Why Dubai Bans Anonymous Cryptocurrencies

Why Dubai Bans Anonymous Cryptocurrencies

In 2020, the Avito ad service invested hundreds of millions of rubles in the GigAnt marketplace, where retailers can place free slots for part-time work, for example, during rush hour, and performers can find a job closer to home. Two years later, the corporation, together with the minority shareholders of the service, filed a lawsuit against the founders of the startup – Denis Reshanov and Mikhail Valkovsky – and demanded that almost 169 million rubles be returned to GigAnt. What is the reason for the crisis in the relationship of a startup with investors?
Millions of rubles for a taxi, babysitting services and access to a premium business club – the Internet company Avito, the co-founder of the Hoff furniture hypermarket chain Mikhail Kuchment and the head of the Alidi logistics company Petr Demchenkov blame the founders of the invested startup GigAnt Denis Reshanov and Mikhail Valkovsky for these and other expenses. At the end of January 2023, investors filed a lawsuit against them with the Arbitration Court of St. Petersburg, it was accepted for proceedings. The plaintiffs demand to recover 168.8 million rubles from the defendants – such a loss, in their opinion, GigAnt received due to the embezzlement of entrepreneurs.

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Denis Reshanov and Mikhail Valkovsky deny all charges. According to Reshanov, the expenses were either necessary for the operation of the service, or agreed with the board of directors, or did not require such approval. He claims that while the startup was growing, there were no questions about the expenses of entrepreneurs. But since the end of 2021, the service has experienced financial difficulties. Reshanov explains them by the changes that have taken place in the temporary employment segment after the pandemic. Due to the outflow of labor migrants, retailers – the main clients of GigAnt – needed performers for full shifts, and the hands did not reach temporary staff, the entrepreneur says. In his own words, he proposed to the board of directors to change the business model to the search for permanent employees, but did not meet with support from investors.

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Forbes spoke with the parties to the conflict, service clients, investors and found out how the conflict began and how it could end.

The birth of a giant
GigAnt is far from Denis Reshanov’s first startup. At the age of 20, he founded the company “Personal Solution”, which began to help businesses with the search for unskilled personnel such as loaders and packers. Then he opened several more projects – the computer repair company Aegis Computers, the AskUp educational portal, the Pizza Time pizzeria chain, the Logomachine design studio, and others. But Personal Solution remained the most successful of his businesses. She also prompted the entrepreneur to the idea of a more technological startup in the same niche.

In 2019, the entrepreneur, together with his partner in Personal Solutions, Mikhail Valkovsky, came up with the GigAnt platform, where retailers could place slots with vacancies for several hours, for example, if the store needs to unload a truck or take out additional employees during peak hours. So the business would have the opportunity not to hire additional people for the entire shift, and the performers would have the opportunity to find a part-time job.

Entrepreneurs registered Gigant LLC in May 2019. Reshanov invested $100,000 of his own money in the launch, while Valkovsky invested “time and skills.” At the same time, the latter became the sole founder of the company, since Reshanov was under the “block of the Federal Tax Service”: for some time he could not be a co-founder of companies and hold senior positions, a source familiar with the details of the partnership between Avito and GigAnt told Forbes, and Reshanov himself confirmed. The temporary ban from the Federal Tax Service arose due to the late submission of reports on one of the legal entities of Personal Solutions, Ekaterina Brown, former financial director of GigAnt, said in a conversation with Forbes.

Reshanov searched for the first performers on Avito. And the first client was VkusVill. After several months of cooperation, about 200 people from GigAnt went to the retailer’s stores daily for part-time jobs. According to SPARK, by the end of 2019, the revenue of Gigant LLC reached 17.4 million rubles, net profit – 5.2 million rubles.

By the beginning of 2020, the startup closed the seed round: Mikhail Kuchment, co-founder of the Hoff furniture hypermarket chain, Petr Demchenkov, Reshanova’s friend and head of the Alidi logistics company, as well as the Startup Lab fund (one of its beneficiaries is the founder of VkusVill, Andrei Krivenko) invested in it. The amount of investment was not disclosed. According to Forbes, GigAnt was valued at about 150 million rubles at that time. As a result of the transaction, 83.08% of the company remained with Valkovsky.

In 2020, the service’s revenue grew more than 10 times, to 188.8 million rubles, and the profit was replaced by a loss of 9.2 million rubles. In December of the same year, Avito joined the investors – the company bought 25% in a startup. She did not disclose the amount of investment. Kommersant, citing a source, reported that the purchase of a stake cost the company 500 million rubles.

At that time, Avito had been developing its own job search service for 10 years and was “strongly occupying the blue-collar niche,” its representative tells Forbes. He continues, the company saw the direction of part-time employment or part-time work as a further vector of development, which “would logically complement the existing Avito Rabota business.” GigAnt at that time was the leader in this area and was actively growing, an Avito representative recalls: “We saw a prospect in this project, as we observed high demand from retail chains for part-time staff.”

It was planned that by the fall of 2022, with Avito’s investment, GigAnt would develop an automated platform that would “match” applicants and companies in need of temporary workers, they say in the ad service. After the launch of the platform, the Avito service wanted to integrate the GigAnt engine into Avito Rabota.

Without air
In February 2021, GigAnt, according to its own data, already served 1450 points. Among them were SPAR, Azbuka Vkusa, Pyaterochka, Dixy and VkusVilla stores. By that time, the number of active performers in the database exceeded 4,000 people. The startup worked in Moscow, St. Petersburg, Tver, Novosibirsk and Ulyanovsk. By the end of the year, Reshanov planned to grow the company by 25 times and cover 20 cities.

In the fall of 2021, Avito reinvested in the service, increasing its stake to 33.81%. The amount of the deal was not disclosed by the company. According to a Forbes source familiar with the details of the partnership between the two companies, the development of the platform was far behind the stated deadlines. Investments were needed to speed up this process. The service began to build up a team of full-time developers, says Reshanov. The startup invested part of the money in marketing – attracting performers through advertising on Avito and HeadHunter.

But at the end of 2021, GigAnt ran into problems. The business stopped growing that year, Reshanov says. “At the end of the year, business indicators stopped reflecting positive dynamics,” confirms an Avito representative.

At the same time, the startup’s annual revenue reached 670.3 million rubles, the loss was 189.4 million rubles. However, the startup did not follow through on its business plan: the growth rate should have been much faster, one of its shareholders explains. Avito says that the revenue plan was underfulfilled by several times, and losses scaled sharply.

Reshanov and Valkovsky explain the loss with the venture business model, and the drop in growth rates with a decrease in demand. Due to the outflow of labor migrants against the backdrop of a pandemic, a shortage of personnel has begun in the labor market, the founders say. Stores no longer needed support staff for short shifts, says Reshanov: “If there should be 10 people at the outlet, and there are five, then the company is not up to optimizing costs [by attracting temporary staff] – first they need to staff [permanent employees].

According to Reshanov, in this situation, disagreements arose between investors and founders. He suggested that the board of directors “adapt to the changing market” and expand the business towards full-fledged long shifts for the whole day. But the idea did not meet with support from the directors of Avito, who insisted that the startup continue to work in short shifts, the entrepreneur claims. In his opinion, top managers blocked the idea because of their personal KPIs for Avito Rabota, which GigAnt would compete with in the event of a pivot (change in business model).

The fact that, having changed the business model, GigAnt would climb into the “glade” of Avito Rabota, Forbes is also told by the head of the accelerator of the Internet Initiatives Development Fund (IIDF) Dmitry Kalaev. “Avito as a strategist is not interested. It turned out to be internal competition, ”he sums up.

Avito claims that they were not against long shifts, but did not consider it a priority to develop this area without solving problems in the main one. According to a source familiar with the details of the partnership between the corporation and the startup, investors saw a different trend in the part-time segment: competitors were growing, and “GigAnt was suffocating.” Because of this, investors perceived the pivot offer as an attempt to cover up “inept management,” says a Forbes source: “When the founders realized that they had lost the short shift market, they very urgently wanted to go into the long shift market.”

According to Reshanov, Mikhail Kuchment and Petr Demchenkov at the same time supported the idea of moving to long shifts and helped convince Avito’s top management of its expediency. Demchenkov and Kuchment declined to comment on this.

Timeless Employees
The temporary employment segment in the Russian labor market has been growing rapidly since 2020, and 2022 was no exception, Forbes tells in the HeadHunter recruiting service (under temporary employment it means any form of employment for a certain period – project, for several months, part-time work in different formats). Over the past year, 656,000 vacancies with temporary employment were posted on hh.ru — 20% more than in 2021, and 2.5 times more than in 2020. At the same time, temporary hiring in retail – the target for the GigAnt industry – has really slowed down, HeadHunter says: in 2020 and 2021, its share in the total number of vacancies was about 12%, and in 2022 it dropped to 8%.

Kalaev from the IIDF also believes that the need for retailers in temporary staff has been declining in the last couple of years, and 2022 has exacerbated the problem. “The temporary staff that GigAnt provides is the icing on the cake that optimizes the business. But in 2022, retailers were not up to the cherry, it was necessary to solve the basic problems with logistics, suppliers and full-time staff who fell under the mobilization, ”he explains.

At the same time, there are several successful projects in the temporary staff segment, Avito notes. For example, the Ventra Go! temporary job search service, which in January 2022 attracted 700 million rubles from the VTB Capital Investments fund (now VIM Investments). The startup declined to comment.

Steep Dive
In 2022, GigAnt’s revenue began to plummet. According to Reshanov, in the first nine months GigAnt gained 200 million rubles, he finds it difficult to name the amount of losses. After the start of the “special operation”*, the company reduced the number of employees – from 200 to 40 people – and the cities of presence. Now GigAnt is represented only in two cities – Moscow and St. Petersburg.

The service could not provide customers with the service they needed, so it was losing ground, Reshanov is sure: “The client asks for a loader for 12 hours, instead we offer him two for six hours. The client asks why not one for 12? And there’s nothing to say in response.” According to him, in connection with this, customers began to reduce the number of applications.

Investors have a different explanation for the sharp drop in earnings. As a source familiar with the details of the partnership between Avito and GigAnt tells Forbes, in 2022, the startup stopped fulfilling the plan for applicants to go to shifts and “entered a steep peak.” According to him, the service was slowly processing applications. The reason is that the platform, which was supposed to automatically “match” applicants and customers, was not ready, says Forbes source. The performers, in his words, noted in the application the time convenient for part-time work, and the clients set their shifts – but it was not the program that brought them together, but the employees. This scheme worked well on small volumes, but on large ones it led to delays, the source claims. Avito told Forbes that in 2022 the platform for part-time work is not ready “in the form in which it was presented to investors by Denis Reshanov.”

The recruitment specialist working with the startup also spoke about the systematic problems in working with GigAnt Forbes. According to him, the applicants might not have permits for work, in addition, they might not come to the shift. Another source in the company, a client of GigAnt, told Forbes about cases of absenteeism of Forbes performers.