Russian startups hide their roots and pretend to be Ukrainian to raise investments — VC

Borys Musielak, Founding Partner at SMOK Ventures, which is one of the most active funds in the CEE region, noticed an interesting trend among Russian startups looking for investments in Europe. It’s now been already a year since the full-scale Russian invasion of Ukraine has begun, and many Russian startups no longer want to be associated with the terrorist state. To raise funding from European VCs, instead of receiving money from Russian oligarchs, which is the most popular investment pattern in Russia, the startups hide their origins and even pretend to be Ukrainian.

“If you’re Russian and you pitch your startup, it’s not a good idea to:
– hide being Russian by removing any Russian references from your LinkedIn / deck,
– pretend to be Ukrainian (wtf??)

Simply state where you’re from and what’s your stance on Putin / the war and move on!

I’m going to find out anyway, so why waste everyone’s time?”

Musielak wrote in LinkedIn blog post.

He didn’t specify the names of those Russian startups, but noted that pretending to have Ukrainian origins is already a trend among them:

“Happens all the time, actually. Both hiding (i can see this on every other Russian founder’s LinkedIn profile) and pretending (less often, but also multiple times).”

Commenting on the post, some users wrote that not all Russians are responsible for the war, and they may hide their roots to avoid harassment. But, according to VC, it is not a good idea.

“I feel for them, but unfortunately, it’s the hiding that will most likely get you unfundable, as I’d immediately suspect that you’re hiding for the wrong reasons. Be transparent and own it. There are amazing reasons to be proud of being Russian. Putin is just not one of them,”

Musielak emphasized.

Some also wrote that it is not fair to reject startups just for being Russian. Addressing those statements, Borys Musielak has shared some insights on how he decides whether to invest in a Russian startup after February 24, 2022, or not. AIN.Capital collected his comments into a column with the permission of the author.

“I’m not going to fund assholes. And if you support Putin and the war, or even if you’re claiming to be neutral, you’re definitely one.

I haven’t said that because they are Russian I automatically assume they support Putin and the war. What I’m saying is that if you’re Russian, you can’t remain neutral. You can’t say “oh, I haven’t supported Putin so I’m good”. No, you’re not. You need to be expressive in your support for Ukraine, and you need to be consistent in order for me to trust you that it’s not just a PR move on your side.

That’s why I advise all the Russians that approach me or other Western investors to be extremely deliberate in how they talk about themselves as Russians and state their believes beforehand.

I’m obviously not going to be judgmental if you’ve done everything you could to state that you are against the war and against Putin (ideally at some point in 2014, and not only in 2023 when your economy falls, and you want out) and I won’t have a problem finding you as a Russian citizen if I believe that you are truthful to what you say. But I’m going to do a lot more reputational due diligence and KYC before I do, for obvious reasons.

If you are based outside of Russia, if you were vocal about being anti-Putin at least from 2014 till now, if you have no connections to Russia outside of family and friends, and if you are genuinely good people (yeah that’s a lot of ifs!) and I can verify all that, of course, I would consider investing.”