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Investing or expanding in Russia sounds like an amazing and terrible idea at the same time. International sanctions, political instability, giant territory, corruption issues – it is a difficult case. But the companies, which enter the Eastern European market, profit from the booming consumer market and the status of a trusted European brand.

As the statistics (AHK Russia/2018) show, German companies are making a lot of money on the Russian market. In 2018 the top nine groups combined (with Volkswagen, Metro Cash&Carry, Globus, Uniper, and Henkel onboard) reached a turnover of €12bln. The total amount of German companies on the Russian market has declined a lot since 2013, but still counts 3971 firms (AHK Russia/2020). Let’s find out why the Russian market seems to be attractive for the European companies and what can be done to minimize the risks of the new market entry.

First of all, Russia is increasingly becoming a consumer society. The main purchase factors are the brand, quality, and longevity of the product, as they come right before the price. The brand „made in Germany“ (but also „made in EU“) means a lot to the Russian consumers. They trust it even more than domestic products and are ready to pay for the quality. Russian e-commerce is booming and is the fourth largest in Europe. 73.7% of the population lives in urban areas with a good logistics infrastructure. And with the two biggest cities (Moscow and Saint Petersburg) being just 700 km apart you can serve a big part of the market without the need of covering the whole territory. Last, but not least: with nearly 150 million consumers Russia has the same amount of the population as Germany and France combined. All this, combined with qualified, but comparatively cheap labor force make Russia an interesting case with massive potential.

But how can you lower the risks and find the right strategy? Let us take a closer look:

„Russify“ your product.

It is always important to localize your brand. However, the Russian people are proud of their culture, language, and history and don’t like to be judged by foreigners. Political correctness is the key to business communication and marketing here. Don’t underestimate the differences in the mentality, as a successful slogan or design from your homeland can be interpreted wrong. Avoid this by working with local designers, copywriters, and marketing specialists, who can adjust your brand to the local market. A lot of European companies (Nivea, Adidas, and MediaMarkt) adapted their marketing design exclusively for Russia.

Get ready to change your infrastructure and legal documents.

Great things take time. Okay, bureaucracy is not a great thing, but it takes a lot of time, especially in Russia. Like any national market, Russia has its own regulations. Take a closer look at the Russian legal system, a lot of permits are regional and depend on the field you are working in. Do you need to collect personal data? Then you have to follow the law, which requires companies to store the personal data of Russian citizens on Russian soil. Look for local consultants and lawyers, they often know the rules better, than their international colleagues.

Facebook who? Use social media, but the right ones.

The Russian social media market is booming. The biggest companies are communicating with customers through Twitter and are buying integrations on TikTok. Due to the official blocking of LinkedIn in Russia (an issue with local data storage), Instagram became a business and marketing platform. But if you take a closer look, you will find out, that Russian consumers are not using western media only. The market leaders are not Facebook and Google, as you could expect. The main social media platform is VK and the most used search engine is Yandex. Both are local and widely used by Russians.

Don’t be afraid to use the methods you already know.

Even if Russia seems to be an unknown land with a lot of difficulties, you do know about sales and marketing already. A lot of businesses forget to transfer their own success stories into the new market strategy. In general. Russian consumers are the same as others. Don’t overcomplicate the strategy. Find a problem, screen the market, offer a solution.

Get help.

Luckily, you are not the first one, who wants to enter the Russian market. There are a lot of great service providers and advisors, who can help you with all the points from above. They will help you to understand Russia better and minimize the risks.

The story of a successful company starts with an idea. There are many milestones between the idea and the time of its implementation. One of these milestones is often the investor pitch of the own idea.

For founders, the investor pitch is the chance for financing, a network, or the know-how of the investors. If the founders fail to convince investors of their own idea, the idea cannot be implemented. Accordingly, it is all the more important that you know what makes a good investor pitch and how you can convince the investors.

So that you can turn your idea into reality, I have a few tips for you that will help you create your investor pitch.

Investors Pitch – Emotions vs. Rationality

As soon as the investors are determined for a pitch, founders forget that these are people. People who, like you, are guided by emotions, feelings, but also by rationality or empathy. The processes in the mind of an investor work just like any other person. So don’t try to pretend immediately. Don’t just analyse your target audience based on the fact that they are investors. But also from the perspective of people and their challenges.

The book “Thinking, Fast and Slow“ by Nobel Prize winner Daniel Kahnemann offers an interesting approach. According to his theory, which is based on years of research, humans have two systems. A fast, emotional system and a slow, logical system. Hence, the logical system follows the emotional system. And this approach is also reflected in my experience in advising startups. An investor pitch is not all about facts, data, charts, and tables. It’s primarily about the idea, the uniqueness, the vision, and mission as well as the team behind it. After all, it’s about presenting what moves you and your startup. What problem do you want to solve? How do you want to change the world.

These aspects are all the more crucial when it comes to the first financing phases of a startup – Seed or Series A. It follows that the larger the targeted financing amount, the more important the rational aspects – numbers, scalability, or finances. Because the emotional aspects have already proven themselves.

Seven tips for your successful investor pitch

In order to support you with the investor pitch, this section is about giving you a few special tips. Don’t forget – every idea is different, there is no general tip. So focus on your target audience and try to find out as much about them as possible.

1. The big business idea

Don’t just tell facts and figures. Because this is about the reason for your idea and your passion. In my experience, the person pitching the idea has as much impact as the investor pitch. Tell your personal story and what triggered it. Show your passion and your emotions, because these are usually remembered.

2. Your uniqueness

If you intend to become a new Spotify or Zalando, then you have to show exactly what sets you apart from the already established brands and business models. As a result, the uniqueness of your business idea must stand out in your investor pitch. Show what defines you.

3. Numbers, data and facts

Your uniqueness and your emotions play a big role, but you must not neglect rationality in your investor pitch. As a result, your numbers, data, and facts are now in demand. Present your market and show how many potential customers there are for your product. Show whether there are already similar products and what advantages or disadvantages they have. Show your costs so far and how much income you can expect. Use comprehensible arguments to present that an investment in your business idea is worthwhile.

4. Who is your idea for?

Show whose problem your business idea solves? A previously created buyer persona can help you embody your potential target group. According to this, you can better understand your customers, their motives, and backgrounds and align your messages accordingly. Introduce your potential investors to the target group you want to address. The more detailed you do it, the more you convey the feeling of having understood your market and your customers. As a result, you can better customize your product or services and appear all the more credible to your investors.

5. Who is behind the idea?

Pitch yourself – pitch not only your idea, but also you as the person who is behind this idea. You don’t have to present your entire résumé. Bring out your two / three most important stations that enable you to be an expert in your industry. In this way, you create trust and show that you have the know-how to manage the company.

When working with startups, I often experience that the entire founding team carries out an investor pitch. What at first glance appears to be a broad-based competence can have a negative connotation at an investor pitch. My recommendation is therefore to only let the founders pitch, who will also say something at the investor pitch. You are welcome to change the people from pitch to pitch, it’s just about not having a person in the meeting or on stage who does not take an active part. For investors, it can give the impression that this person has nothing to say. What is its function, then?

6. Your social skills

There is one thing you can not forget – you want to solve a specific problem with your product. Show that you are not just about making money with your product. Bring the added value for your customers to the fore and show how you will change their world. With your social skills, you arouse emotions in your audience. And as we discussed earlier, this is a very important part of your investor pitch.

7. Practice, practice and practice again

Have you successfully incorporated all the components of your investor pitch? So now it’s the most important part – practice, practice and practice again. It doesn’t do you much good if you stutter out of nervousness and can’t present your idea optimally. Therefore, I recommend that you practice your investor pitch several times. And that in front of an audience in advance. Find out if your messages are getting through and if they are understandable and clear.