The founder of the Ukrainian venture investment fund Adventures Lab Ruslan Tymofieiev (Ruslan Timofeev) created one of the most successful CPA networks in the Health & Beauty niche but then sold his stake in the company to get immersed in investment activities. His fund has financed projects such as Reface, Salo, and EdoDo, and the total volume of portfolio investments has already reached more than $15 million. We talked to Ruslan and found out what investors pay attention to when choosing startups and whether the social skills of founders affect the success of their business.
— Ruslan, do you remember how you earned your first money?
Ruslan Tymofieiev: I was 17 or 18 years old. I was studying at the university at that moment, and I knew many entrepreneurs who were working with Internet marketing. I started to promote social network communities dedicated to self-development and business motivation. In two weeks, I figured out how to do it properly. I managed to increase the number of subscribers and scale communities. After a while, it brought me 300?400 dollars a day. This was the beginning of the first serious earnings.
— In 2019, you and your partners founded Adventures Lab. What is your role in the company today?
Ruslan Tymofieiev: Andrew [Andrew Kryvorchuk, Managing Partner Adventures Lab, Ed.] and I developed the fund’s strategy. We chose the directions to work in. I carefully study each project, its prospects on the market, meet the team personally, evaluate the founders and the product. After studying, I decide whether to invest in it or not. We are also constantly working with our portfolio companies. Mostly, we are consulting them: my colleagues and I regularly meet with the founders, help them spot problems, and find new ways to develop their business. Most of the time, this process is focused on analyzing and communicating.
— What are the main criteria you use to determine whether it is worth investing in a project or not? Which of these criteria is getting the most attention?
Ruslan Tymofieiev: I carefully study the market, the industry, and the business model of the product. It is necessary to determine the competition level and understand whether the market allows this startup to reach a significant share of the target audience. As for me, these external factors are the most important. Everyone usually starts with the team, but I prefer to start with the market. Because if the market is not overheated, you can carve out a certain niche. There was a case when some guys came to us with a project excellent in all respects. But since I knew that market well, I realized they would not be able to earn more than 30,000 dollars in their segment. And that was exactly what happened in the end. A growing market is a success factor. We pay great attention to the virality of the project. And lately, we have been very closely monitoring the networking effect: the stronger the networking level of founders is, the more chances of success there are.
— And what is the secret?
Ruslan Tymofieiev: We have studied this issue separately. We reached the conclusion that the networking effect is common for founders and employees of almost all successful companies. Due to strong networking, communication with investors and the media, due to feedback received, the company receives a lot more valuable information. As a result, they make the best decisions and can outperform competitors. Because communication is the key to success.
— If the founders are introverts, don’t they have a chance?
Ruslan Tymofieiev: They do. But then the founders should have incredible expertise. The final product should be powerful, exclusive, and user-friendly. With this, they can outperform their competitors. Such cases also happen but they are rather exceptions.
— Do you have to rely on intuition when investing?
Ruslan Tymofieiev: Yes. It can’t be that we studied a startup, voted 49 “for” and 51 “against” and that’s it—we refuse to invest. It is still an intuitive process in many respects. You have to rely on your inner feelings whether you believe in this project or not. Of course, if we have collected all the data about a startup, studied it backward and forward, and understand that it will be clearly unsuccessful, then intuition will not help. Data is always more convincing than feelings.
— What are the risks?
Ruslan Tymofieiev: There are many different ones. Venture investing involves risk. It can be that a startup is great, data, management, product—everything is fine. And then the founder divorces his wife, becomes depressed for a year, and gives up everything. You should consider this as well—there is always a human factor.
— And the last thing. Should an investor be involved in operating activities?
Ruslan Tymofieiev: An investor can advise founders, consult them, be a mentor. But taking on operational activities means managing the company. In this case, you take the role of a founder, and the point of investing is lost.