How we attracted 17,000,000 rubles of investment to the NFCKEY startup
NFCKEY is a startup that creates smart locks that can be opened by Android and iOS phones using NFC technology. In September 2024, the project raised 17,000,000 rubles. More than 16 major media outlets in the country wrote about this. But how to attract such funds today in Russia, starting from scratch, as a student?
If you want a brief description, you can read the information in the media, including TV channels TVC, Russia 1, Russia 24, Forbes magazine, TASS, RB.RU, Gazeta.ru, Techinsider. All links are there Here. If you are interested in how such investments are attracted and how this happens in Russia, enjoy reading.
The work of a startup product is similar to the work of payment systems – you tap your phone and the door is open. Our solution is extremely universal and is suitable for many target audiences: individuals (personal use), landlords, hotels, corporations in the field of construction, offices and production. We write about the project on a blog, there is a lot of information about us in various media, we run social media. networks, and of course we have website. So any information you are interested in can be easily found.
Looking at the release dates of the first articles on various blogs, you can understand that the public history of the project begins in October 2023. But the project itself originated in March at the “I’m in” competition, and its implementation as a business project began in mid-August.
The project team initially consisted of three people, and the funds for its implementation were no more than a student’s scholarship. But let's look at the numberswhat path the project had to go through to receive one of the largest funding in Russia in 2024 for a startup at an early stage.
Participation in competitions – 14 (of which only 4 were crowned with victory, two of which after receiving funding)
Days at events and exhibitions – 22
Changed people in the team – 8
Prototypes were made – 3
Invested your own funds – 80,000 rubles
Refusals from investors in total – 6
Sleepless nights for the team in total – 14
Rethinking presentations – 9
Changing pitch tactics and product packaging – 2
So the path was far from easy, and we have a lot to tell. For people who are not involved in creating startups – this will be an interesting story of how in Russia it is now possible to start complex business projects with almost zero start for a student (which means you can succeed too).
For those who are planning to create a startup or are already doing this, — this article will become almost the only honest material about the real way to get money for your startup. Essentially, this is an encyclopedia of knowledge that was obtained with blood and sweat over a year and a half of work.
Russian venture market today
At the moment, funding for early-stage startups in Russia is this is 2% of the total investment and 11% of the quantity. So don't get your hopes up that finding funding will be an easy task. Only the strongest projects that have been prominent somewhere or won a competition receive it. If you initially do not have contacts in this area, then on average it will take you about 1.5-2.5 years to raise funds. And this is under a successful combination of circumstances. Initially we thought that it would take much less time, but, alas, this is not the case.
You can completely forget about business angels. If you do meet them, the competition for investment from such a person is so huge that the chance of getting through with a startup at an early stage is almost zero (a project with revenue will always be chosen, since there are fewer risks). And even if you pass, you will receive pennies that will give life to the project, God willing, for six months. There are exceptional cases, but betting on it is like trying to climb Everest without preparation.
But it is important to understand that the state creates a huge number of instrumentsthanks to which you can create a small technology business. There is quite a lot of competition for support, but not so much that it is unrealistic.
FSI and other similar funds. A key area for students to start with. And a little more difficult, but no less key, if you have already graduated. There will be a separate article on this topic in our blogs.
Startup studios. They are mainly based at a university, which is why they invest mainly in startups where the team and founder are either students or graduates of the past three years. For people in this category, this is the simplest and most reliable option. That’s exactly what we chose: our investor Rosbiotech is a startup studio. You will learn about the format of our work with investors a little later in this article.
Various competitions and accelerators – the most important areas of any self-respecting startup at an early stage. If you want to improve quickly so that people start talking about you, go to the largest accelerators in the country and show your maximum. This is the easiest way to get noticed by investors and startup studios. From our experience, the Academy of Innovators is the strongest accelerator that, with due diligence, will take you to a new level in media terms.
Key tips to help you get an investment faster and more likely
Let's look at what you need to do to get an investment offer:
1. Listen to feedback, be open to it and work on mistakes.
In our project, we failed for 9 months in a row until we worked out all the mistakes that we were often told about and changed the positioning and packaging of the product as a whole. After the changes, every participation in competitions was a winner, and investments were also attracted. It was these changes that allowed us to reach a completely new level.
Don't think that you understand your project better than anyone else. If you are a novice startup, every second expert will point out to you more problems in 5 minutes than you will find on your own in several months. And being open to feedback will help you not to resist criticism, but to immediately look for solutions to problems.
2. Estimate your startup realistically.
How do you understand what a realistic assessment is? Valuing a startup is always subjective.
Yes, it’s subjective, but we can base it on the market. The average amount of a pre-seed round (that is, the very first, early stage of any startup) for 2024 is about 8-9 million rubles in our country. Moreover, over the 9 months of 2024 there were only 11 of them. In previous years, the average amount was even less. That is, hoping that they will invest 20-30 million in you at 15% is definitely not worth it. If investors see such a request, they won’t even talk to you, because it’s clear that you don’t understand the market and your value. Sometimes it’s better to lower your expectations a little, and then at the negotiations justify why you still want to change the conditions.
3. Learn to pitch.
Everyone is judged by their clothes – so dress well, practice your speech, learn how to speak to large audiences, don’t be afraid to go where everyone is shy and present yourself to large companies and important people.
4. The team is what an investor pays for at an early stage.
In fact, the shortage of personnel dictates even the state to build policy in such a way as to create startups not for the sake of creating new businesses, but for the sake of creating new strong personnel. Therefore, when investing in a startup in which the product is barely alive, there is no intellectual property, and even less revenue, the investor’s key investment is in the team, which, within the framework of the startup, “for pennies” implements things that to develop with the help of a staff of programmers would not be cheaper than investing in startup. Look not just for good developers, but for the backbone who will carry the project together with you.
Following these 4 tipsBy adding persistence, self-confidence and the intention to develop the project to the end, the likelihood of your success will, in fact, be extremely high (tested in our experience). It’s just that there are very few people who don’t give up in the first six months, and there are practically no people who don’t give up for a year. And it takes at least about one and a half years on average.
Who did we get funding from and how does it work?
As I wrote above, the startup studio Rosbiotech invested in us. The story of how this happened will be short: the strongest pitch of all projects at one of the competitions and a low request interested the studio director. We exchanged contacts. Further, in the negotiation process (far from fast, all approvals took about two months in total), all the subtleties were discussed and a point of agreement was found. It is important to understand: All the changes were made in order to attract such a person. Without them, they simply would not have paid attention to us.
Was there fear and uncertainty? Certainly. You always doubt when you change the share of your project, but we just decided on this and went into this dark forest to develop the project further. In the end, we weren't disappointed at all.
It is important to understand that a startup studio is not just funding, but also constant support for the project in legal and administrative terms (accounting).
The financing format itself is also slightly different: This is not a one-time payment, but constant financial support for the project. In our case, we have already increased the investment amount on demand for a trip to Saudi Arabia. For an early-stage startup, all this is much more convenient and safer.
Of course, a startup studio will ask for a significant share and you need to be prepared for this. No one will communicate with you for a 10% share of a company that has essentially nothing in its hands, since the investor is at great risk. If you don’t have your own serious funds, it is important for you to start moving, and not try to find the most profitable option. This is not a market, those who have money decide here.
After the agreement, doesn't it seem that funds could have been raised at a better price? Believe me, it seems and will always seem. But the only difference is between those who always wait for the best and those who use the opportunities that exist – the result. Afterwards, you can always think that there were better options, but in the moment these alternatives will not exist.
One of the largest investments in 2024 in an early stage startup in Russia. What should we do next? What's wrong with the company now?
The funds go mostly to salaries, materials and the development of the device’s microcontroller. We have quite strictly defined deadlines for the completion of work, as well as cost estimates, so we already understand that it is very likely that entry into the market will take place in the 1st quarter of 2025.
Until then, there is a lot of work to be done, including safety checks. We are already organizing our production and trying to estimate production capacity. We are also already setting budgets for staff expansion and marketing.
Has anything changed within the team? Yes, and it's definitely a serious attitude. Now this is not a hobby, but a full-time job where you need to show results. Such funds are not only great opportunities, but also great responsibility, as well as strict deadlines and KPIs. You also need to be prepared for this. These are far from the same conditions as employees, but the prizes in this game are much larger, and the whole process is much more interesting.
We know that there will be many difficulties, we don’t have high expectations, we just keep high standards and believe that everything will work out.
This article is a description of our transition period. The first step is the most difficult, therefore, we think that this material will be extremely useful, as a kind of “guide” on how to take this step. And very soon the same guide will be released on how to win a FSI grant for 3,000,000 rubles. We think it will be extremely useful. We also have such an achievement.
We will be grateful for any comments, subscription to our social networks. networks and article evaluation. We hope that the material will help turn the situation around in the project around for someone. Typically, such materials are sold at “successful” courses for hundreds of thousands of rubles.
NFCKEY media (created a week ago) — Here you can watch the podcast with the founder and more.
