COVID-19 rapidly altered the global business landscape. Companies were forced to innovate in the face of lockdowns, social distancing, and other restrictions. Sweeping changes due to the pandemic made it extremely difficult, if not impossible, to conduct in-person business, close deals, or meet with potential clients face-to-face.
Many companies have suffered financially as economic slowdowns dry out the appetites of investors and restrict the ability of consumers to spend money on products.
COVID-19 emphasized the importance of online services that can be utilized by anyone across the world. It also highlighted the importance of adept marketing to attract new customers adjusting to a more digital lifestyle.
CEOs Andrey Belozerov and Artem Ermolaev have been at the forefront of the tech and digital revolution and have first-hand experience at how both have bright futures even in a ‘post-pandemic’ world. Belozerov and Ermolaev founded the private venture capital club Digital Disrupt in 2020, focusing on tech companies and early-phase startups with a MVP, initial sales, and real-world marketing hypothesis test results.
One of Digital Disrupt’s investment focuses is on-demand services like eLearning platforms, keeping the duo extremely busy amid the pandemic as the number of online learners keeps rising.
We caught up with Belozerov and Ermolaev to get their perspective on how they identify companies with innovative and unique concepts, and how startups should adapt in a world forever altered by the pandemic to attract investor attention and capitalize on new and future trends. Here are some highlights from our interview.
2020 was a unique year for many business owners. Why did you choose to found Digital Disrupt last year, and what were some of the most challenging aspects of launching in the midst of a pandemic?
We started working on the first investment projects in 2019. In 2020, together with our partners we decided to bring them all under the umbrella of investment club Digital Disrupt. The pandemic had a neutral, and even a positive effect for our target markets – technology and digital services, so we doubled our portfolio in 2020, which includes Tilli, our digital educational platform for preschool development, QB Box, a subscription-based self-storage on demand by platform, and the PitchMe recruitment platform, among others. The pandemic boosted the offline to online transition and we expect that trend to work well even when the storm ends.
The challenging aspect was the necessity to change our minds and boost our own transition from online to offline. Now there’s no need to fly and meet teams and partners in person to make a decision. Shaking hands is no longer an obligatory element of the investment process. Digitals tools let us expand our portfolio and make business with people from any part of the world.
How do you think operating in the ‘new normal’ has impacted the work and vision of early phase startups? Are there still market opportunities during the pandemic?
Previously, there was still a certain barrier to online communication. That was a problem. Now time zones and geographical locations are no longer such barriers. Using digital tools is quite enough to meet people, make investments, and operate businesses. In regard to market opportunities, digital is obviously growing, but offline will strike back as lockdowns and isolation ends. Digital Disrupt is aware of this and invests in projects such as a car-sharing platform called Mashina and the mobile app Carousel for sharing electric scooters in Moscow.
With an investment portfolio that includes industry giants like Momentus, are there any business or marketing patterns you notice with these big companies that smaller startups or early-stage tech companies would be wise to adopt?
Momentus is truly a disruptive company that is not afraid to break the mold. The company provides in-space transportation and infrastructure services, which is highly innovative in itself. It’s also launching a unique low-cost modular approach satellite as a service for hosting your payload in space. And by 2050, the company plans to extract minerals on other planets. This is exactly the kind of disruptive thinking that can be borrowed from such industrial giants as Momentus.
What evolutions do you see in the general venture capital industry across the next five years?
HealthTech started showing its growth even before the pandemic, but in 2020, e-health showed huge growth. Business models focusing on remote patient management and care have benefited from rapid growth. As far as we can see, this trend will continue at least in 2021 but further development is also possible. Consequently, VC investment in e-health will only increase.
What are three components Digital Disrupt looks for when evaluating a tech company or early-stage startup for the first time?
A project with a valuable offer that meets the existing demand or creates a new one. It is extremely important the principles, competencies and vision for further development of the startup and Digital Disrupt coincide. We can talk about fruitful further cooperation only if there is a match.
Which geographic market area do you perceive as having the greatest breakthrough potential? What is one unique aspect of this market many would not know about?
We see disruptive potential in the African market. We believe growth of the digital industry across Africa is a proverbial ‘time bomb’ about to explode. This includes the transition to online education and the development of online services. Africa has a huge potential for development, so investing in this market now is extremely profitable. That’s why we are investing in HIPPO FRED, an educational startup for children in Kenya. This project seems extremely interesting and has great prospects in the African digital market.
What advice would you give to those interested in launching a startup in a so-called ‘disruptive industry’ like material science, blockchain, biotech, etc.
Maintain and develop expertise, build a strong network of partnerships in the field of capital, science, technology, and the digital world. And most importantly, be ready for a long-distance race.
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