups can see how we work and vice verse.

What can startups expect from the HSE Incubator?

We work based off three core values: expertise, network, community.

We have extensive expertise when it comes to building businesses based on personal experience. We know what it means to be successful as well as to fail therefore we have an understanding of which methods can help, which tools are needed and how to work with them. At HSE Incubator, we see thousands of new companies every year and thanks to this exposure we can identify typical mistakes and misconceptions. Additionally, through the hundreds of startups we’ve worked with, we can also see which of our services is working or which elements of the program are distracting or don’t bring any results – and we adapt.

The network of the Incubator and its team helps founders and their startups to reach the right people and establish cooperations with them. We already have a good reputation on the market so we recommend only proven and reliable people. Most people will agree that when you don’t know anyone in the market it’s hard to break into it. HSE introduces startups to professionals and corporations in particular industries to help them become future partners or clients.

What is more, the presence of our powerful community of graduates and residents present an incredible opportunity to find customers and partners as well as to ask for advice of those who face similar challenges, to discuss exciting issues. It’s also happened that two founders’ projects have failed and they built the third one together. We find this synergy amongst the participants is especially inspiring.

Which are some of the most successful startups that have participated in the HSE Incubator?

Since we work with very early-stage startups and ideas, for one reason or another, 80% of them are closed within the first two years. A part of the founders abandon their project at the beginning of the acceleration phase – which actually is an important result as well. When founders kill their projects because of objective reasons, e.g. lack of demand, it saves resources such as time, money, and nerves.

Though we did not have any international unicorns going through our program just yet, our more mature graduates are firmly entrenched in their niches and have become financially stable. Some of them include:

• TimePad, a service for organizing events, which was founded by the employees of the Incubator in 2008. These guys structured the lists of people for the events and came up with a convenient tool for the organizers. At one time, TimePad was the first to develop a niche of electronic tickets for events, and now it seems that it can not be different, as it is so convenient.
• Hiconversion: automating advertising
• SportVokrug: CRM-system for managing the organization and conduct of sports events
• Statsbot: a business intelligence company that raised more than $ 1 million in Silicon Valley
• Suretly: “Tinder for borrowers”

What are the main challenges startups in Russia face?

In Russia, startups have to deal with the illusion of a large market. The population is very high (150 million), Russia’s a huge country but in reality, the selling and scaling of a product are very difficult. The solution to this is to build and support tech companies with a global focus.

What advice can you give to entrepreneurs?

You can only make a mistake when you do nothing. Always use the opportunities that are opening up in front of you – see them, realize future scenarios and use them to develop yourself and your company.

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