- Alexander Galitsky on the start of his career
- Difference between an entrepreneur and an investor
- Alexander Galitsky on the qualities every investor needs
Alexander Galitsky is the founder of Almaz Capital, a venture investment fund that works with projects from Eastern Europe. The fund was created with the help of Cisco Systems that was looking for opportunities to expand in post-Soviet countries. Galitsky had been managing a number of successful start-ups in Russia and Europe when the fund was created. Today, the venture capitalist is no longer interested in the Russian market, so he left all the Russian projects he used to be a part of. The main reason for that is the fact that most of these projects have changed their development vector and are no longer focused on going global. Alexander, on the contrary, only sees potential in working with start-ups that aim to become internationally successful and strive to reach the level of Silicon Valley.
Alexander Galitsky on the start of his career
We asked Alexander Galitsky whether he had received any help or advice when he had first started with ELVIS+ (his first tech company that was founded in 1991). During that time, post-Soviet states were full of promising young people. Some of them achieved great results in various professional fields thanks to their knowledge and skills. However, even more young and talented people failed to find their place in the new world — and one of the obstacles on their way was the lack of knowledge about business, marketing and advertising.
“I was an entrepreneur and I knew next to nothing about business. In terms of competitive technological advances, everything was great. We could solve any engineering problem and outpace many of Silicon Valley’s leading tech companies. Yes, our ELVIS+ company was the first to implement the 802.11 protocol (the prototype of the Wi-Fi technology) in 1992. We also later introduced the PCMCIA (The Personal Computer Memory Card International Association) standard. In October 1993, together with Sun Microsystems, which became our investor in March 1993, we participated in the Interop exhibition in Paris. This was where we introduced our 10 Sparc Station workstations running on a wireless network. In 1995, we deployed the world's first Windows VPN via SKIP. This product was acquired by Sun Microsystems in 1996 and entered the market as SunScreen E+ in 1997. However, these were purely engineering successes, not business ones. At the time, I saw venture capitalists as speculators. To this day, I regret it. I missed out on a lot in terms of my business potential in those early years because I chose to ignore the importance of sales and marketing.”
— Alexander Galitsky
Difference between an entrepreneur and an investor
Alexander Galitsky shared his opinion on the difference between an entrepreneur and an investor. Surprisingly enough, one might find that the difference between how the two work may tell us a lot about their character.
“This is a very complex question as it has many aspects to it. In terms of their roles, entrepreneurs are ‘dream achievers’ and investors act as their ‘supporters’. The job of an investor is what you might call a ‘servicing’ job, which is to provide finances, experience, business reputation and professional connections. And finally, an investor never takes over the driver’s seat in the entrepreneur's business.”
— Alexander Galitsky
Alexander Galitsky on the qualities every investor needs
“First of all, they need to be well-versed in the industry they invest in and have a good business reputation. They also need to have experience in operating start-ups. What matters to me personally is whether my fellow investors (if they invest with me at the early stages) have been in the shoes of an entrepreneur and whether they have acquired the experience and skills to fight for survival. We know that statistically only 10 percent of start-ups go through seed investment and get to the Series A funding round. And only 30–40 percent of those lucky 10 percent are the ‘survivors’ that get Series B investment. The term "smart money" comes to my mind. That is what I am looking for in a partner.”
In case you did not know, the term “smart money” that was mentioned by Alexander Galitsky originated in the sports betting world. It refers to a person who has deep knowledge of the game, teams, players, etc. Today, the term also refers to the capital that is invested in the market by institutional investors, central banks, funds, and other financial professionals. Smart money is the force that influences and drives financial markets.
At the moment, Alexander Galitsky is no longer taking part in any Russian projects for a number of reasons. For example, he left Alfa-Bank because he had concerns about the changes in the bank's policy regarding its domestic and international operations. As for Skolkovo, given Almaz Capital's stance on the matter, he saw no way to remain as efficient as ever. So, the main reason why he cut ties with all Russian companies was that they all had changed their development strategies, in which becoming international corporations was no longer their primary objective.