A growing number of Russian start-ups involved in everything from robotics to gaming are fuelling Dublin’s fast-growing startup scene.
Some of these have been relocated from Moscow using funds and resources provided by an Irish government agency, while others have spun out of the Dublin operations of US tech giants such as Google and Facebook.
Private capital from the US, Russia and Ireland is now helping to underpin funding from the Competitive Start Fund, an initiative by the government agency Enterprise Ireland, which is luring “waves” of programmers and developers from Russia.
Enterprise Ireland provides Russian firms with support to secure visas and accommodation as well as mentoring after they decide to move to the Irish capital, known as the Silicon Docks due to the presence of many of the big US technology firms.
The fund is open to start-ups from all around the world, but more than a third of its hundreds of applications comes from Russia or Russian-speaking countries like Belarus and Ukraine.
“We try to attract entrepreneurs from international markets to come and set up in Ireland and we have had quite a lot of success with Russia,” Tom Early, senior investment adviser at Enterprise Ireland, tells bne IntelliNews at a recent Russian iCham Russian investment forum in Dublin.
So far, Early says the fund has attracted 12 start-ups from Russia. Of those, three have received the full funding package of €250,000 while the other nine are heading towards that level after receiving the initial €50,000 grant. A further five Russian companies have secured funding in the latest round.
One of those companies is EiraTech Robotics, a robotic picker for warehouses. The founder and chief executive Alexei Tabolkin decided to relocate to Ireland after his Moscow friend Dmitry Simonenko moved his company InnaLabs, which makes sensors used in the aerospace industry.
InnaLabs, which relocated from France, is based in the same building as EiraTech in the Dublin suburb of Blanchardstown, home to the European HQ of the online auction giant Ebay. InnaLabs hardly qualifies as a start-up any more. The company is firmly established with over 50 employees and in April secured a €1mn contract from the European Space Agency to produce a gyroscope-based system for satellite control systems that will be used in future space missions.
Tabolkin says EiraTech has secured funding from private Russia-based investors, as well as the Irish state. The company’s robots, which are rigorously tested at its Dublin warehouse, shuttle up and down aisles selecting requested items from racks in a 500 square-metre simulated environment.
“Our robots transfer the burden and mundanity of stock picking into a key competitive advantage,” Tabolkin explains to bne IntelliNews in an interview. “So not only does it slash costs for the customers but it also boosts productivity of personnel and improves their motivation and job satisfaction.”
Tabolkin is confident of closing the firm’s first orders after piloting their robotic system for retailers in the UK and Spain. And once the deals materialise the company should easily be able to raise further capital from both Enterprise Ireland and private investors, he says.
“Ireland is a great place for us to go international,” says Tabolkin. “It’s neutral, English-speaking, 30% cheaper than the UK and there’s a good pool talent with all our hardware guys from Ireland and all our software guys from Russia and Eastern Europe.”
Rich training and recruiting ground
The big US tech giants in Dublin, such as Google, Facebook, Twitter, LinkedIn and Amazon, are providing a rich training ground for the burgeoning startup ecosystem.
Google, for instance, has over 3,000 permanent employees at its Dublin office. More than 10% of those are Russian-speaking coders, engineers and sales execs and some of those are now leaving to set up their own companies.
“Google doesn’t encourage people to leave but they don’t seem to mind too much when it happens,” Alexander Belenky, a former Google executive in Dublin who recently left to join EiraTech as an adviser to the CEO, tells bne IntelliNews. “At a certain point, it starts to feel like golden handcuffs. There is a fine line of how entrepreneurial versus corporate one can be even at Google.”
Cesanta is a company making waves with a play on the “Internet of Things”, developing software to enable network communication between devices or domestic appliances using secure connectivity. Their open-source operating system Mongoose OS “democratises” microcontrollers’ programming by making software available to millions of developers for free.
The start-up’s founders, Russian Anatoly Lebedev and Ukrainian Sergei Lyubka are ex-Googlers in Dublin who hatched a plan to set up their own startup while at the US search giant.
Another product called Mongoose Web Server Library is already widely used by companies like Intel, HP, Dell, Samsung, and even the US space agency Nasa.
Lebedev says the company, the offices of which look over Grand Canal’s Silicon Docks, is committed to staying and growing in the city even after securing funding from top US investors, such as Eventbrite founder and Airbnb advisor Kevin Hartz. The company even spurned a chance to move from Dublin to sunnier Silicon Valley due to the higher cost of living in California.
Cesanta initially lured six staff from Google – most of whom were native Russian speakers – as well as business developers from Twitter and Hubspot.
“The best engineers in the world are from Russia so we had to hire the guys from Google,” Lebedev tells bne IntelliNews in an interview. “But it wasn’t always the way. When I came in 2007, there was less than ten Russian speakers at Google.”
While he was at Google, Lebedev says everyone was constantly talking about leaving to set up their own thing. “You know the story about two guys in a garage – everyone desires it but not everyone goes for it,” he says.
Both Cesanta and Profitero - another startup with Russian-speaking DNA - are widely regarded by analysts as the most exciting companies building product in Dublin.
Profitero, a Dublin-based provider of online insight and e-commerce intelligence for retailers and brands, raised $8m in funding in from Boston-based venture firm Polaris Partners three years ago and is rumoured to be seeking another round of investment so it can expand.
The firm monitors over 450mn prices in near real-time in 45 countries and counts retailers Boots, Waitrose, Spar, L’Oreal and Ocado amongst its customers. Its three founders Konstantin Chernysh, Dmitry Vysotski and Volodymyr Pigrukh hail from Ukraine and Belarus.
Gaming companies with Russian heritage, such as Playrix and Gama Games, are also trying to use Dublin as a launching pad into global markets. Retail analytics service Countbox has also relocated to Dublin, as well as the founder of Survival Russian App, a software company developing an application to teach Russian as a foreign language.
Numerous emerging Russian tech companies have left Moscow for foreign shores in the US, Singapore, Dubai, Latvia and Ireland over the past three years as the country struggles to emerge from its deepest recession since 2008. Repression of social media and fear for intellectual property has accelerated that trend.
Martin Shanahan, CEO of IDA Ireland, the state agency responsible for attracting foreign investment, was in Russia in last year meeting a number of companies and explaining why Ireland was the right place for them to do business.
“In recent years, we have seen increased investment from Russian companies and, as these firms grow, they have the potential to create several hundred jobs over the next few years,” Shanahan tells bne IntelliNews. “Ireland is proving to be an attractive location for Russian companies looking to expand their operations abroad and tap into the tech talent pool here.”
The Irish agency is also understood to have held talks with the Russian search engine Yandex and leading internet company Mail.ru about setting up in Dublin after Kaspersky Labs set up its European R&D centre in Dublin last September. Kaspersky, a global cybersecurity firm, is initially investing $5mn and plans to hire 50 staff for its Dublin office. Meanwhile Russia Today (RT), the Kremlin-controlled English-language TV station, set up a Dublin office a year ago headed by Ivor Crotty.
The appeal of Dublin for many of these tech firms is Ireland’s low corporate tax rate of 12.5%, its highly-educated workforce, ease of doing business, and greater access to markets and networks in the EU and US.
Enterprise Ireland has talked of “waves” of programmers and developers from Russia, Ukraine and Belarus relocating to work for Google, Facebook and Twitter in Dublin.
Dublin has also become a leading centre of companies involved in fintech, blockchain, traveltech and cybersecurity as the country undergoes a venture capital boom. Recent data from the Irish Venture Capital Association shows that tech firms attracted that €900mn in funding last year, a 70% jump on 2015.
However, there are several clouds on the horizon for Dublin’s Silicon Docks. Not least plans by the US administration to lower their corporate tax rate to 15% and a desire by President Donald Trump to repatriate American tech companies and their jobs homeward.
The start-up culture is still in its infancy and it will take time to shape and to attract more serious angel and venture capital money to enable companies to achieve scale before selling out. Many start-ups laud the ease of doing business in Ireland but complain about infrastructure, such as the lack of affordable residential and office space.
“Ireland is doing good job at marketing itself and ranks well on the ease of doing business,” Alex Demenchuk, a former Rothschild banker from Moscow now advising several Dublin start-ups, tells bne IntelliNews. “Despite what already has been done, it needs further radical changes to keep up with the likes of Singapore.”