11 July 2020
MTS is one of the largest mobile operators in the world by the size of the subscriber base. Today it is transforming into an IT company and is developing corporate innovations. MTS operates an innovation center in order to speed up the study of new promising areas and the launch of new products and services. Dmitry Kurin, Director of the MTS StartUp Hub Innovation and Investment Center, told Startup Jedi how the MTS ecosystem works, how it can benefit startups at different stages of development, and how to get into this ecosystem.
MTS Startup Hub also took an active part in the friendly international conference Emerge, within which we had published this material.
Why does MTS work with startups?
For a long time now, MTS has stopped being only a telecommunications company, but has become a full digital ecosystem. The MTS group includes such business verticals as MTS Bank, #CloudMTS, WASD.tv streaming platform, AI, IoT and many others. For the accelerated development of these areas, MTS attracts innovative solutions from the open market, since this often allows it to work with ready-to-go products, reducing the time to market for new MTS solutions. The goals of working with open innovation are to prepare startups for pilots, and to plan hypotheses and KPIs for these pilots. Successful pilots move into scaling, gaining the opportunity to establish long-term relationships with the company.
Why should startups work with MTS?
For startups, this is an opportunity to scale their product, gain access to our company’s sales channels, gain expertise and find a strong strategic partner. Startups can also get investments from the corporate MTS venture fund being at a certain stage of the development. In addition, MTS can help improve the startup’s products and solutions for operating in 5G networks.
Does MTS give money? What are the terms?
MTS, as an advanced digital ecosystem, has different tools for sponsoring startups, depending on the project’s product maturity stage. MTS provides different conditions, based on the path along which the work with the startup is going. If a startup becomes a resident at our corporate accelerator, it receives a grant of 200 thousand rubles. In case of successful completion of the acceleration, the startup launches a pilot along with one of the structural divisions of MTS. MTS provides up to 500 thousand rubles to the startup for implementing the pilot. After the pilot, the project scales up and becomes a long-term partner with MTS. There are three ways to do that: purchase of a license for a startup’s product, creation of the joint venture, or launch of the revenue sharing model. Also, the founders can get an offer to sell the company and develop their product within the MTSs framework.
In addition, we have a 5G Incubator, where startups test their solutions on next-generation networks. This program allows companies to receive a grant of up to 500 thousand rubles for the further development of cases using the 5G network.
Moreover, we have a venture fund that is ready to invest from 500 thousand dollars in startups, whose products can be applied within our company.
At what stage of development should a startup start working with you?
If we are talking about an accelerator, then we are waiting for startups that, at least, have already created an MVP, with confirmed value and the first sales.
As for the 5G Incubator, here we are ready to accept projects with both an MVP and a finished product. In addition, an important point for any potential resident of the 5G Incubator is the justification of how next-generation networks open up new opportunities for the product development and solve customer problems that could not previously be solved using other communication technologies.
The venture fund invests in late seed and round A.
In what industries are you looking for startups?
We are looking for projects that correspond to the strategic directions of the MTS development. In particular, these are telecom, media, fintech, cloud and digital solutions. Each acceleration batch specialization depends on the needs of some of the MTS business-verticals. For example, in the latest batch, we looked for projects in retail innovation, fintech, industry 4.0, and environmental innovation. We received more than 550 applications, of which, 19 startups were selected for the accelerator.
Are you interested in Belarusian startups?
We are looking at startups from the Republic of Belarus with great interest. Moreover, we have already worked with projects from Minsk earlier. In the new batch of accelerator the Belarusian startup Tap2Pay (which we have already talked about) has become our resident. It is a service that allows you to accept payments in various digital channels: on the website, in social networks and messengers. The business customer of the startup is MTS Bank. The Republic of Belarus has long been known as the birthplace of many successful technological projects. At MTS, we want to increase the influx of Belarusian startups into all our tools for working with open innovation.
Do you have any experience working with foreign startups? Does a startup have to travel to Moscow, if it enters your accelerator or incubator?
In March of this year, we launched an online accelerator for foreign startups. All activities in it, including the demo day, are carried out online. Besides, starting from March, we transferred our fourth accelerator batch to a remote format. The demo day took place on the 10th of April and was also held online. As a result of the demo day, 14 pilot projects were launched. Thus, foreign startups that have become residents of the accelerator will not have to travel to Moscow.
It’s a different story with 5G startups. Our 5G Center is located at VDNH, Moscow. Startups have to visit Moscow to test their solutions in next-generation networks. However, our approach is very flexible. Each startup decides for itself how many tests to conduct and how often to visit our Center for this.
Where is MTS StartUp Hub represented?
Last year we have launched offices in Berlin, Israel and Southeast Asia. Our international technology scouts help to attract startups from these regions. In particular, in the fifth accelerator batch , in addition to the mentioned Belarusian project, we have a French system for predictive diagnostics of industrial electric motors PREDICT-ADAPT, Vintom, a Polish system of automatic creation of personalized video for marketing communications, and a startup Somin.ai from Singapore, which is engaged in optimization of digital and influencer marketing campaigns on social media. UK-based project Doubleme, a holographic communication system that works with AR, is resident atf the 5G Center.
Tell us about the strategy of the MTS venture fund.
The fund invests in promising startups in such areas as: big data, AI, IoT, fintech, cloud technologies, educational services, Esports and media services. As I said, the minimum fund check is $ 500,000. When choosing a startup, it is important for the fund that the project has strategic value for MTS. For example, a startup operates in a fast-growing market where MTS is not represented. In this case, the project can create a new product vertical within the company in the future.
Why did you open the 5G Incubator, if the fifth generation networks in Russia have not yet been launched and it is not clear when they will appear?
Fifth generation networks will be launched in Russia anyway. And the competition will be won by those who, at the time of launch, enter the market with ready-made 5G solutions. Startups that start to work with 5G networks now will have a significant advantage in the future. MTS, for its part, wants to test hypotheses and develop cases for a new network.
What else can you offer startups apart from the acceleration, 5G Incubator and venture capital investments?
Last year, MTS signed an agreement with Singapore Enterprise. This is the Singapore State Development Institute.