German media company BURDA is one of the biggest publishers in Russia, producing titles including fashion magazine Burda, women’s mag Liza and its children’s version Liza Girl, tech journals Chip and Computer Bild and men’s mag Playboy.
Worldwide the firm has been investing strategically in digital media projects for more than a decade, and its German portfolio companies alone generate an annual revenue of more than $1.5 billion. It is now aiming to build a portfolio in Russia, and we talked to Christian Graggaber, Burda’s Chief Digital Officer in Russia, about their plans.
Christian himself has considerable experience of doing business in Russia. Ever since a visit in the late 1990s to top up the Russian he had learnt at school, he has been drawn to the country as a visitor and businessmen, making many trips. As well as liking “the people, the country, the food”, Christian was particularly impressed by the business opportunities Russia had to offer, and this led him to enroll in the Skolkovo MBA program in 2010.
Studying at Skolkovo
This was a very positive experience, and he took full advantage of the ‘bespoke’ nature of the Skolkovo program, which allows students to shape their degree based on their interests. As an entrepreneur first and foremost, Christian chose to focus on startups and benefited from the local expertise of former Evraz president Alexandr Abramov, as well as tuition from world-leading experts based at Harvard and MIT in the USA.
Another advantage of the Skolkovo MBA was the chance to network. The most important connection Christian made was probably KupiVIP founder Oskar Hartmann, with whom he continues to cooperate.
Doing business in Russia - Juvalia&You
After graduating from Skolkovo Christian co-founded Juvalia & You, a social selling jewellery startup. The project raised $6 million and launched operation in Russia, India and the USA, with Christian leading the company in Russia. However, after a year Russia operations were shut down, and we actually featured the company as our “Fail of the Month” in January. Naturally, I was curious and I asked Christian what happened.
He explained that the problem was not that the business wasn’t working in Russia, but that it was working much better in India, where demand for jewellery is much higher and where much jewellery is also manufactured. This led the team to choose to focus more exclusively on India, and so Russia had to be sacrificed. Christian however was keen to emphasise that he still believes in the social selling business model, and would like to invest via Burda in similar projects.
Burda Digital in Russia
Burda is, Christian explained, first and foremost a strategic investor. In Germany it still holds majority or 100% stakes in all of its portfolio projects, and in Russia it is looking to make similarly long term investments.
What sectors in Germany? Names of some successful projects, maybe a link to Burda's German portfolio.
Same investment strategy in Russia?
Can you name 2 or three sectors (or projects, if you can mention them) have impressed you so far in Russia, and explain why.
In Russia Burda Digital, which Christian manages, runs its own projects and aims to invest in others. Its first project is a partnership with Silicon Valley-based Glam Media, in which Burda is the biggest shareholder. Christian's department is overseeing the launch of Glam Media websites in in Russia, Ukraine and Kazakhstan.
It is yet to fund a Russian project, but it has a broad target group - Christian listed female mass market, B2C, fashion, beauty, food, health, children and automobiles, and I got the impression that this is not an exclusive list. While ideally he is looking to invest up to $3 million in projects that are already up and running, he emphasised that tickets could be much lower (starting from $500,000), and that in exceptional cases Burda is open to the possibility of investing in late seed projects, or even financing a full exit to Burda.
Christian does speak Russian, although he admits that he prefers not to. So Obraschaite in Russian if you must, but if you speak English that’s great. Burda is a RusBase partner, and so you can tell him about your project by registering it in RusBase's database and marking it for “Burda Media”.
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