Yandex hosts Tolstoy Summer Camp for startups

Yandex may support three of the best Russian startups. Source: ITAR-TASS

Yandex may support three of the best Russian startups. Source: ITAR-TASS

After three years of working with startups, Yandex decided to try a new strategy and opened a summer workshop for developers - the Tolstoy Summer Camp. Yandex will provide financial support to three finalists from this workshop.

The Russian Internet company Yandex has taken interest and may support three of the best projects created during a summer workshop for developers, announced Xenia Elkina, the program manager at Yandex.

Among the three projects that will receive support from Yandex is an application for voice playback of news found on social networks (Speaking Mind), a service to store loyalty cards on your smartphone (Fivecards), and an application to display additional content about football matches (Football Second Screen).

Among the finalists, there were an additional 12 projects that were presented to investors. The Tolstoy Summer Camp received more than 1,000 applications from developers, out of which 65 candidates were selected from Russia, Belarus, Ukraine, Moldova, Kazakhstan and the United States.

Thus, just one year after the last similar event — Yandex.Start — the company is making another attempt to enter the international startup community.

Three years on the startup market

This is not the first time that Yandex has worked with startups. In 2010, the company launched an investment program called Yandex.Factory, through which it has already financed five projects: Social Mart, Dzenmani,, GBooking and Citrea.

“Yandex started its deliberate work with startups three years ago, when we held regular open days called Yandex.Starts, and through this acquired several projects. The Tolstoy Summer Camp is just the next chapter in this story,” they explained at Yandex.

According to publicly available information, during the last few years, the company has purchased only three startups and invested money in five. By comparison, Yahoo buys about the same amount of startups every week.

“We have not yet learned to work so valiantly in buying up projects like Yahoo and Google do, but we believe that a bright future is still ahead of us. This is one area that is impossible to abandon, because startups are a very important source of ideas for the development of a company and its products,” said Elkina.

“Yandex does not want to simply collect new ideas, as many people seem to think; the company already has many ideas. What Yandex needs is ideas and hands. Therefore, the goal here is not direct hunting. The target is rather broader: Yandex is trying to develop a new generation of people.” At least this is how the company is positioning its activities in the startup market.

Analysts point out that the new format of cooperation with startups was not needed so much by the startups, but by Yandex itself. The company obtained no tangible benefits from its previous tactic.

From 1,000 candidates, only a few were purchased and several others received investments. In addition, some do not rule out the fact that this new approach will enable Yandex to uncover promising IT-staff for future recruitment.

Startups for Yandex

It should be noted that Yandex is not a venture capital fund. Yandex does not take risks and invests only in specific projects — which explains the small number of startups that are supported by the company. Yandex is also a partner. “In fact, Yandex is also a startup, but with a capitalization of more than $10 billion,” said Elkina.

Yandex is interested in products that are designed for hundreds of thousands of people, and not for a limited number of users — in other words, not just a social network for expectant biker moms.

In addition, of all the startups supported or purchased by Yandex, the successful ones are those that have involved themselves in the company's work and added to and improved its services — startups such as WebVisor and Loginza. The most notable separate project that was supported by Yandex was the virtual classroom Colorpen, which was closed on Sept. 3 without explanation.

Yandex and the market

Experts agree that, on the whole, Yandex is doing the right things to stimulate the emergence of new startups. According to Nikolai Davydov, investment director at ITech Capital, the apparent lack of concrete success stories, dozens of acquisitions and dozens of first-round investments into supported startups does not mean that the results are nil.

“In fact, as one of the most successful Russian IT companies operating in the international market, Yandex has developed a variety of rather very competitive products — even avoiding at one time being gobbled up by Google. Yandex creates really effective programs, and not only in the startups sphere, but also in scientific areas such as the bioinformatics school,” said Davydov.

When it comes to supporting startups, Yandex does not follow the altruistic path.

“Yandex is being cunning when claiming that startups are the main purpose of its programs. Of course, the main goal of most of these programs, given the skilled personnel shortage in Russia, is to attract talented professionals to the company, including from abroad — and startup games are an excellent way to achieve this,” said Maxim Godse, director of the InCube Business Incubator.

Godse also noted that the methods Yandex uses to support enterprises are rather weak. According to him, the preparation of attractive investment projects requires skills in discreet intervention and support. However, this has not been seen in the Yandex program.

“In their efficient program, in terms of working with projects, there is one very significant flaw: Yandex, as a company, does not specialize in the preparation of young startups, and they do not have their own tested methodology to work with these, such as the well-known programs of Enterprisers and GrowthWheel, which use business accelerators all over the world, including in Russia,” said Godse. “At Yandex, they are great at advising developers, yet the part of their program involving the development of small business is, of course, makeshift.”

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