What Country Is Best To Open R&D Office

Tips the managing partner of the Fund, Gagarin Capital Nikolay Davydov for entrepreneurs who are going to move to Silicon valley. I want to publish a series of notes for entrepreneurs who have just moved or plan to move to Silicon valley of Eastern Europe. We will touch on various topics ranging from product strategy and ending with tips for attracting investment.

Today lets talk about how to choose an office space, R&D. Suppose you develop a global startup that develops computer vision systems for the diagnosis of cat cancer. Or funny app with artificial intelligence that puts stickers with cats on a selfie to Snapchat.

Or chatbot platform for accounts of the famous animals in Instagram. Lets say you are going to become the next $70-billion-dollar “unicorn”, but instead would raise a round of “A” and to sell his company to Google in the next four to five years.

Most entrepreneurs want the same thing, unlike guys on the street sand hill, which can easily choke organic quinoa, when you invite them for only 15-fold return of the investment is possible (albeit illusory) to enter the Hall of fame of Silicon valley. For me personally, your plan sounds good too.

But you need to think about sales strategy from the very beginning that, in future, to avoid mistakes that can affect the deal. So, you just moved here from Eastern Europe and rented a Studio apartment under the headquarters. Now the entire top management, departments, business development and product (i.e. you and your cat) are based in Silicon valley and R&D Department (i.e. everyone else) — in Moscow, Minsk or Kiev.

I will not talk about how to structure your powerful international Corporation. There is always a lawyer who will be happy to bill you $500 for the advice to open company in Eastern Europe and the C-Corporation in Delaware.

Instead, I would like to dwell on the fate of your R&D Department. Why is it so important. Because large corporations sometimes more difficult to open an office in a new country than to buy your startup. It requires a lot of time, effort and may lead to legal consequences (for example, the need to obey Russian laws governing the Internet).

In addition, it is important to keep employees together to avoid the time difference and communication barriers. Its one thing when in Russia or Belarus you sitting a few developers, and more — when a large part of the company.

This can be a problem because transporting employees in the United States before it was not easy for corporations, and with the new administration in the White house it became even more difficult. In addition, it is not only about the companies — also will think, and most venture capital funds. The ideal case is when all your employees are in Silicon valley. However, if you try to bring up all the engineers, this will be not only difficult and expensive, but hardly have them in mind.

You know, many developers have “entrepreneurial spirit” (by this I mean the fact that they are completely sane people who do not want to live with a constant lack of sleep, to sit on a diet of Ramen noodles and hope for a brighter future), they have families who may not want to move to the other end of the world. If your strategic partner is a R&D Department in your country, youre safe.

But this is not always. So lets open the map and see which countries are best suited in order to place there R&D. People who grow up in cities with harsh climates like St. Petersburg and Grodno, usually choose warm countries with cheap food.

Some are even opening offices in Thailand or Bali, but you better leave these options for real start-punks, because from the point of view of the subsequent sale of the company, R&D offices in exotic countries are no better office in your home country. Many businesses open an office in Cyprus. EU membership, good weather, proximity to Moscow and the magical tax regime for them look very attractive.

However, in the future you can start with scaling difficulty of this office, since Cyprus is not easy to find enough qualified developers. And besides, theres no R&D offices of large companies from Silicon valley, so if the long-awaited deal still held, they still have to solve the problem of relocation of all personnel.

So lets see what European countries are the offices of Facebook, Google, or Microsoft. It is important that locations satisfy the following criteria. According to businessmen who spent a considerable amount of time in search of a country, they managed to find only three viable options.

Lets apply another filter — the number of successful it deals over the past three years, and we have the only winner is Israel. No, the Israeli government has sponsored the publication of this note, and I have no friends in the Mossad.

Certainly, Israel is not the perfect place to live, but it seems to me that this is a very good place for R&D office of a startup from Silicon valley who wants to it was purchased by Facebook, Google, Microsoft or any other Corporation. However, the purpose of this post is not to compare different countries or to explore the specificity of the labour or tax legislation, but to encourage entrepreneurs to think in advance about where to open R&D Department, in order not to bite your elbows before the deal. Send columns, corresponding to the requirements of the editorial Board, [email protected]

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