Alexander Galitsky — On the culture of startups and venture investments

Alexander Galitsky

Galitsky Alexander Vladimirovich is a venture investor focused on the B2B segment in the field of deep tech. He uses a bridge model of work. Founder and Managing Partner of Almaz Capital venture fund. Considers promising startups with the aim of further bringing the investment object to the world market. The priority is artificial intelligence, blockchain, machine learning, smart contracts, the Internet of Things, and other innovative technologies. He stands out for his strict approach to choosing the investment object.

He is sensitive to the philosophy of investing, which implies making a profit as the main goal of any project. He is able to calculate the needs of startups in the innovation flow. To date, the geographical focus of the fund is concentrated on Eastern Europe, which has significant potential in the High-Tech segment but is experiencing difficulties with the implementation of B2B projects.

Background information. In Soviet times, he was engaged in the creation of software for satellite communication systems. At the age of 32, he was appointed chief designer of ELAS, which carried out computer development for the space industry. His name is also associated with the development of VPN and wireless communications.

Almaz Capital and the role of Alexander Galitsky in its creation

The name of Alexander Galitsky a talented software scientist was already well known by 1990. After visiting Silicon Valley, he decided to promote domestic developments by attracting venture capital from the United States, so the appeal to him to lead the first European Tech Tour in Russia, held in 2004, was completely understandable.

The purpose of the forum at that time was to search for promising regional startups in the CIS countries. Alexander Galitsky and his team did a great job – they selected 25 of the most interesting projects for meetings with investors, although they considered more than 200 applications.

At the same time, representatives of Cisco approached Galitsky with a proposal to create a venture fund with their capital to invest in Russian and CIS startups. The American corporation aimed to enter new markets. The growing venture economy suggested an increase in the number of High-Tech companies in the portfolio, which would ultimately mean an increase in demand for the company’s products.

As Alexander Galitsky recalls, Almaz Capital immediately attracted the attention of the largest investors. Cisco Systems entered the company as an anchor investor with a capital of $ 32 million. The EBRD and UFG, who became institutional investors of the fund, contributed $20 million each.

A special merit of Alexander Galitsky is that he immediately clearly defined the development strategy of the fund. Its basic condition was cross-border business and focus on the global market. The portfolio was to be based on companies from Russia, the CIS, and Eastern Europe with the prospect of developing in the US market.

Almaz Capital Venture Fund was established in 2008, and the company’s head office was located in California. Today, regional offices operate in London, Berlin, and other cities. Alexander Galitsky, according to people who know him, managed to build the work in such a way as to attract the coolest professionals. His impeccable reputation also played a big role in this. The general partners for the first fund were Charles Ryan, Peter Lukyanov, and Pavel Bogdanov.

In the early years, the Fund’s activities were aimed at finding promising startups for the global market in the former USSR. Later, at the insistence of institutional investors, interest shifted towards Eastern Europe.

In 2011, Galitsky and his partners decided to create Almaz II, but without the participation of Peter Lukyanov, with whom he had a number of disagreements at that time. 2 years later, Geoffrey Baehr, who had previously collaborated with Alexander, took Lukyanov’s place in the Fund.

The assets of the second Almaz fund have already amounted to $ 174 million, and the LP also includes the International Finance Corporation and Family funds. In 2014, the shares of Yandex and QIK were sold. According to Alexander Galitsky himself, these were quite successful exits.

By this time, the interests of the Fund began to gradually shift towards Eastern and Central Europe. At the same time, the company constantly monitors offers in search of promising startups.

In 2021, Almaz III was formed with a capital of more than 190 million dollars.

Today, the three funds’ key portfolio teams include companies such as Acronis, GoodData, Gridgain, Hover, DMarket, Minute, Mobalytics, Neptune, OneSoil, Parallels, and others.

Due diligence is a necessary stage in the history of a startup

A special place in the business biography of Alexander Galitsky is occupied by the so-called due diligence, the procedure for compiling an objective view of a startup. The entrepreneur recommends that it be carried out mutually and very carefully since it is at this stage that various points are revealed that may be the reason for refusing to invest.

Due diligence is a step-by-step process that takes a long time. The investor evaluates not only the prospects of the project but also the personal qualities of the founder. If it suddenly turns out that the applicant is embellishing reality or he finds himself involved in a dubious story, Galitsky recommends “getting out of the game” and doing it right away.

Alexander Galitsky as an investor is demanding nuances. He cites trust between partners as the main reason for the success of any project. When considering a project as an investment object, the entrepreneur assigns a special role to personal opinion and his own impressions about the applicant. At the same time, he admits that it is objectively natural for a person to embellish himself and his results.

Another reason to conduct thorough due diligence is the opportunity to protect yourself as much as possible from such accidents when the founder refuses to sell the company at the most appropriate moment for this. Alexander Galitsky is a businessman who uses his own and other people’s money given to him for a while and is responsible for the result to investors. For this reason, he prefers to deal with familiar people or those who came to him through networking.

Alexander Galitsky- Nowadays

Alexander Vladimirovich Galitsky is currently engaged only in his own projects. Publications continue to appear in the press that he is still a member of the Skolkovo Board of Directors, although he resigned from its membership on March 22, 2022. Galitsky is also not listed in RVC, Alfa-Bank, Skolkovo Venture Investments, SkolTech,  the Moscow State University business incubator, Megafon, the Expert Council for the Development of the Information Technology Industry (Mintsifra), the Venture Market Council, and the Russian Quantum Center. Participation in their activities has ceased to be relevant for the businessman.

Alexander Galitsky does not reveal the details of his personal life, as well as the details of his professional activity.