Startup culture is a new religion for Moldovan entrepreneurs

In 2019, Traian Kivriga together with like-minded people founded XY Partners - one of the few business incubators in Moldova. XY Partners opens unique opportunities for entrepreneurs: to test ideas, launch startups with minimal resources, find experienced mentors and experts, and attract their first clients and investors. Among the successful XY Partners alumni we can highlight such promising startups as Unde.io, Edoositter.com, Teleportravel, as well as e-commerce businesses such as Floral Soul and Les Perles.

I was able to talk to several companies that are participating in the programme and find out how useful the programme is for them. I invite you to an interesting dialogue with Traian, where you can learn more about the world of startups and innovation. And how XY Partners continues to support and develop the entrepreneurial community in Moldova.

What programmes are you currently running at XY Partners?

You're just in time, we're starting a new accelerator programme this Friday with 7 projects already in place (note: our communication took place on 31 October 2023). We aim to help form companies from these projects by the end of the programme. We run programmes twice a year, in autumn and spring. Among our programmes is Women Accelerator, where we advise women entrepreneurs. Entrepreneurship in Residence Programme - founders of foreign companies from our Moldovan diaspora help local startups. Ecommerce incubator is aimed at helping companies developing e-commerce business.

Entering international markets

Congratulations!!! Do you help grow companies locally or beyond?

Basically, we help to scale to other markets, and we consider Moldova as a base for testing, because the market is small.

Um, how do you help companies go global? 

We have partners who help with company registration, with distribution, with sales. But I am deeply convinced that our main goal is not only that. We aim to help entrepreneurs develop an international mindset and revise their beliefs. It turns out that our activities are aimed at changing their way of thinking.

Selection of participants for the XY Partners programme

I wonder if this is an important component for the development of a successful company. How do you select companies to participate in the programme?

Unfortunately, we cannot afford to be too pedantic because we do not have a large number of funders to choose from. Every year, there can be about 100 startup ideas in Moldova. 

It's not a bad thing, is it?

Not bad, but not enough. For example, in the largest accelerator, YCombinator, about 200,000 startups apply for one program. In total, they gather 40,000 startups for two programs per year. Out of the 40,000, they pick 400. If you look statistically at this point, it turns out that only one company from Moldova can apply for YCombinator. So one company out of a thousand gets into YCombinator, which means that we need 10 years to find a team for this program. Actually, we want to hack this system and be able to promote one team out of 100. That's why we don't have the ability to be more selective in this process. 

Still, I'm sure you interview founders before starting a programme. What do you pay attention to?

We look first of all at people - whether they have entrepreneurial acumen. Unfortunately, Moldova does not yet have the principle, as in Silicon Valley, of developing startups with someone. Therefore, a startup usually has only one founder and, as a rule, it is their own business.

The second thing we look at is whether the idea is old or new. If it is an old idea, we are interested in the reason why it has not been done so far. But mostly we look at new ideas, where there is a new market, new opportunities and where there is room to grow. 

Thirdly, we look at the market and industry that the startup has chosen. If it is AI or the energy industry, that is cool. If the entrepreneur wants to open another pizza parlour, it is not so promising. 

And finally, we look to see if the entrepreneur has been able to do something of his own without the help of an accelerator. Is there a product that he or she can show us, not just talk and make promises.

And, in general, does the previous experience of the funder matter? 

Since there aren't very many of them, we look more at the factors I mentioned above than we do at their experience. That's the problem with our market. We do what we can with what we have, but that doesn't mean it's bad.

"Before coming to the XY Partners programme, I had already launched startups many times, I just didn't know it was called that. And, accordingly, I did everything the other way round - I initially created a product, a website and business cards :), and then tried to sell and figure out who needed it. But the XY team set my mind right and did it smoothly and quickly, for which I will be sincerely grateful to them for the rest of my life!

As a result, we created a travel marketplace Teleportravel, which has more than 100 routes in 15 European countries and that's just the beginning. And the main insight was Trajan's phrase - Baby steps. In general, I highly recommend the XY team to those who want real growth, and not to make it look like a flurry of activity!".
Stanislav Balaur, founder Teleportravel

How long does the programme usually last?
Three months. We usually take up to 10 projects into the programme, of which 2-3 start-ups become companies.

How many people do you have on your team?

Currently, the KHU Partners team has 8 full-time employees and about 200 experienced mentors ready to assist every entrepreneur in our network.

Conditions of participation in the programme

What are the conditions for startups to participate in the programme? 

Our programmes are paid for by FTA donors. They pay for mentors, programme logistics, marketing and so on. This is a low-cost programme for the entrepreneur, as he does not spend anything in return. But we have changed the conditions, and we ask for up to 5% of company shares in return. This is necessary so that the programme does not always depend only on donors, and so that we can use the money from the resale of these shares to develop new programmes.

What makes startups successful

Based on your experience, what do you think contributes to the success of the very two or three start-ups that become full-fledged companies after your program?

We asked our entrepreneurs what was most useful for them in the program, and they said that they were helped by our belief in the project - something we sometimes believed in more than the funders themselves. I guess knowing that there are people who push you to do something, and who always support you, gives you the impetus not to give up, and to persevere until the very end. That's probably the first value. 

The second value is undoubtedly a network with global connections. We can always find a co-founder, partner or investor for an entrepreneur. 

What usually prevents projects from becoming successful startups? What are the reasons for failure?

There are so many factors. One of them is the entrepreneur's team, namely the lack of a co-founder. When you are on your own, there is a big risk that you will give up on the project, get discouraged and have no motivation to move on. And when you are in a team with someone, the other person will be able to support you and pull the company to the right level until you come back to the project with renewed vigour. In this regard, unfortunately, there are situations when funders choose bad co-founders for their team. For example, they take their parents and this then has a bad effect on the project. We try to hint straightforwardly but smoothly that parents can be good investors (as US practice shows), but not co-founders.

Another example is when someone they have never worked with becomes a co-founder. A month later they realise that they are not compatible in character. That's why we always advise you to hire someone you've worked with before or someone you enjoy spending 24 hours a day with as a co-founder.

The second factor is when an entrepreneur thinks he has a great idea, but in reality nobody needs the product. They try to convince themselves that now they will change something and everything will work out, but in reality this is not the case. They are just wasting their time.

Do you guide entrepreneurs? Do you help them to sort out an idea or propose a new one?

The idea has to come from the entrepreneur. We can hint at what markets to look at, what the market trends are, but we cannot tell them what idea to develop. Sometimes we ask them a lot of questions so that the entrepreneurs themselves understand where and how to grow. 

So you fulfil the role of psychologists and mentors. Have you ever had a case where you had a startup in the programme that you didn't really believe in, but it took off?

Look, a startup is a sine wave where there will always be ups & downs. So I can't predict what will happen and how it will go, because this is a very risky kind of activity, because we are doing something new. And new things are always harder for people to understand. It is always an unknown path. 

In fact, our task is to ensure that the startup does not die. We should have all the tools to give it artificial respiration when necessary, so that we can get the project back on its feet. We, as a programme, have to make sure that the entrepreneur's motivation does not fade and do everything possible to make sure that he or she has all the arguments not to close the startup.

Lifehacks for entrepreneurs

What are some of the best best practices for keeping or fuelling entrepreneurial motivation?

There are several. We always suggest that an entrepreneur register a company. It is not really necessary for a start-up, but it is a psychological moment for the entrepreneur when he takes responsibility, which is why we recommend it to them so much.

Or we offer to give a PR interview to the media, even if he doesn't have a product yet. This is to make a public promise to family, friends and future customers that I, as an entrepreneur, will make this product. Here we do tips & tricks like this so that the entrepreneur takes responsibility and fuels his motivation. 

At the end of the programme, do you keep in touch with the companies that have completed the programmes?

They come back a lot. We have teams that were in the third and fourth accelerator and came back for the sixth and seventh. Some change their idea, some stay with us and become mentors. 

Portrait of entrepreneurs participating in the programme

I am sure that you have entrepreneurs of different levels coming to you. What do they have in common? 

Experienced entrepreneurs are united by a midlife crisis. They think it's better to try to make a company at 33 because it will be harder at 40. They see it as the last opportunity. And inexperienced young entrepreneurs, who are 18-19 years old, do not think so much about what exactly they need to develop, they just want to make a project and make money on it. They initially do not understand what they are doing. This comes to them over time, when they start working hard on the idea.

This is also an important indicator for the programme. When we hear guys say "our project, our project", it can be perceived more as a hobby. But if a person says "my company", we immediately realise that it is all serious. There is nothing wrong with this, my goal is for people to change their thinking from "project" to "company", so that they realise that their company is their life. 

"XY played a crucial role in the development of our startup unde.io. In three intense months, we learnt the whole essence of building a successful startup. The accelerator program gave us not only knowledge, but also an extensive network - from our first customers to investors. After Demo Day, even before we had a full-fledged product, we were able to attract our first investment, which was a key moment in our journey.

Now, more than a year later, continuously benefiting from XY's follow-up sessions and support, we are proud to offer the most advanced event platform to our clients already in Romania. I highly recommend XY Partners to all startups looking for jet fuel for their rocket."
Founder of the company unde.ioBogdan Sorin

Attracting and formalising investments

On the subject of investments - how do you formalise them?

There are 2 types of investments: in Moldova and abroad. Abroad is done through law firms and our partners, who help in the process of buying shares and premiums for these purchases. Also, we can register a company in Romania, as Romania is in the European Union. Next year we want to help register companies in the USA, Delaware and Estonia. 

In Moldova it is done in two ways - either you give a loan, which is then converted into a share, or you immediately get a share in the company.

Who are the most frequent investors?

Investors are usually individuals, they usually have their own business, they are in their 40s, and they want to be part of something new. They have already successfully developed their business and want to invest in something new, but they don't have the time or energy to do it. 

So when an entrepreneur comes with a good idea, the investor thinks that this entrepreneur will take over the operational responsibilities and is ready to invest 5000 euros in return for 2-3% of shares. All investments from our investors are minority, in no round have we taken more than 10-12%, usually up to 8-9%, and the rest are investments from the funders.  

And can you share information about the maximum amount of investment you have taken per project?

In Moldova, the biggest investment was in the amount of two million euros, and of our guys who finished the acceleration 200,000 euros for two rounds.

You have a very interesting company and program. I think the success of your project is the network, your mentors and your ability to look at the project from different angles. Thank you for your time and I wish you success!