Sergey Kartashov, CEO of Generation Partners LTD, told about the selecting process of IT projects for further investment. He also shared his vision on Cyprus as a safe island destination for IT and intellectual property companies.
To preserve and increase the assets of individuals, partners, groups and even families with a fortune of more than $ 100 million, there are various types of asset management offices. These days, Cyprus is considered one of the most popular regions for managing IT assets.
IP BOX and Cyprus
Sergey Kartashov, CEO of Generation Partners LTD, says that intellectual property companies are particularly interested in this jurisdiction. The main reason is IP Box. This is a tax incentive regime that allows to create and use intellectual property, while only part of the revenue of the objects is subject to taxation.
“To obtain tax benefits, you require not only a nominal company, but also a full-fledged development office that independently creates an intellectual property object or substantially develops a purchased one,” says Sergey Kartashov. “This have pushed foreign companies to relocate their offices and staff during the last years. Apart from this, it stimulated the development of the local IT industry in Cyprus. Of course, such a work involves serious upfront costs, but if you have great stock turnover, it will lead to substantial savings in the future.”
He says that because of the influx of IT companies and investments, the infrastructure of Limassol began to develop rapidly, and business predicts the city to become as prominent as the Silicon Valley. Today, there are great number of offices of the strongest IT companies already on the island, and employees use their released products to broadcast a positive mood filled with a hot climate and salty warm sea.
Many IT asset management companies have also focused on Cyprus. Among them, there are companies that provide independent analysis of all possible investment decisions and development of an investment strategy. Often, consultants take on the processes of negotiations with banks to collect and prepare documents that meet the requirements of financial institutions or reduce the amount of bank commissions.
Generation Partners focuses on the expertise of startups and strives for a yield of 20 percent or more. To accomplish it, according to Sergey Kartashov, it’s necessary to combine classic investments, which will always keep the office afloat, and highly profitable projects with a high level of risk.
“We do multi-level expertise of video-tech and IT-ecosystems projects. We study industry trends and new projects on the market, we analyse what companies do, how professionally their teams and managers are, and we also assess risks,” explains the CEO of the company. “Of course, the final decision on investments in new projects is always up to the customer. At this stage, our task is to collect the maximum information about the startup and consult the client. However, the process of further development of invested companies is much more serious, i.e. cooperation with managers, coordination of plans and strategies, progress analysis. This is a huge part of the work that we keep under our control.”
He says that this kind of companies is most interested in companies in the early stage of raising capital (Series A-B) and that tend to switch to an IPO. At the same time, it is important to carefully approach the analysis of each startup and thoroughly diversify the portfolio. According to the CEO of Generation Partners, from 100 to 500 thousand dollars are invested in one project. This allows not only to expand assets, but also to restrain overall risks.
“Every month, we analyse more than 30 companies. Usually, only 0.5-1 percent of them are interesting enough for investing. And this, in fact, is still a great score,” says Sergey Kartashov.
Among the interesting projects that were examined by Generation Partners in recent years, the CEO names the French podcast service Majelan, the VR platform Psious, and the Spanish startup bank BNext.