Slush revokes $1M pitch prize from Russian founders after industry outcry [Updated]

This post was published (November 21, 2022 @ 08:37:07) and was updated with new information at (November 21, 2022 @ 11:54:08) San Francisco time.

Immigram -- a talent immigration platform founded by two Russian passport holders -- has been removed from a $1 million startup competition that it won last week at the high-profile Slush conference in Helsinki, Finland after a swirl of controversy enveloped the decision due to Russia’s invasion of Ukraine.

Amid allegations of the startup helping Russians move at a time when the country is being sanctioned and others claiming that the conference and judges were tone deaf to award the top prize to a Russian-founded startup, TechCrunch has found that the startup appears to also have investor ties to Russia.

The fallout from the whole situation has been substantial, with posts criticizing the award going viral, but also the startup's founders -- who have said they do not support Russia's aggression -- facing death threats and more.

This morning, Immigram announced that it was “opting out" of the competition, and moments later, the Slush organization said on Twitter that it was revoking the award.

TechCrunch understands that the VCs that were brought together to fund the $1 million investment prize -- Accel, General Catalyst, Lightspeed Venture Partners, NEA and Northzone -- had advised Slush to revoke the prize only after doing their own due diligence into Immigram, post the competition. More on that later.

Slush meanwhile said it had revoked Immigram’s win “in light of new information.” It also requested that the investors pull their investment, and it apologised to attendees “for this oversight.”

“We should have reviewed all participants operations more closely before entering into the competition," it added.

Over the weekend it also issued this statement: “Slush stands with Ukraine and condemns the Russian invasion of Ukraine. For this reason, we do not partner with Russian companies or funds or accept startup or investor applications from companies based in Russia.”

Immigram was launched in 2019 by two expat Russian founders -- one of them, CEO Anastasia Mirolyubova, has been living in the U.K. since 2016, while the other, Mikhail Sharonov, is based in Georgia -- and it is registered as a U.K. legal entity based out of London, England. Its principal offering is a platform-based approach to the complex process of navigating “Global Talent” visa programs across 10 countries searching for high-tech talent, especially post-COVID.

Specifically, it is advertised to people in countries like Russia, Ukraine, Belarus, India and the U.S. to apply for the U.K. Global Talent visa. The company says that applicants from Eastern Europe make up a minority of its users.

However, perhaps because of its founder DNA, Russia was among the early countries where Immigram first launched its operations, in order to assist Russians with obtaining said visas.

In 2019 Immigram may well have been a relatively uncontroversial startup and might well have attracted little attention.

But in April this year -- barely a month after the brutal invasion of Ukraine by Russia -- it raised $500,000 in a funding round led by Xploration Capital, as well as from Mikita Mikado, the Belarusian СEO of PandaDoc.

UPDATE: Mikado has since posted on LinkedIn in defence of Immigram, saying: "Services like Immigram can help to fail dictatorships in the long term. Technology makes a huge difference in the modern world, including warfare. We don't want Putin’s regime to have access to AI engineers and scientists Immigram helps to move to U.K. We want them to contribute to democracies."

Other investors included Joint Journey Ventures, angel investors and Hatchery, a startup incubator run by University College London.

A casual observer may well have commented at the time that Immigram’s growth might have been connected to the desire by many Russians who disagreed with the war to leave the country or who wanted to avoid its consequences. It is of course impossible to say either way, since every individual is different.

It’s worth noting that Mikado has also made anti-Putin statements and had to flee Belarus, which is led by Kremlin ally Alexander Lukashenko.

It was in this context -- and after a heavy vetting process by Slush (four stages, more than 1,000 startup applicants) -- that Immigram came to pitch live at Slush last week.

But when it emerged shortly after that the co-founders were still both Russian passport holders, social media -- particularly on LinkedIn -- lit up about the decision, focusing on this aspect of the pitch competition’s decision.

Among them, an extensive post by Yaroslav Krempovych of Movens Capital in Warsaw, criticizing the decision to hand the award to Immigram, went viral over the weekend.

“While some startup founders fight and die on the frontlines for the lives of their families and loved ones and their country's freedom, others seek to assist Russians to escape the repercussions of their acts and inactions,” he posted.

Several other commentators, including TechUkraine, assembled yet more critical posts of the decision.

To add fuel to the fire, Immigram had pitched during the competition against Ukrainian startup, Zeely, a platform aimed at emerging markets allowing consumers to launch web sites easily from their phone. Zeely took second place in the pitch-off competition.

Regardless of whether Immigram, based out of the U.K. but run by Russian passport holders, directly violates any specific sanctions, observers have called the decision by Slush to include the startup in the competition “tone deaf,” coming the same week as Russia was shelling Ukrainian cities.

Furthermore, the VCs involved have come under criticism for not engaging in greater due diligence during the pitch competition and failing to "read the room" regarding the background of the startups involved.

The fallout from the incident has been considerable.

Mirolyubova said in a LinkedIn post on Sunday that while she cannot directly relate to the horror Ukrainians are facing, “I truly emphasize and stand with Ukraine. We do not support the aggression and the invasion and never have.”

But she also added that she has “started getting death threats and wishes, for rightfully winning a startup competition with a wrong colour of the passport.”

“My co-founder’s Mikhail Sharonov's family comes from Odessa, Ukraine; my father is from Tatarstan. But both of us happen to have a red [Russian] passport. The very nature of Immigram is to help talents (from small Indian towns to Nigerian villages) with any passport to live and work in developed countries without racism, xenophobia and hate … I wanted my business to be judged, not my nationality,” she added.

Immigram has previously said (in April) that it was offering a service to talented Ukrainian IT specialists to move to the U.K. via the Global Talent route, but that it had since waived the payments for Ukrainian clients after the war broke out, and it helped buy an ambulance car for the Ukrainian frontline.

After winning the competition, Immigram said it would donate $100,000 to Ukrainian NGOs assisting the war effort.

And yet the company has had to face questions about its operational strategy. While Immigram does not have a legal entity in Russia, nor does it base any employees there, AIN.Capital, a CEE tech news site, published images from a Russian job board appearing to show Immigram hiring for roles in Moscow.

Mirolyubova has countered this, saying that the company simply uses these Russian job sites to advertise for roles outside Russia such as in Georgia, Armenia or the U.K., where it can then also offer its Talent Visa platform. Furthermore, she says Russian job boards do not have a “relocate” category as this would trigger investigations by the authorities.

All that said, TechCrunch has uncovered an investor in Immigram who maintains close links to Russia.

Sergey Dashkov, head of Joint Journey Ventures, a Cyprus-based early-stage investor in Immigram, recently listed his location on LinkedIn as “Moscow.” This was changed only after TechCrunch contacted him for comment.

Speaking to TechCrunch, he said: “I maintain several addresses in many countries. Now I’m in Limassol, Cyprus. I live between Russia, UAE, Singapore, Cyprus. Mainly live in Internet [sic].”

On May 31 this year he also appeared in an article, by Russian-American journalist Daria Solovieva, headlined “How this Moscow-based VC investor navigates uncertainty in times of war.”

The article detailed how Dashkov had invested in 112 companies since 2016 and he did “not differentiate between Russian, Belarusian or Ukrainian founders. "[I] still have 'many' Ukrainian companies," he said. He added that “times are not good, but they produce strong people” and “what doesn’t kill you makes you stronger,” in a clear reference to the conflict in Ukraine.

Although Joint Journey Ventures said it had suspended new investments in early March, Dashkov was quoted as saying he is still monitoring the “best deals that appear on his radar.”

He added: “I’m sure in five-six years’ time, we will see Russian companies that become unicorns, despite all the complications and barriers now.”

Speaking to TechCrunch, Immigram founder Anastasia Mirolyubova said Immigram had taken Joint Journey’s investment several months before the war started:

“We took this investment [from Joint Journey Ventures] before the invasion started, in December 2021. The fund invests in a number of great European and U.S. companies. We were not previously aware until today that Sergey lived nor spent any time in Russia.”

Ukrainian startup Zeely declined to comment on the jury’s decision but said it stands “in an explicit anti-Russian position. A terrible, bloody war continues in our country, where our citizens are dying and we do not tolerate neutrality. We must all be unanimous. We are against cooperation with Russia in any of its manifestations,” it said in a statement.

Commenting, Borys Musielak, founding partner at SMOK, a prominent Polish VC, said on LinkedIn that the incident was a “PR fuckup … awarding a major European startup award to a Russian team Immigram that helps Russians escape Russia as a consequence of Russia invading Ukraine … while Russia was shelling the country at the same time. You should have known better Slush, Accel, Northzone, General Catalyst, Lightspeed Venture Partners, New Enterprise Associates (NEA). I'd love to hear an explanation from the GPs on the picture why you thought this was a good idea.”

“Recognizing a Russian startup, which is currently hiring in Moscow, at such a serious event, with the applause of top VCs … it’s not only a PR shot in the foot, but most of all, a very real shot in the back of the Ukrainians,” he added.

While so far there has been no official comment from Northzone, Lightspeed, General Catalyst, Accel and NEA, TechCrunch spoke on background to sources close to the decision-making process among the VC judges.

A source close to the judging panel told TechCrunch that the judges’ decision not to go ahead with the investment had nothing to do with the founders having Russian passports, but because too many of its customers, outside of the other countries it serves, were from Russia.

“The business is indirectly getting more traction because of the war, not because Immigram did anything wrong, but because most of the applicants on their platform are currently Russian,” they told TechCrunch, and this hadn’t been previously clear to the judges.

Once Slush and investors learned this, they said, Slush made the final decision:

“This is a consequence of trying to make a live investment decision. There's a reason firms do due diligence after they sign a term sheet. Typically investments aren't public for weeks/months after when all diligence is done.”

They said the VC judges don't blame Slush or Immigram for the situation but in light of the information about the bulk of it customers, “it felt inappropriate to invest.”

They added that this was “a true edge case — a bunch of people trying to do the right thing including the founders … very unfortunate.” They said the whole situation was “much more nuanced and well intentioned” than the comments on social media have suggested.