A robotics engineer from Moscow, Alexander Khanin, created a facial recognition system which is now used for security purposes in banks, retail and transport in Russia and abroad. In three years, the revenue of VisionLabs has grown almost six times. The company expects that in 2020 the share of revenue from foreign sales will increase to 75%.

The company was first interested in public and private venture capital funds, and later in Sberbank, which acquired a quarter of its charter capital.

Meanwhile, to ensure further successful growth, the company's head office was transferred from Russia to the Netherlands (Amsterdam). Other successful Russian startups, including, for example, Uber, a competitor that was born in Russia, have to go abroad due to numerous problems that hinder the successful development of these companies in Russia.

What did the company create?

Alexander Khanin was fond of computer vision technologies as early as in his third year at MGTU named after Bauman. After graduation, he worked at one of the Moscow research institutes where he was engaged in image processing. Visiting various conferences and exhibitions, he found that many companies are interested in using such technologies for security purposes.

Having found three like-minded people - Ivan Laptev, a professor at the French National Institute of Informatics and Automation Research, Alexey Kordichev from Rosbank and Alexey Nekhaev, an IT specialist - Khanin applied to Skolkovo and founded VisionLabs.

The company's product is LUNA Platform, a computer program used to work with biometric data and can solve a variety of tasks using facial recognition functions, such as verifying a bank customer, identifying office employees at the entrance to the building, etc.

Photo: VisionLabs

"In Russia, passports are issued at 14, 20 and 45 years old. From 20 to 45 years old a person can change beyond recognition. Operators at banks that check passports manually are not able to make sure it's the same person. You can come with any passport and tell them that it is you in the picture, you just don't look good now. And there is a lot of such fraud," says VisionLabs CEO Alexander Khanin.

According to estimates of "Post Bank", the system saves him about 1 billion rubles per year by preventing losses from fraud, says Khanin. In addition, according to him, the system increases customer loyalty and reduces the bank's operating costs by accelerating service, and therefore pays off in a few months.

The first major client, Leto Bank (renamed Post Bank in 2016), appeared in 2014. At the same time, the company signed a contract with the Russian division of the American credit history bureau Equifax. Together with it, the company created a biometric interbank service for photo comparison. Today the company's technology is used by more than 40 banks, transport companies, retailers X5 Retail Group, Disksy, VkusWill, and S7 Airlines.

In retail, VisionLabs technology helps prevent theft, detect thieves, recognize dangerous behavior for others and see idle employees. In the field of transport - to stop the theft of a car, to determine the emotions of a taxi passenger and the degree of sleepiness of the driver, the information on the company's website. The technology recognizes faces even when a part of the face is blocked, when glasses or hats are used.

Since the company was founded, it was decided to avoid working with military and police officers. "We needed a clear, transparent picture [of how] customers would choose us because we are a company without administrative resources," explains Khanin. So we went to a place where we could quickly show the economic effect on the figures: retail banks, which are more familiar with the problem of fraud than anyone else.

How the project is financed and what it earns from.

In 2012-2015, the founders have invested in the project their own savings ($150 thousand), a grant from the Fund for Assistance to Innovations (Br30 million) and a subsidy of the Ministry of Education and Science. In 2013, the project was also supported by the Internet Initiative Development Fund (Br980 thousand in exchange for a share of 2.2%). The main expenses were spent on programmers' salaries.

In 2016, the first major investor, the Sistema VC venture fund (AFK Sistema), entered the capital of VisionLabs, receiving 25% of the company. The value of the entire firm, the investor then estimated at 1.4 billion rubles, with the volume of his investments amounted to 350 million. In 2017, the project invested a subsidiary of Sberbank "Digital Assets", receiving another 25.07% of the company. The amount of investment in the company is not disclosed. The money was mainly spent on product development and research.

VisionLabs sells licenses whose value depends on the size of the bank's business. "If a small bank, which has few operations, few clients, it costs several million rubles. If it's a big bank that has millions or tens of millions of customers, it can cost tens of millions of rubles," says Khanin.

There is no universal project that would suit all customers. Everyone gets a product that takes into account their individual requirements: some additionally get a mobile application, others get a VIP service.

In 2014, the company's revenue amounted to 21 million rubles, in 2015 - 33 million, in 2016 - 85 million, told the magazine "Secret" co-founder of VisionLabs Alexei Nehaev. The figures are the same as the financial statements, according to Kartoteka.ru. In 2017, according to her information, the revenue was already 127.3 million rubles. No data for 2018.

The growth rate of the entrepreneur's revenue is not satisfactory, so he plans to develop more actively in the international market. In addition, he estimates that the Russian market for facial recognition software is negligible - about $100 million, which is less than 1% of the world market, and it is growing by about 10% a year. And there are many companies in Russia that are good at facial recognition. In other words, the competition is high.

Going abroad

The first attempt to enter the international market in 2017 proved to be unsuccessful. It turned out that the product needed to be modified, for example, to teach the system to recognize the faces of people of different nationalities. In addition, it had to be brought in line with international legislation. As a result, the company entered the foreign market only in early 2018. Now the company's projects work in dozens of foreign countries. At the end of 2019, the share of revenue received outside Russia and the CIS will amount to 50%, and in 2020 it will increase to 75%, the company expects.

For the sake of foreign expansion, the company's head office was moved from Moscow to Amsterdam, says Khanin. According to Kartoteka.ru, in the summer of 2018 there was a layer between OOO "Vizhnlabs" and its owners in the form of Dutch company "Vizhnlabs B.V.", which now owns 100% of the authorized capital of the Russian legal entity.

"We promote our product in the foreign market through partners. These are system integrators, technology partners and other vendors," he says. Usually the partner sells the product under his name, and inside it there is VisionLabs technology.

Achievements and challenges

According to Khanin, the success of the company is confirmed by its leading position in the ranking of the National Institute of Standards and Technology (NIST), which tests facial recognition algorithms. In 2019, the VisionLabs algorithm showed the best result among its peers for the second time, recognizing the same person from photographs taken with a difference of several years. And it did it 2.5 times faster than competitors.

"Now there are a lot of companies that say that they are the best in the world, and these words are not confirmed by anything. Many investors are afraid that the guys who have read the book for teapots and tell that they are the best in the world, according to some guy from the back door, may come," says Khanin.

Khanin, who created the technology, programmed the first three years himself, but then focused on management work, delegating the development of algorithms to "more talented people in the team", although finding such people was not easy.

"In the first years, when nobody knew us and we had nothing behind us, the hardest thing was to convince cool qualified people to work for us for pennies. Explain to them that there are great prospects," Khanin said.

Now the salary in VisionLabs, according to Khanin, is not worse than in large corporations. But it's still difficult to attract the best specialists, as there aren't many of them in the labour market.

Plans for the future

VisionLabs regularly reports about the implementation of a particular product created on their platform. In 2018, for example, a system of contactless identification of residents was implemented in a Moscow residential complex, which allows you to enter the house without a key (intercom video camera recognizes the face of the owner).

In 2019, the co-owner of VisionLabs, Sberbank, announced the software and hardware complex Luna SCUD (access control and management systems), which can operate in the dark and recognize faces up to three meters away, as a result of which doors or turnstile leaves can open without delay the flow of people.

Deliveries of Luna RPCS to customers will begin in the fourth quarter of 2019, and from July partners in Asia-Pacific and the Middle East will receive the first product samples for pilot projects. In 2020 it is planned to sell about 10 thousand such devices.

The company is currently engaged in research in the field of human behavior recognition and plans to implement several such projects by the end of 2019. At the same time, the company is implementing projects to analyze traffic flows (recognition of brands, models, car numbers).

Khanin admits that not all VisionLabs technologies will be in demand in the market. But if he does not test his hypotheses, there will be no prospects of multiple growth. "We are looking for, investing, and what will be shot will be new oil," he says.