Venture capital investments in Russia

Venture Capital Investments

Main Article: Venture Investing

Venture capital funds

There are private, private and corporate funds (investing in the interests of the founding corporations). Here are some of them working in Russia:

Private funds

• s16vc
• Vibranium Venture Capital
• AI1 Ventures
• TilTeh-2
• GEM Capital
• Cabra VC
• Altair Capital
• AltaIR ABO Ventures
• Flashpoint Venture Capital
• FortRoss Ventures (SBT Venture Fund)
• Finam Information Technology
• Atlanta Start
• Atlanta Venture
• Baring Vostok Capital Partners
• Kite Ventures
• DFJ VTB Capital Aurora
• Speedinvest
• Fores Ventures
• Malina VC
• Advanced technology

Private and public funds

• Russian Venture Capital Company (RVC)
• Moscow Foundation under the management of Alliance Rosno UA
• Mordovia Foundation under the management of Alliance Rosno UA
• Perm Foundation under the management of Alliance Rosno UA
• Krasnoyarsk Foundation under the management of Troika Dialog
• Fund of the Moscow Region under the management of Troika Dialog
• Venture Fund of Tatarstan under the management of Troika Dialog
• VTB Venture Fund (together with RVC)
• Fund of St. Petersburg under the management of VTB UA
• Nizhegorodsky Fund under the management of VTB UA
• Saratov Fund under the management of VTB UA

Corporate funds

• Fuel For Growth
• Intel Capital
• Cisco Capital
• Deutsche Telekom Capital Partners (DTCP)
• Oradell Capital - created by the founder and president of IBS holding Natoliy Karachinsky

Investment in the IT sector

Main article: Venture investments in the IT sector of Russia

Investment in Medical Technology

Main article: Investment in medical tech

2024

The government approved the introduction of a tax deduction for investments in Russian startups

On April 1, 2024, it became known that the Government of the Russian Federation approved the introduction of a tax deduction for venture capital investments. Amendments to the Tax Code relate to investment partnership (DIT) agreements concluded for a period of at least five years without early termination. Under these agreements, venture capital or direct investment is expected. Read more here.

Tinkoff launched the T-venture venture investment platform

On March 13, 2024, Tinkoff Investments announced the launch of the T-venture venture investment platform. It will help companies with high growth potential get funds from retail investors to develop and scale the business. Read more here.

2023

Named the 10 largest venture capital deals in Russia for the year

At the end of 2023, the 10 largest transactions accounted for approximately 62% of the total venture capital market in Russia. At the same time, the largest agreement provided a third of the expenses in the segment under consideration. This is stated in a study by the Moscow Innovation Agency, the results of which were published in early March 2024.

The report says that the largest venture deal in Russia in 2023 was the raising of $40 million by Xpanceo, the developer of ultra-thin smart contact lenses with built-in artificial intelligence algorithms. The investor was Opportunity Ventures. In second place in the ranking is KEK Entertainment, a developer of multiplayer mobile games, which received $8 million for development. Closes the top three biotechnological startup Gero, which managed to attract $6 million to search for new methods of treating age-related diseases and combating aging. The Top 10 venture deals of 2023 also included:

• "Здоровье.ру" (an online platform for taking care of health for free under compulsory medical insurance policies) - $4 million;
• Looky (social network, analogue of Instagram (owned by Meta, which is recognized as extremist and banned in Russia)) - $3.7 million;
• CarMoney (an online lending service that issues money secured by cars and special equipment) - $3.3 million;
• Poison Drop (marketplace for the sale of designer jewelry and jewelry) - $3.3 million;
• Drone Solutions (development and production of multifunctional drones) - $2.5 million;
• Anabar (developer of the sales management system on marketplaces) - $2.2 million;
• OSNOVA tech (manufacturer of dry bases for preparing drinks intended for coffee shops, vending machines, etc.) - $2 million

The study notes that in general, in 2023, investors entered into 181 transactions in Russia for a total amount of approximately $118.2 million. At the same time, the volume of venture capital investments decreased by more than 10 times compared to 2022. Moscow in 2023 accounted for more than half of the venture capital market of the Russian Federation both in volume and in the number of transactions. The top three regions also included Tatarstan and St. Petersburg.

Russian Venture Capital Investment Market 2023

Tatarstan Investment Fund invested in 25 startups over the year and took 30% of the Russian venture capital market

In 2023, the Investment and Venture Fund of the Republic of Tatarstan (IVF RT) invested in 25 domestic startups, which is 30% of all venture transactions in the Russian Federation. This is stated in a study by the analytical company Dsight, the results of which are presented in early March 2024.

IVF RT became the leader in the rating of venture capital funds in Russia at the end of 2023 according to Dsight. The focus was on areas such as financial technology, business software, healthcare, transport and logistics, biotechnology, industrial solutions, consumer services, etc.

Investment and Venture Fund of the Republic of Tatarstan (IVF RT) invested in 25 domestic startups, which is 30% of all venture transactions in the Russian Federation

The Dsight rating includes private and state venture capital funds in Russia. The second position was taken by the Voskhod Foundation, which made 12 transactions in a year. In third place is the Moscow Seed Fund, which has invested in 11 startups. The fourth position was taken by the Kama Flow fund, which closed 9 transactions. On the fifth line is High beeline ventures, which took part in 8 transactions.

In general, the volume of the venture capital market in Russia in 2023 amounted to $84 million, which is 80% less than in 2022. The main trend is the activation of business angels and syndicates. In 2023, they accounted for more than half of transactions with early-stage startups, while in 2021 they accounted for only 15%. At the same time, the IPO market (initial public offering) has changed dramatically: foreign investors have left, and institutional investors have given way to retail ones. The size of the company for a successful IPO has shrunk, opening up new opportunities for exit.

Dsight estimated there were about 67 M&A deals in 2023, up 31% from 2022. Moreover, only 22 of them publicly disclosed the amounts. Amid instability, many investors, especially corporations, choose strategic investing over financial investing.^[1]

Growth in the number of transactions for investing in Russian startups by 20% to 175

In 2023, Russian investors and startups entered into 175 transactions - 20% more than in 2022. Such data are provided in a study by the analytical company Dsight called Venture Eurasia. At the same time, the total amount of financing decreased to $84 million - by 80% compared to 2022.

The study was prepared by Dsight in partnership with the RITA alliance of trading and technology companies, startup hub SberUnity, B1 agency and law firm Nextons. The research is based on data from open sources and information from investors.

For 2023, Russian investors and startups entered into 175 transactions

The volume of transactions in 2023 decreased to a historic minimum. At the same time, the "average check" fell. In 2023, the average check was $0.84 million, which is 84% less than in 2022. This dynamics is explained by the desire of investors to get a quick refund, as well as the geopolitical situation.

The number of transactions in 2023 increased by 20% and amounted to 175, while the year before that, 146 transactions were concluded on the Russian venture capital investment market. According to Dsight founder Arseny Dabbach, this could signal a "return to normality" in the market.

Private funds became the most active investors in 2023 - they closed 52 transactions. In addition, the activity of business angels has grown sharply.

Most of the transactions were concluded in the IV quarter of the year - this quarter accounted for almost half of the investment rounds. According to experts, this is due to the fact that investors spend more time analyzing and choosing projects. The largest deal of the year was investments in Здоровье.ру - in March 2023, the Kama Flow fund and a group of angel investors invested $3.8 million in the platform.

Experts also noted among the largest transactions of the year investments in the social network Looky ($3.7 million), in the Russian operator for charging stations for electric vehicles Hyper ($3.5 million). In addition, $3.3 million was invested in CarMoney MFIs.^[2]

Women's startups accounted for 17% of deals in the venture capital market

Women's startups accounted for 17% of transactions in the Russian venture capital market in 2023. This is evidenced by the data of the Zerno Ventures fund, which were released in early March 2024.

The fund estimates that in 2023, startups with female founders attracted 8% of venture capital investments from the total volume of transactions in monetary terms. In total, 31 such transactions were registered in 2023.

Women's startups accounted for 17% of deals in the venture capital market

According to a study by Zerno Ventures (the organization positions itself as the first Russian venture impact fund with a separate focus on supporting female foundations), in 2022-2023. the average investment in projects founded by women decreased six times compared to 2021 (to $0.5 million), while the check of "men's" projects fell even more - almost ten times (to $1 million). Among the projects in which only women are founders, the largest investment in 2023 ($0.5 million from Zerno Ventures) was attracted by the resale platform The Cultt. The FashionTech segment took first place in terms of investment among Russian projects with female founders, the study notes.

As part of the study, analysts at Zerno Ventures studied 1,846 transactions with Russian company founders. The report published in March 2024 states that over the past three years, the share of female foundations in the segment of small and medium-sized businesses in Russia has increased from 39% to 45%.

According to Kommersant, the success of women's business is less often covered not only in Russia, but also in the world. So, in 2023, the share of women's companies in the Fortune 500 list was 10%, and among those who received investments in Russia - 13%. At the same time, according to the publication, investments in women's projects bring in 10% more income and provide 2.5 times higher returns.^[3]

Market cut 10.6 times to $118.2 million

The volume of the Russian venture capital investment market in 2023 amounted to $118.2 million, having decreased 10.6 times compared to the previous year and being at a minimum over the past 7 years. This is evidenced by the data of the Moscow Innovation Agency, published in early March 2024.

According to the study, the number of transactions in the Russian venture capital market at the end of 2023 increased by 10%, to 181. Almost a third of this amount came from investments with undisclosed investment amounts. The actual volume of venture capital investments in 2023 was higher than can be estimated from public data, analysts say.

Early stage deals (pre-seed and seed) accounted for more than 60% of the market for the first time in 2023. The volume of seed investments in 2023 increased 2.5 times compared to 2022, but was provided by several large transactions mainly with knowledge-intensive startups. At the same time, investments in the late stages fell the most. In 2023, only 5 deals were concluded on rounds B and C +.

As a result, the average and median checks in investment transactions decreased by 9 and almost 3 times, respectively. Unlike the previous two years, in 2023 there were no megarounds - in the largest transaction, the volume of investments was measured at $40 million.

The researchers also pay attention to the decrease in the valuation of companies and the number of startups targeting the global market. The share of companies operating in foreign markets at the time of attracting investments halved - from 35% in 2021 to 14% in 2023. The average cost of startups decreased 12 times, amounting to $11.3 million in 2023. The main changes affected companies in rounds A, B and C +. The average estimates of early stage companies have hardly changed, the report said.

Russian Venture Capital Market 2023 - Moscow Innovation Agency study

10 venture capital funds launched in Russia in 2 years

In Russia, in two years - by the end of 2023 - 10 venture capital funds were formed, and another 11 such structures are at the launch stage. Investor activity is growing against the background of the current geopolitical situation, due to which many foreign companies have left the Russian market, and the vacated niches are actively occupied by new players. This is stated in a study by Softline Venture Partners, the results of which were released on December 11, 2023.

According to the report, Forbes referring to the data of the report, not only private, but also corporate and state players were included in the number of new venture funds. In February 2022, the venture capital company Startech VC Vladislav Zdorenko created startups the Startech.Partners fund for early-stage investments. A month later, a fund was registered, Hyperion Andrey Olkhovsky co-owner of the car dealer "." Autohouse In addition, in 2022, "" (VimpelCom beeline brand) formed a subsidiary structure of LLC "" Hyve for investment startups in and support of entrepreneurship. Moscow Credit Bank (MKB) And in the summer of the same year, he opened the corporate venture fund Izba vc, which focuses on Moscow startups in the fintech segments.

In the public sector, in the summer of 2022, the Technospark startup studio of the Infrastructure and Educational Programs Fund (FIOP) launched the Technospark Ventures I venture fund. This structure focuses on the areas of decentralized and alternative power, electric transport, new materials, medicine, electronics and mathematical modeling.

In the spring of 2023, the Tiltech group of the Russian billionaire and founder of VkusVilla Andrei Krivenko and his partners opened the 3Streams fund, and in the summer of the same year, Dmitry Komissarov, founder of the MyOffice IT developer, created the Strigo Capital venture fund for investments in IT startups. The new venture capital fund comes from investment platform Sk Capital.

As of the end of 2023, the Voskhod Aerospace Technology Fund, the TechnoSpark joint venture capital fund and the National Technology Initiative (NTI) Sovereign Technology Fund are being prepared for launch. ^[4]

Russian venture capital investments demonstrated a new anti-record

Dsight conducted a major study of the Eurasia venture capital market for the first half of 2023. The company shared its results with TAdviser on October 19, the study provides data separately for Russia. According to Dsight, Russian venture capital investments are demonstrating a new anti-record. The trend of the market decline, which took shape in 2022, continued in the first half of 2023. Dsight recorded 66 venture capital deals, down 21% from the same period last year.

The decline in investment is even more dramatic: the market collapsed 10 times in annual terms, to $27 million. The five largest transactions accounted for half of venture capital investments over the period, according to Dsight.

With a high probability, the negative trend will continue until the end of 2023, and the gradual recovery of the market will begin in 2024, provided the geopolitical situation stabilizes, Dsight believes.

The volume of venture capital investments has decreased at all stages. The largest drop in the volume of venture financing and the number of transactions fell on the early and late stages. This clearly reflects a change in the approaches of venture capital investors to transactions and a decrease in their risk tolerance.

The reduction in total capital in the venture capital industry and the rise in the cost of money has led to increased competition for rounds for startups. In the face of uncertainty, investor demands for the efficiency of the startup business and the speed of reaching positive profitability have tightened.

The structure of Russian venture capital transactions is traditionally dominated by transactions at the sowing stages, and the share of such transactions in total increased from 62% in the 1 half of 2022 to 70% in the first half of 2023. According to Dsight's forecast, this figure could rise to 85% by the end of 2023.

Business angels provided half of the sowing investment. Despite the fact that the number of transactions held with the participation of business angels decreased 2.5 times, to 8, the average check of transactions remained unchanged compared to the first half of 2022 and amounted to $0.8 million. The largest transaction in this segment is the attraction of Russian social network Looky $3.7 million from a group of private investors.

The number of transactions involving state investors increased by 47%, with the largest activity demonstrated by the investment and venture capital fund of the Republic of Tatarstan, which financed 17 technology companies (almost 70% of all transactions in the segment). However, the average deal size in this segment in the first half of 2023 decreased 40 times, from $4 million to $100 thousand.

The share of corporations in investment increased from 3% to 22%. Despite the fact that many corporations had to redistribute their budgets for innovation due to sanctions and reduce the cost of developing innovation and R&D, in the first half of the year corporate investors slightly increased venture activity: compared to the same period last year, the number of transactions in this segment doubled. At the same time, the volume of investments decreased slightly.

Earlier MTS it announced plans to make 3-5 transactions with a total amount of up to 1 billion rubles by the end of 2023. Additionally, the company "" intends to support promising domestic projects, in the Rostelecom plans of which the launch of a new venture fund of 8 billion rubles. We can expect that the venture activity of the Big Four operators will ensure the growth of startups capable of replacing the technologies of foreign vendors that have left the Russian market with their developments and solutions.

We see many corporations deprioritizing venture capital instruments in their structures and closing startup support programs. On the other hand, there are fewer promising startups: some have changed jurisdiction and switched to finding investments abroad. Corporate venture is being rebuilt to point work: from accelerators to scouting startups of A/B rounds, from minority venture investments to M&A transactions, - Dmitry Kurin, director of innovation and investment at MTS, founder of MTS StartUp Hub, quotes Dsight in his research.

Foreign investments in the first half of 2023, according to Dsight, are represented by a single deal: educational startup EducateOnline, which created a platform for distance learning in foreign schools, raised $640 thousand as part of a bridge round from business angels UMAY Angel's Club. The lead investor and syndicator of the transaction was a Kazakhstani businessman and venture investor Bakht Niyazov.

According to analysts at the MTS StartUp Hub Innovation and Investment Center, which are given in the study, according to the results of the first half of 2023, the largest number of startups in Russia (15.6%) are launched in the FinTech region, another 11.9% are developing their projects in the fields of medicine and health. These segments are also leading in terms of attracted investments: they account for 30% of venture investments in the first half of the year.

And for the first time, cybersecurity entered the top 3 industries: the number of startups in this segment doubled compared to 2022, which is due to the departure of Western vendors and increased demand from Russian business due to a significant increase in cyber attacks.

At the same time, there has not yet been a boom in venture capital investments in cybersecurity: over the past 3.5 years, Dsight has recorded only seven venture capital transactions in Russia. It is expected that venture investments in cybersecurity will increase over the coming years, but a sharp increase will not be expected until a bridge is built between information security startups and venture investors.

Other attractive VC niches in 2023 include B2B Software, BioTech, EdTech, HRTech and PropTech. In 2023, the government allocated construction, chemical industry and food to priority areas, which, according to Dsight analysts, will be able to count on a special approach of banks when approving loans, as well as on the creation of grant programs from development institutions.

The main challenge of innovators is a shortage of high-quality solutions. The overwhelming majority of innovators surveyed by Dsight in large corporations note a reduction in high-quality solutions available on the market due to the outflow of a large number of promising startups outside the Russian Federation. Another "pain" of corporations when working with startups is the inadequate assessment by the latter of the maturity level of their decisions.

About a third of Dsight's surveyed companies still experience traditional difficulties working with open innovations: here are bureaucratic red tape in internal processes and legal problems. Legal problems are now especially associated with the transition of companies to Russian software, which has changed the requirements for cybersecurity and complicated the process of integrating the corporation and startup.

Dsight researchers state that most corporations do not reduce the budget for innovation. At the same time, if the internal development of products for the company is cheaper, or highly specialized solutions are needed (including import substitution tasks), they prefer to create them inside, even if it is more difficult and takes more time.

And in connection with the departure of high-quality startups, corporations choose development own products instead of investing or buying, Dsight explains.

{{quote 'This trend of corporate innovation will remain until the geopolitical situation improves. In addition, at the moment, crowdfunding and investment platforms have become more actively used, for example, Rounds, where amounts for investments are collected from various participants and collectively, which will help attract capital in Russia. So, in the top 3 Russian transactions hit startup CarMoney, which raised $3.3 million in private investment round held by offering shares under a closed subscription on the crowdfunding platform Rounds, the study says.}}

Market growth for the first time since February 2022

In the third quarter of 2023, 37 transactions were registered on the Russian venture capital investment market, which is 15% more than a year earlier. At the same time, a 56% decline was recorded in money, to $11.7 million. This is evidenced by the data of the Venture Guide service.

As noted Kommersant by "," the Russian venture capital market showed growth for the first time since the start of a military special operation RUSSIAN FEDERATION on. In To Ukraine January-September 2023, the volume of venture investments Russia in reached $41.6 million with 82 transactions, which is 96% and 37% less year-on-year, respectively.

It is noted that the largest contribution to the recovery of the market in the third quarter was made by the energy and auto industry. In August, the investment platform Zorko invested $1.3 million in, Hyper which is developing a charging infrastructure for electric transport. In September 2023, the venture capital club "" Syndicate invested $258,000 in Ta-dam!, a service for selecting spare parts for car services. Another growing niche is technology for medicine: $1.5 million Rosmed.Info was invested in the developer of an online platform for doctors and patients by a private fund that was not disclosed under the terms of the deal.

The situation can be described as "moderate growth," said Konstantin Gibalo, venture partner of the Voskhod Foundation, whose opinion is quoted by the newspaper in early October 2023.

To date, investors and startups have mastered new approaches to structuring transactions. Also, the expectations of the parties according to estimates at this stage have become as close as possible, and it became possible to agree on investments on mutually interesting conditions, "he said.

Given the increased interest of retail players in the capital market and the domestic liquidity glut, a way out of assets through an IPO was also possible, Gibalo said.

One of the sources of the publication says that by October 2023, the venture capital market around the world is now "undergoing a correction," although individual segments and niches are showing growth.^[5]

A venture capital fund worth 3 billion rubles was launched in Russia to support technologies for electric vehicles

In August 2023, a venture capital fund worth 3 billion rubles was launched in Russia to support technologies for electric vehicles. This is a joint project of the TechnoSpark group of companies and the Foundation for Confident Technologies of the National Technology Initiative. Read more here.

Maxim Parshin, Ministry of Digital Development, at TAdviser SummIT - about a "group of investors" who are ready to invest in IT projects that have not received state grants

TAdviser At the SummIT conference, the editor-in-chief TAdviser Alexander Levashov conducted an open interview Maxim Parshin, with the Deputy Minister. digital development, communications and mass communications of the Russian Federation Maxim Parshin answered topical questions about development: about Russian IT market the dynamics, import substitution growth of salaries IT specialists, the volume of investments of Russian state-owned companies in, measures domestic software taken by Ministry of Digital Development to overcome the shortage of IT personnel, involvement in the profession related to IT, development. sports programming

Among others, the Deputy Minister was asked about private investment as an important direction of the development of Russian IT industries, about the mechanisms for stimulating the inflow of private investment into domestic IT projects, and the actions of the regulator in this direction. Maxim Parshin confirmed that private investment in the near future will become the main direction of development of the IT industry. Recalling the non-refundable forms of support state in the form of grants, the official spoke about the "short plan": it consists of several points with events aimed at resolving tactical issues to remove restrictions on the way to involve additional investments in the IT industry.

In the practical plane, today, in a pilot mode, work is underway with applications for grants that were accepted by RFRIT last year. In total, Maxim Parshin recalled, RFRIT received more than a thousand applications for grants totaling about 70 billion rubles. The state is not able to satisfy the demand in such a volume, and this is inappropriate. As a result, about 40 projects received grants.

At the same time, many of the remaining unsatisfied applications could be satisfied through precisely non-state investments, which is more comfortable, safe and flexible.

Today, a "spontaneous group of investors" has formed around the ministry, which includes 9 funds that consider projects as private investors. Ministry of Digital Development and RFRIT, for their part, "somewhat moderate" this work so that it goes in an organized manner. And there have already been several deals to dispose of projects that have not received grants.

Maxim Parshin said that several hundred those who did not receive grants were previously interviewed, are they ready to attract private investment, since the likelihood of allocating new money for grants is low, and everyone agreed to the new investment format.

The Deputy Minister invited new startups to this work, and new organizations to the investor club, mentioning that the RFRIT website has a simple registration form for new private investors.

To solve the issue globally, Maxim Parshin added, institutional changes are needed, the development of the regulatory framework. In this regard, the Ministry of Digital Development has a number of proposals that will soon be communicated to market participants for discussion before the adoption of relevant legislation.

Non-refundable forms of state support in the form of grants are good, but this is not a systemic support measure, - said Maxim Parshin. - Where there is no competition, market, the state is able to support the creation of the necessary solution with a grant. But the strategic direction is private, non-state investments, venture capital, direct financing.

TAdviser SummIT took place on May 30, 2023 in Moscow and gathered more than 1000 participants. Reports were made by Deputy General Director of Russian Railways Yevgeny Charkin, Deputy Head of the Federal Treasury Alexander Albychev, Senior Vice President of VTB Sergey Bezbogov, Vice President for IT EvrazHolding Artem Natrusov and many others.

Rostelecom announced the launch of a venture capital fund of 8 billion rubles

On June 15, 2023, Rostelecom announced the launch of a new venture capital fund. Its volume will amount to 8 billion rubles, said Sergey Anokhin, First Vice President and Financial Director of the company. Read more here.

The Government of the Russian Federation has developed measures to support venture investors

The Russian government has developed a set of measures to tax stimulate the Russian venture capital industry. This became known on June 8, 2023.

According to Vedomosti, in accordance with the bill, companies investing in venture capital funds will be able to take into account these costs with an increasing coefficient of 1.5. This reduces the income tax base. A similar mechanism by June 2023 operates in relation to the financing of research and development work, a representative of the Ministry of Economic Development told the publication.

As noted in the Ministry of Digital Development, the income tax benefit is only one of the measures that are being considered in the government. They also discuss the simplification of the procedure for issuing investment contracts, the possibility of participation of individuals in them, the removal of excessive requirements that prevent the sale of assets, as well as the optimization of the legally established proportion of preferred shares in JSC and the promotion of the introduction of long-term employee motivation systems based on options.

Tax breaks can really increase the popularity of venture capital funds with private investors, according to Alexey Basov, managing partner of the investment bank BSF Capital, and Arseny Dabbach, founder of the Dsight analytical platform. According to Anna Zelenskaya, partner of the MEF Legal tax practice, the benefit will be beneficial to large businesses that have already received income from activities, since it affects the tax indirectly, through a decrease in the tax base.

Companies can abuse the benefit and invest in controlled and related structures to avoid taxes, "warned Vadim Ilyin, partner of B1 (formerly EY in Russia).

Arseniy Dabbach estimates that there are fewer than 20 companies that invest in third-party funds by June 2023.^[1]

Venture fund "Rostec" changed its name and focused on investments in medical tech

On May 25, 2023, it became known that RT-Venture Investments, a venture capital fund of the state corporation Rostec, received a new name and changed its direction of activity. Read more here.

A fund of sovereign NTI technologies has been created in Russia. Through it will invest 6 billion rubles in drones and wireless communication

The NTI Project Support Fund (National Technology Initiative) and Popov Radio Corporation JSC have created the NTI Sovereign Technology Venture Fund (FST NTI). This became known in early April 2023. Read more here.

2022

Startup funding down 68%

The volume of the Russian venture capital financing market in 2022 amounted to $819 million, down 68% from $2.93 billion a year ago. The number of transactions to invest in startups turned out to be the minimum in seven years - 139. In 2021, for comparison, there were 306 of them. This is evidenced by the data of the analytical company Dsight (Disite), which were released in March 2023.

A significant decline in the Russian venture capital market is associated with the start of a military special operation of the Russian Federation in Ukraine, which led to the departure of investors from the Russian market, sanctions and an unstable economic situation in the country and in the world, the researchers point out.

According to them, in 2022, investment activities were reduced by all participants in the venture capital market. But the strongest are corporations and corporate funds. If in 2021 they invested a total of $424 million, then in 2022 - $15 million. The founder of Dsight Arseny Dabbach, in a conversation with Forbes, noted that against the background of "shocks in the market," corporations always stop investment projects.

If a private or individual investor sees opportunities in the situation, since the estimates of [startups] have decreased, and high-quality assets have become available, then corporations are waiting for stability and are not taking drastic action, "said Dabbach.

In 2022, the volume of financing from private funds also decreased - eight times, from $1.3 billion to $158 million. Private Dsight included funds founded by Russians in Russia or abroad, not affiliated with the state or corporations and investing more than half of the capital in the projects of Russian-speaking entrepreneurs, Dabbach said. The authors of the study explain the decrease in activity in this segment by a change in focus: in 2022, private funds solved legal problems and issues with the relocation of employees.

Foreign investment also decreased, four and a half times - from $638 million to $138 million. This is due to the "isolation of Russia from American and European partners," the researchers write. Business angels also reduced activity: in 2022, they closed half as many transactions as a year earlier: 36 against 70 in 2021. The amount of investment decreased from $77 million to $27 million.

The least changes occurred in the public sector. Presented state funds in 2022 invested $76 million in Russian projects. For comparison, in 2021, the amount of funding from state players amounted to $87 million. The number of transactions also decreased slightly: from 31 in 2021 to 24 in 2022, the study says.

The leader in the number of transactions in 2022 was the industry software for business. The largest deal in this segment is an investment in a crypto startup Superdao that develops operating systems for decentralized autonomous organizations. In January 2022, the company raised $10.5 million at an estimate of $160 million. The lead investor in the round was the California venture capital fund SignalFire. The development segment ON remains the most attractive to investors, according to research by Dsight. This is due to the growing interest in IT security from Russian state and private companies, explains Dabbach. According to him, interest stimulates the need to replace technologies that have left the Russian market.

From the point of view of industries, the least consequences of the special operation affected biotechnology companies, according to Dsight. Despite the fall in the entire venture capital market, they raised $119 million, which is $111 million more than in 2021.^[2]

Moscow venture market exceeded pre-pandemic level

In 2022, 119 transactions worth $658 million were concluded in the Moscow venture financing market (VC), the Moscow Innovation Agency said in early March 2023. They noted that the volume of investments in comparison with 2021 decreased, but it exceeded the level that was before the COVID-19 coronavirus pandemic. Read more here.

The volume of investments in the Russian edtech market decreased by 3.5 times to 4 billion rubles

The volume of investments in online education services in Russia in 2022 amounted to 4 billion rubles, having decreased by 3.5 times compared to the indicator of a year ago, equal to 14 billion rubles. This is evidenced by the data of the Smart Ranking agency, published at the end of February 2023. Read more here.

The Russian venture capital investment market has sharply decreased

In 2022, 128 transactions in the field of venture financing were concluded in Russia, which is 56% less than a year earlier. In them, the volume of funds attracted by startups decreased even more - by 57%, to $1.1 billion. Such data are provided by Kommersant with reference to the statistics of the profile portal Venture Guide.

Dsight, which participated in the data collection, clarifies that the statistics include information about open transactions at all rounds for the year, with the exception of those concluded with players who left Russia, such as Miro (IT platform for collaboration). The Voskhod venture fund confirmed the relevance of the data to the newspaper.

Pavel Fedosov, director of strategic projects at Zyfra Group of Companies, noted that of the total $1.1 billion, about $900 million in investments were made in January 2022, when two transactions were concluded with American funds Accel and BlackRock for a total of $650 million.

In the second and third quarters, there was extremely low activity in the market for new transactions, the funds were engaged in projects of the current portfolio, "added Artur Martirosov, investment director of Voskhod Management Company.

The main events that influenced the market, he called the military special operation in Ukraine, the outflow of personnel, the rupture of supply chains and sanctions. As a result, the funds focused on investment in import substitution projects and startups in "friendly" jurisdictions in the Middle East and Latin America.

According to Anton Shulga, partner of the financial consulting department of the DRT, many of the transactions that were planned to be closed in the first half of 2022 were paused due to a sharp deterioration in estimates.

But "now certainty is higher than last year," so in 2023 investments will show growth, he said in January 2023. The most promising area for investments will be import substitution of software for corporate clients, Martirosov noted.

Attractive, he adds, remain medicine and, biotechnologies as well as industrial projects. According to Pavel Fedosov, now the state is becoming the main investor in the de facto market, but it is also possible that "specialized private funds that compensate for the departed foreign venture capital" will appear.

Among the market niches leading in terms of investment in 2022 were: business software development (Business Software), HR & WorkTech (technology segment for HR), cybersecurity and telecommunications. The size of investments in startups in these areas in 2022 amounted to $449.35 million, $425.67 million, $251.5 million and $192.6 million, respectively, the newspaper indicates.

In the first category, transactions were carried out, in particular, with the developer of the FIS information system designer (more than $5 million), among HR & WorkTech - with the XOR recruiting chat platform ($2 million).

According to Leta Capital, about 70% of IT startups left Russia in 2022. Mostly they moved to Turkey, Kazakhstan, Armenia and Georgia. However, these states often serve as transit countries, from where projects move to more developed venture capital markets: Dutch, Spanish, German and British.

Dmitry Makhlin, partner and development director of HRlink, in a conversation with Vedomosti at the end of 2022 said that the Russian venture capital market can hardly be called attractive for both investors and startups: the number of potential buyers is too small, and due to limited demand, startup estimates are minimal. Moreover, there is no established system for determining the value of a startup - most often a ready-made business is evaluated, and not its prospects.^[3]

The Russian venture capital market fell 2 times. Key trends

In 2022, 118 transactions were concluded on the Russian venture capital, which is almost half as much as a year earlier (221). At the same time, the volume of attracted financing decreased even more - from ₽85,2 billion to ₽16 billion rubles. This figure can be considered low, given that in 2020, when the COVID-19 coronavirus pandemic began, 203 transactions worth ₽24,9 billion rubles were registered. The corresponding study of the Telegram channel "Russian Venture" was published in December 2022. The report (published on the RBC website) provides several trends in the market.

Foreign investors almost stopped investing in Russian startups

The segment of foreign investment was the most affected. In 2021, the volume of transactions amounted to ₽44,5 billion, and in 2022 it fell to ₽2,7 billion, which indicates a drop of more than 15 times. The number of deals fell sharply: 28 against 9. And 4 out of 9 public transactions in 2022 were closed until February 24, after which the interest of foreign investors in startups headquartered in Moscow was at zero.

Private funds have noticeably slowed down since the end of February

In 2021, 48 transactions totaling ₽23,8 billion were known in the segment of private funds. In 2022, 19 transactions worth ₽5,2 billion were announced. That is, the number of rounds fell 2.5 times, and the volume of this market segment decreased by almost 78%. Some funds with Russian roots have removed the list of portfolio companies from their sites so as not to harm them.

Investment from private investors fell three times

The segment of investments from business angels has always been considered the most closed, but even here you can track the negative trend of 2022, that is, a serious drop. In covid 2020, 60 transactions totaling ₽3,7 billion were closed. In 2021, 61 transactions were recorded with the participation of business angels for a total of ₽3 billion. In 2022, the number of transactions decreased by 1.5 times. In 2022, 37 transactions totaling ₽938 million were announced.

Investments from representatives of the public sector demonstrate a steady fall from year to year

In 2021, it was known about 9 transactions totaling ₽2,3 billion against ₽3,9 billion a year earlier. And in 2022, there were a little more transactions with the participation of representatives of the state pension (11). At the same time, the volume of public rounds decreased significantly, falling to ₽1,3 billion. The fall in investment in the public sector seems to have become a steady trend in recent years. At the same time, the average check compared to 2021 increased by 33% - from ₽80,3 million to ₽120,3 million, analysts say. However, only one investor managed to achieve such growth - VEB Ventures, which closed the largest rounds of 2022 in this segment by ₽520 million and ₽400 million, respectively.

The corporate segment was the least affected

As of 2021, 41 transactions worth ₽11,5 billion are known. During this year, 36 rounds of ₽6,2 billion were announced. The volume decreased by less than 2 times, and the number of transactions turned out to be only 5 less than in 2021. A significant part of Russian corporations was under sanctions, and their investments can now be of interest only to startups operating in Russia and Belarus.

You can no longer launch a startup from Russia to the whole world

For domestic startups, 2022 turned out to be a turning point and not having compromises. It became clear that it was almost impossible to launch the project in Russia, and then begin its development in other markets. Foundations at the start should be determined how to identify their own projects - as Russian or as international.^[4]

Investing 2.25 billion rubles in Russian startups

In mid-November 2022, the Internet Initiatives Development Fund (IIDF) announced an update to its strategy: now it intends to focus on pre-seed and seed rounds. He will invest 2.25 billion rubles in Russian startups. The report of the fund notes that the active investment phase of the IIDF is designed for at least three years. Read more here.

Investments in Russian IT startups have decreased by more than 10 times

In January-August 2022 Russia , only 31 local investment transactions were concluded - ITstartups against 121 transactions for the same period in 2021. This is evidenced by data the investment company A.Partners, which were announced on September 19, 2022.

A.Partners notes that there is one investor per round in 2022, while in 2021 - two. Experts noted an increase in the check for one project - from $10.5 million to $14 million.

But a significant share in statistics is made up of venture capital transactions of institutional and large industry investors, and if you take them out of brackets, then the average check falls significantly, "said Andrei Sharlay, investment analyst at A.Partners.

A number of investment funds have indeed lowered the lower limit of the average check, sometimes - tenfold. According to a Kommersant source in a large investment fund, if earlier the average check when investing in an IT startup was about 300-500 million rubles, and investment rounds of B2C projects reached 2 billion rubles, now (the publication reported this on September 19, 2022) the basis of the market is investments with an average check of 20-30 million rubles.

The venture capital fund MTS also says that the number of investment transactions has decreased significantly in six months, in particular due to the fact that "the opportunity to make money with their help has become less obvious."

{{quote 'Funds from a number of large corporate and state investors have become high-risk, and the number of strategists ready to buy at good multipliers (coefficients characterizing the ratio of value to revenue - approx. Kommersant) has become less, - explained the head of the fund Islam Midov. }} Pavel Fedosov, director of strategic projects at Zyfra Group of Companies, says that the problem is not only in lowering the investment threshold, but in general in their absence.^[5]

2021

Sberbank, VK, Yandex, MTS and VTB became leaders in buying startups in Russia

Most often in 2021, large ecosystems invested in startups in Russia, including Sber, VK (formerly Mail.ru Group), Yandex, MTS and VTB - they accounted for 22% of transactions against 11% in 2020. This is stated in a study conducted by venture investor Aleksei Solovyov in partnership with Kaspersky Lab, EY and DS Law. The data were released on December 8, 2021.

Ecosystem leadership, according to the founder of Fort Ross Ventures Viktor Orlovsky, is associated with increased competition. In Moscow alone, in ten months of 2021, corporations directly or through funds invested almost twice as much money in startups as in the whole of 2020, said Alexei Parabuchev, general director of the Moscow Innovation Agency, in a conversation with Kommersant.

State-owned companies or companies with state participation (except for Sber) became buyers of startups and, accordingly, a source of exit for investors only in 2% of cases. This suggests that state-owned companies are in no hurry to buy innovation directly, despite the universal digital transformation, the researchers note.

It also says that 2020 investors had no exits 36% year, and in 2021 this figure was 51% investors. Given that half of the business angels among respondents began to invest only in 2020-2021, the fall in the number of exits in general data is explainable, analysts explain.

In total, more than 300 Russian-speaking representatives of the venture capital market took part in the survey. 89% of surveyed investors made new investments in 2021, and almost a third of the study participants invested in ten or more startups. In 2020, only 85% of respondents attracted new investments, in 2019 - 75%.

Aleksei Solovyov says that the study showed several dynamic changes in the venture capital market in 2021:

• growth of investment activity;
• revitalizing the market;
• the influx of private capital and new players;
• the work of investors in international markets and the export of Russian technologists of business models.^[6]

Moscow became one of the world leaders in the number of startups, but few succeed

According to the report of the Institute for Statistical Research and Economics of Knowledge (ISIEZ) published in early July 2021, HSE Moscow it is one of the world leaders in terms of the number startups and innovative economic activity. However, very few projects achieve great success due to problems with both market infrastructure and venture capital, as well as with personnel, universities and the state of science.

So, To Moscow there are almost no "unicorns" - startups valued at more than $1 billion. Among the problems of venture infrastructure in the Russian capital is a small concentration R&D of divisions of foreign technology companies, with a concentration of their representative offices above average. The researchers also noted the problem of "personnel hunger."

According to HSE experts, the demand of Moscow startups for venture capital investments significantly exceeds supply. In part, this may not be seen as a problem, but as an advantage: Moscow startups are not part of any funding bubble anyway. According to the Crunchbase project, in 2015-2019, startups from Moscow received about five times less venture capital funds at the sowing stage in comparison with companies from cities with comparable innovative activity - including due to the small number of institutional investors and state support.

The authors of the report also draw attention to such a problem as the weakness of the university science of the city. Moscow is one of the top 5 world university conglomerates, but the citation of publications by scientists is extremely small, the number of foreign teachers and students is also small, and natural science areas dominate.

The strength of Moscow is the creative industry: the gaming, advertising and cultural sphere dominates, the city is one of the TOP-10 of innovation centers.^[7]

Russia adopted a law on a convertible loan for startups

On June 8, 2021, the State Duma adopted in the second and third readings a law on a convertible loan, thanks to which startups will be able to quickly attract investments and reduce risks. Read more here.

2020

Russian software developers attracted 10 billion rubles of investments

In 2020, Russian software developers attracted about 10 billion rubles of external investments, and the total investment in the market amounted to 46.5 billion rubles, according to Russoft data released at the end of September 2021. Read more here.

Reduction of venture capital investments by 19%, to $702.9 million, growth of transactions by 14%, to 281

The volume of the venture capital market in Russia at the end of 2020 reached $702.9 million - this is how much was invested in startups. This is 19% less compared to 2019. At the same time, the number of transactions increased by 14%, to 281. Such data are provided in a Dsight study supported by Kaspersky Lab, EY, Raiffeisen, Moscow Innovation Agency, DS Law, NAURAN and Crunchbase.

As RBC writes with reference to this report, investments in Russian startups in 2020 reduced all types of investors, with the exception of corporate funds and corporations. The latter invested $307.6 million in startups, which is 61% more than a year earlier.

Educational startups turned out to be the leader in the number of investment transactions concluded in 2020. They closed 36 rounds for $119.1 million. This interest was largely due to the large-scale closure of educational institutions.

Lockdowns and sanitary restrictions have proven that physical presence in institutions is not necessary for the educational process, the study notes.

The largest deal was the acquisition of 25% by Mail.ru Group in the Учи.ру startup for $47 million (taking into account small contributions from the Russian-Chinese Investment Fund and the Russian Direct Investment Fund).

Another industry that the COVID-19 coronavirus pandemic has caught up in is healthcare. In 2020, 19 investment transactions worth $44.9 million were concluded there. The largest round was attended by the Doctor Nearby telemedicine company, which raised $8.9 million. Experts also noted an investment of $7.5 million in the BestDoctor insurance service from a group of investors and $5 million in the Simple diet control service from the Target Global fund and the co-founder of the Palta service.

A study by Dsight said that e-commerce it was among the markets that benefited most from the spread of the coronavirus: the pandemic accelerated the transition of companies from a wide variety of industries to sales through. Internet Companies that already use the Internet as a platform for selling their services have strengthened their positions, outsiders had to hastily reduce their backlog, analysts say.

The negative consequences of the pandemic are expressed in reducing the volume of venture capital investments. In 2020, most acceleration programs were suspended. The number of such transactions decreased by 55% compared to 2019, to 35. But this drop was offset by increased activity of business angels, which, according to Dsight, made 64 investments against 37 transactions in 2019.

As the managing partner of the venture capital fund LETA Capital Alexander Chachava noted, not many segments suffered from the pandemic: everything related to tourism, offline events and activities, non-food retail.

If we talk about the Russian venture capital market, then the pandemic did not negatively affect it, rather removed the traditional shortcomings. Perhaps the inflow of money has decreased due to general economic difficulties, but venture capital just allows you to earn where tectonic shifts occur, he argues (RBC quotes him).

In 2021, Chachava expects the economy to revive and overcome the crisis along with the development of new projects that originated in 2020 due to the pandemic.

According to experts, since the effects of the pandemic were unpredictable, many decided to minimize risks and monitor the development of the situation. Only those transactions were concluded in which there were already clear obligations or some super capabilities were discovered related, for example, to the pre-bankruptcy state of the company, said Oleg Bratishko, managing partner of the Typhoon Digital Development venture fund.^[8]

Mishustin approved the rules of state support for venture projects

Prime Minister Mikhail Mishustin approved the rules for state support for venture projects. The press service of the Cabinet of Ministers announced on December 25, 2020 that the head of the Government of the Russian Federation signed a corresponding decree.

The document fixes the conceptual apparatus, clarifies the terms associated with venture investments, establishes the principles for assessing the effectiveness of investments. The decree also enshrines the requirements for conducting examinations and monitoring venture projects.

As noted in the Cabinet, the document establishes a unified approach to financing venture projects at the expense of the budget. It will unify regulation in the field of venture capital investments, which "will simplify the financing of promising projects, reduce the risks of participation in such initiatives and ultimately stimulate the technological development of the Russian economy."

Separately, the criteria for the targeted use of budget funds are being worked out, which will avoid ambiguous interpretations in this matter. Another important point that the Cabinet of Ministers draws attention to is related to the determination of the permissible level of risks and risk management. To do this, special rules are introduced, according to which the factors affecting the implementation of the project will be evaluated.

The President Russia Vladimir Putin has repeatedly proposed giving technology entrepreneurs the "right to risk" in the event of unsuccessful implementation of projects - to protect them from accusations of misuse of funds.

Earlier, the Accounts Chamber said that the lack of a single agenda and priorities of state policy in the field of venture capital and direct financing is one of the reasons for the slowdown in the venture capital market. In addition, according to the agency's report, targets, indicators and measures aimed at the integrated and coordinated development of this market have not been identified.^[9]

Russian venture capital market doubled

The volume of the Russian venture capital investment market in 2020 amounted to 21.9 billion rubles, almost doubling compared to the indicator of one year ago, equal to 11.6 billion rubles. The number of transactions during this time increased from 134 to 180, according to data from Inc.

Journalists of the publication analyzed all public transactions in which Russian startups participated. To startups, the authors of the study attributed projects up to 10 years old to individuals in Russia, in which technologies play a key role. An exception was made for startups from the "Exit" category due to the possibility of investors to leave the project after a ten-year term of the company. The initial data did not include direct investments, acquisitions and mergers, the creation of joint ventures and the sale of shares in subsidiaries.

The largest growth was shown by foreign investments - they reached 7.5 billion rubles against 1.8 billion rubles in 2019. The largest deal in this segment was the investment of $50 million in a startup for collaboration. Miro

In the segment of private investors, there was an increase from 1.1 billion rubles to 3.7 billion rubles. This happened, in particular, at the expense of Roman Abramovich, who invested $20 million in the 110 Industries gaming service. In 2020, investments of private funds in Russian startups amounted to almost 2.3 billion rubles, which exceeded the 2019 figure by 64.3%.

There was a decline in the public venture capital investment sector: compared to last year, the figure decreased from 4.3 billion rubles to 3.1 billion rubles. Investments in the Russian startup from the public sector also decreased. The fall amounted to 43.7% from 208.5 million rubles to 117.3 million rubles.

The share of Russian accelerators continues to decline. In 2020, they closed 16 transactions for 89 million rubles, and in 2019 - 45 for 209 million rubles. In 2018, 107 transactions for a record 466.8 million rubles were closed with the participation of accelerators.^[10]

The average fund is $44 million, the average check is $1.4 million. Results of the year in the Russian venture capital market

In mid-December, a new study of the Russian venture capital investment market, Venture Barometer, was released. Its authors summed up the results and noted the main trends of the outgoing 2020.

According to analysts, the volume of the Russian venture capital fund in 2020 ranged from $26-62 million (average value - $44 million). Average investments ranged from $0.67 to $2 million.

According to the Venture Barometer, 36% of funds invest with checks up to $250,000, which is more typical of angel business. Thus, at least a third of funds operating in the seed segment are present on the market, the researchers note.

Between checks up to $250,000 and more than $1 million, there is a "failure" - only a few respondents noted that transactions of this size are typical for them.

In total, more than 100 market participants were interviewed as part of the study. Among them, the most representatives of private foundations (41%) and business angels (22%). Corporations are represented by 12% of participants, state funds, including funds formed with funds from companies with state participation, - 9%.

In 2020, only 28% of management companies had new funds, while last year this figure was 46%. In addition, 36% of respondents did not have a single exit, which is significantly lower than in 2019.

More than 50% of investors did not notice the negative impact of the COVID-19 coronavirus pandemic on their activities. A third of respondents either did not experience any changes, or discovered new niches for investment. 12% of respondents increased the size of investments.

Three-quarters of corporations and corporate funds that are participants in the venture capital market have not made a single investment in 2020. This suggests that this segment of the market has suffered the most from the COVID-19 pandemic. In general, over the year, 85% of respondents made new investments - this value remained unchanged compared to 2019.^[11]

Venture fund "Rosatom" invested in 13 companies

On December 15, 2020, Rosatom summed up the work of its venture capital fund Digital Evolution Ventures, created in mid-2018. In total, 13 companies were supported during this time. The share of invested funds amounted to 65% of the investitsionnoy̆ part of the fund. Read more here.

Startup Lab venture capital fund launch to invest in start-ups in early stages

On December 14, 2020, it became known that Startup Lab (a subsidiary of TilTech Capital, among whose co-owners is the founder of the Vkusville network Andrei Krivenko) launched its second fund to invest in startups in the early stages. Read more here.

IIDF changed the investment strategy and began to support foreign startups with Russian founders

As it became known on October 22, 2020, the Internet Initiatives Development Fund (IIDF) changed its investment strategy and began to support foreign startups with Russian founders, which own at least 50% of the shares. In addition, those start-up companies that plan international expansion will be able to count on financial support. Read more here.

The Government of the Russian Federation creates a fund for investment in startups

On October 21, 2020, it became known about the creation of a venture fund of funds in Russia, for which 14 billion rubles were allocated. First Deputy Prime Minister Andrei Belousov spoke about this at a meeting between Vladimir Putin and board members of the Russian Union of Industrialists and Entrepreneurs. Read more here.

Mishustin instructed to accelerate the growth of investments of state corporations in venture capital funds

On April 14, 2020, Russian Prime Minister Mikhail Mishustin instructed to develop mechanisms to increase the investment of state corporations and companies with state participation in venture capital funds. The deadline is June 10.

The Ministry of Economic Development of Russia and the Ministry of  Finance of Russia together  with the Bank of Russia and the joint-stock company "Management Company of the Russian Direct Investment Fund" to submit proposals for the creation of mechanisms, allowing to increase the volume of investments of state corporations and companies with state participation in venture capital funds, including due to the possible investment of funds by a specialized fund in other venture capital funds, as well as, if possible, the creation of joint venture funds, the government's website says.

Mishustin also instructed the Ministry of Finance, the Ministry of Labor and the Ministry of Economic Development to consider the possibility of investing the savings of non-state pension funds in direct and venture capital investment funds.^[12] 

It is added that when preparing the relevant proposals, the ministries should ensure interaction with the Central Bank of the  Russian Federation.

In early April 2020, President Vladimir Putin recommended that the  Central Bank and the government work out the possibility of investing pension savings in direct and venture capital investment funds. A report on this issue must be submitted by May 15.

According to the Deputy General Director - Investment Director of RVKAlexey Basov, the need for 2020 and the next decade will be legislative and infrastructure changes that should affect all players in the venture capital industry, including regulators and development institutions. RVC presented a look at the instruments and initiatives necessary for the Russian venture capital market in the Venture Market Development Strategy until 2030.

2019

Market growth of 50% to $520 million

In 2019, the volume of the Russian venture capital market grew by 50%, investors invested about $520 million in startups against $352 million a year earlier, according to data from the Russian venture capital company (RVC).

In 2019, venture investors entered into 776 transactions and made 82 exits, and in 2018 - 684 and 48, respectively. The rating compiled by RVC included 208 investors. Almost half of all transactions are non-public, since the venture capital market is traditionally opaque, many funds do not disclose the size of investments, the authors of the study explain. In general, venture investors prefer to advertise not purchases, but successful exits from assets, they write Sheets"" with reference to a representative of RVC.

In 2019, the top three among management companies changed. The most active was IIDF Invest, which conducted 45 transactions. Altair Capital and TealTech Capital ranked second and third, respectively.

The leaders in the number of exits in 2019 included IIDF (12 transactions), Moscow Seed Fund (7 transactions) and Runa Capital (4 transactions). In terms of output, FinSight Ventures ($430 million), Elbrus Capital ($150 million) and Runa Capital ($111 million) entered the top 3.

The top 5 most active new funds at the end of 2019 are as follows:

• Sberbank-500 - 15 deals
• TealTech Capital - 9 Deals
• A&A Capital - 8 deals
• Digital Horizon - 7 deals
• Alpha Accelerator - 7 deals.

Among the most successful transactions, RVC calls the sale of a 4.2% stake in Avito a subsidiary of Baring Vostok Geliria Holdings - according to Vedomosti, the deal amounted to $161 million, as well as the sale of a stake in Nginx, owned by Runa Capital, an American company F5 Networks for $670 million^[13]

Among corporate investors in 2019, new players appeared in the person of private companies and corporations with state participation. Sberbank became the leader of the rating with 26 transactions, followed by AFK Sistema and VK (formerly Mail.ru Group).

Market halving

In 2019, 134 public transactions on venture financing of startups in the amount of 11.6 billion rubles were concluded in Russia. In 2018, there were 275 of them for 26.7 billion rubles, according to a study by Inc. Russia.

The volume of foreign investments decreased the most. In 2018, Russian startups received 12.6 billion rubles from foreign investors, and a year later - only 1.8 billion rubles.

Startups from the Russian Federation received 2.5 billion rubles from corporations and corporate funds in 2019 against 8.5 billion rubles a year earlier. Investments of business angels decreased from 1.8 to 1.1 billion rubles. In 2018, accelerators closed 107 transactions worth more than 466 million rubles, and in 2019 - only 45 by 209 million rubles.

The growth in investment in 2019 was shown only by funds and companies with state participation (4.3 against 1.8 billion rubles in 2018).

The study also indicates that the average check has grown in all categories of investors, except for foreign and corporate ones. Its growth ranged from 5% for accelerators to 71.8% for state funds.

Investments of private funds in 2019 remained almost at the level of 2018 - 1.4 billion rubles. The largest transaction is the investment of TMT Investments, Yandex, Sistema VC, Digital Horizon, Phystech Ventures in the educational project Mel Science in the amount of $6 million.

According to Viktor Orlovsky, managing partner of FortRoss Ventures, the decrease in the volume and number of transactions in the venture capital market does not mean that it began to fall. The fact is that the entire market is small, so high volatility is characteristic of it. On large volumes, volatility would be lower, he said.

The Russian venture capital market continues to evolve. We see the growing interest of various types of investors in the creation of new funds, as well as the rather high investment activity of existing players, - said Deputy General Director - Investment Director of RVKAKLEI Basov.[14]

The market for venture capital transactions in Russia for 6 months of 2019 grew by 161%

RVC, together with PwC, presented the eighth annual review of the Russian venture capital industry "MoneyTree: Venture Market Navigator" for 2018 and the first half of 2019.

According to the study, the venture capital market, which forms the basis of the venture ecosystem, in the first half of 2019 showed an increase of 161% to $248.1 million compared to the first half of 2018, when its volume was $94.9 million. At the same time, 129 transactions were made, which is 48% more than a year earlier (87 transactions).

At the end of 2018, the market grew by 78% to $433.7 million against $243.7 million in 2017. At the same time, the number of transactions compared to 2017 decreased slightly - from 205 to 195 transactions. Thus, the Russian venture capital market showed almost threefold growth in the first half of 2019 and twofold growth in 2018 compared to 2017.

The average deal size in the first half of 2019 rose to $3.1 million. A year earlier, this figure was equal to $1.5 million. Noteworthy is the almost sevenfold increase in the average size of the transaction at the expansion stage (from $2 million to $13.3 million). The positive dynamics of this indicator is associated with the transformation of the venture model and the gradual blurring of the boundaries between venture and direct investment. At an early stage, the average transaction amount increased 2.5 times (from $0.9 million to $2.3 million). At the startup stage, there was a twofold increase in volumes - from $1.2 million to $2.7 million.

The largest transactions were the purchase of an 18.7% stake in Ozon.ruAFK Sistema in March 2019 for $119.3 million, a deal involving RDIF, Rusnano Sistema Sicar and startup WayRay for a total of $80 million in September 2018, as well as another deal of AFK Sistema and Ozon.ru in December 2018 in the amount of $57 million.

In the context of the stage structure, investor demand continues to shift towards more mature projects. In the first half of 2019, 60% of the total investment fell on the expansion stage, while in the first half of 2018 - 55%. In 2018, 80% of all transactions in value terms fell on the expansion stage, in 2017 their share was 68%.

The information technology sector traditionally remains the leader in the number of venture capital transactions and the amount of attracted investments. According to the results of the first half of 2019, positive dynamics was observed in this sector both in the number of transactions and in the total amount of funds raised. At the same time, the e-commerce subsector became the leader. In 2018, transactions in the information technology sector accounted for 94% of the total amount of all transactions in the market. Biotech and industrial technology sectors accounted for 3.3% and 2.7%, respectively.

Corporate investors are becoming increasingly active players in the venture capital market. In value terms, the volume of such transactions almost tripled - from $34 million in 2017 to $89.9 million in 2018. The most active venture investors were Sberbank, Yandex, MTS and Mail.Ru.

According to the results of six months of 2019, 13 investor exits took place, which is eight more than in the first half of 2018. Their total cost was $53.2 million. The number of investor exits in 2018 increased by 7% to 32 transactions, and the total value - by 61% to $128.9 million compared to $79.9 million in 2017. The largest exit is the purchase of MTS service Ticketland.ru in February 2018 for $55 million, which was a way out for the iTech Capital fund, Sergei Solonin and a number of investors.

In the first half of 2019, 2,357 grants worth $46.4 million were issued, which is 23% more in monetary terms ($37.1 million) compared to the first half of 2018 and 4% more in quantitative terms (2,266 grants issued). The number of grants issued in 2018 decreased to 3,955 units, however, in monetary terms, their volume increased to $99.3 million.

The full version of the review can be found here.

There are fewer transactions in the venture capital market of Russia

In the Russian venture capital market, in the first half of 2019, the number of transactions fell noticeably. This data was shared in July 2019 by Dabbach Arseny, founder of Dsight. The number of transactions of the sowing stage decreased the most, so compared to the same period in 2018, the figure fell from 77 to 38 transactions.

The total number of transactions has also decreased, according to the results of the half of 2019 there were 101 of them, a year earlier there were 142 of them. At the same time, the volume of investments in the first half of the year increased, according to Dsight estimates, it amounted to $477 million. Mainly, the growth was due to the volume of late-stage transactions. The average check of the transaction has also grown (amounted to $4.8 million).

"Transactions are becoming larger, the number of transactions has decreased," Arseniy Dabbach said[15].

Also in the Russian venture capital market, the number of exits has increased. There were 17 of them in total, usually this indicator does not increase 10-15.

2018

Annual rating of the most active venture investors in Russia

On December 26, 2018, RVC presented an annual rating of the most active venture investors in Russia.

The results of the study show how the main market players behaved in 2018 and how the main trends in the industry developed. The rating takes into account three types of investors in startups: venture capital funds, business angels and corporations.

Venture capital funds

The list includes those companies that made the most deals with startups between December 2017 and December 2018. The main ranking indicator is the number of invested projects.

In 2018, the total number of active funds increased to 95 funds, compared to 55 in 2017. At the same time, in general, the activity of Russian funds has not changed. Russian funds conducted a total of 441 transactions, a year earlier - 391.

The rating divides funds into four categories:

• classical funds,
• sowing funds,
• new funds
• foreign investors.

The most active classical fund was Runa Capital, which invested more than $15 million in 16 companies. The rating also includes Da Vinci Capital, created with the participation of RVC capital and invested $100 million in 5 projects in 2018, including investments in the Gett taxi service. The first place in the category of sowing funds for the third year in a row is occupied by the IIDF with investments in the amount of $12 million in 100 projects. The leader among the new funds was Day One Ventures, and among foreign investors - GPS Ventures. The most active management company was Target Global, which in 2018 conducted 15 transactions. In addition, Infrafond RVC (Infra Fund) entered the top 10 management teams, investing in 2 projects.

As in 2017, IT funds occupy a key place in the ranking. The only participant in the top 3, focusing on another direction - alternative energy, was the I2BF Global Ventures fund with investments in 15 projects in the amount of $8 million.

The number of foreign funds invested in Russian startups increased to 14 (in 2017 - 11).

Top most active classical funds:

• Runa Capital - 16 projects invested
• I2BF Global Ventures - 15 invested projects
• Target Global - 15 projects invested
• Primer Capital - 10 invested projects
• Fort Ross Ventures - 9 projects invested
• Gagarin Capital - 9 invested projects

Top most active new funds:

• Day One Ventures - 11 projects invested
• Larix - 4 invested projects
• NP Capital - 4 invested projects
• Target Global Fintech Opportunities Fund - 2 invested projects
• Target Mobility 2.0 - 2 invested projects
• Venture Bot - 2 invested projects

Top most active seed funds:

• IIDF - 100 invested projects
• Day One Ventures - 11 projects invested
• TilTech Capital - 10 invested projects
• Finshi Capital - 9 invested projects
• Moscow Seed Fund - 9 invested projects
• The Untitled ventures - 9 invested projects

Top most active foreign funds:

• GPS Ventures - 3 invested projects
• Vostok New Ventures - 2 invested projects
• FJ Labs - 2 invested projects
• Access Industries - 2 invested projects

Top most active management companies:

• Target Global - 15 projects invested
• I2BF Global Ventures - 15 invested projects
• Gagarin Capital - 9 invested projects
• UK Fort Ross Ventures - 9 invested projects
• iTech Family - 7 invested projects

Angel investors

The rating of business angels demonstrates the list of the most active private venture investors in Russia.

According to the study, in 2018 there were 167 transactions in the business angel investment market, with the top 10 business angels accounting for 50% - 82 transactions. In total, Russian business angels made 13 exits. The average check of transactions ranged from 0.5 million rubles. up to $1 million.

In the selection of the most active business angels, the first place was taken, as in 2017, by Alexander Rumyantsev, who made 15 transactions in a year. Bogdan Yarovoy invested in 13 projects and is located on the second line of the rating. Third place went to Nikolay Belykh with 10 confirmed deals.

In general, the results of the rating show that another generational change is coming in the angel business investment market. Many of the market participants of past years no longer invest, but are already engaged in invested projects, either actively helping them, or, in some cases, even landing in one of the most promising companies.

It is worth noting that the angels on the list are actively investing their own companies, preferring to invest less actively in others. On the one hand, investors believe in their portfolio, on the other, apparently, there are not many young companies on the open market that seem interesting to them.

Top 10 most active business angels in Russia:

• Alexander Rumyantsev - 15 confirmed deals
• Bogdan Yarovoy - 13 confirmed deals
• Nikolay Belykh - 10 confirmed deals
• Sergey Dashkov - 9 confirmed deals
• Igor Ryabenkyi - 8 confirmed deals
• Dmitry Bergelson - 8 confirmed deals
• Alex Kushner - 6 confirmed deals
• Vitaly Polekhin - 5 confirmed deals
• Igor Shoifot - 4 confirmed deals
• Vadim Kulikov - 4 confirmed deals

Corporations

In 2018, RVC compiled a rating of Russian corporations that were most actively involved in venture capital investment. The partner of the rating was PwC.

At the end of 2018, 27 corporations were among the active investors, which concluded a total of 77 transactions, which is three times more than the same period in 2017 (23 transactions). The leader of the rating was AFK Sistema with 15 transactions, followed by Sberbank and VK (formerly Mail.ru Group) with 9 confirmed investments.

Russian companies prefer to invest in startups not directly, but through their corporate funds. There were 1.5 times more such transactions in 2018 than private equity. At the same time, more and more corporations acquire their own venture capital funds. So, this year ВЭБ.РФ announced the creation of an investment platform for investments in technology startups Viman Capital. S7 Group (S7 Group of Companies) has created its own fund - S7 Group Investment - for investments in projects related to digital and industrial technologies.

Most of all, corporations are ready to invest in startups that offer business solutions. In addition to this area, corporations willingly invest in startups related to transport and finance. Medicine and AI follow.

Russian corporations prefer to invest in local startups: in 2018, 42 transactions were concluded with them, and only 16 with foreign ones. However, among Russian startups that received investment in 2018, there are also those that entered the international market, for example, WayRay or TraceAir.

Top 10 most active corporations:

• AFK Sistema - 15 confirmed transactions
• Sberbank - 9 confirmed transactions
• Mail.Ru Group - 9 confirmed deals
• QIWI - 7 confirmed deals
• PIK Group of Companies - 5 confirmed transactions
• Rusnano - 3 confirmed deals
• Softline - 3 confirmed deals
• S7 Group - 3 confirmed deals
• Rostec - 2 confirmed deals
• Pharmstandard - 2 confirmed transactions

author '= Alexey Basov, Deputy CEO Investment Director of RVC ' The ratings presented reflect the results of the hard work of all market players. The twofold growth in the number of venture capital funds, the development of venture capital tools by corporations, the activation of the next generation of business angels is the foundation for the intensive expansion and development of the market, which we will see in the very near future. They became possible, among other things, thanks to the efforts of the state, which implements a systematic and qualified approach to stimulate the innovative economy, attracting players and resources to it. To synchronize the work of regulators and development institutions in the growing ecosystem, to launch priority legislative and infrastructure changes, the Government of the Russian Federation needed a special tool, which, I am sure, will be the Strategy for the Development of the Venture Market until 2030, presented by RVC in 2018. We expect that it will provide a consolidated view of the key areas of development and transformation of the venture capital market for venture funds, authorities, corporations and private investors.

The ratings are based on an analysis of public transaction data for the period from December 2017 to December 2018 and a subsequent survey of market participants.

VC & Private Equity Market Development Strategy Developed

RVC together Ministry of Economic Development of Russia with presented a draft Strategy for Market Development venture and Private Investment for the period up to 2025 and a further perspective up to 2030. The project was developed by RVC together with an international consulting company by PWC order. Ministry of Economic Development The strategy initiatives are aimed at expanding the circle of investors active in the venture capital market, attracting Russia foreign capital and stimulating the entry of Russian projects into international markets, developing infrastructure to support technological entrepreneurship and improving the regulatory framework, RVC reported TAdviser on November 18, 2018. More. here

TAdviser: Corporate venture in the Russian IT industry

• Main article Corporate venture in the Russian IT industry

2017

RAVI: $125 million in venture capital investment

At the end of 2017, the total capitalization of Russian venture capital and private equity (investing in projects in the later stages) funds increased for the first time since 2013, amounting to $21.2 billion against $19.9 billion in 2016. Such data are provided by the Russian Venture Investment Association (RAVI). The 2013 figure, however, is still far away - then it amounted to $26.3 billion. Of the total amount, venture capital funds (there are already almost two hundred of them) account for $4.07 billion ($3.78 billion in 2016).

The total volume of investments for the year increased by 62%, to $1.31 billion, while 58% of investments were provided by the State Russian Direct Investment Fund. Venture investments amounted to only $125 million (as in 2016, at the peak in 2012 it was $376 million). In terms of the number of investments, the Internet Initiatives Development Fund is leading, having carried out 43% of transactions on the market. In 2017, $38 million ($27 million in 2016) was invested in venture capital funds with state participation, while their share in the total capitalization of funds decreased to 22% from 24%. There was a change in the structure of investments - 58% of investments of all venture capital funds were sent to IT projects (77% in 2016), the share of projects in the field of industrial technologies increased from 8% to 22%.

Investments of private venture capital funds for the year, on the contrary, decreased - from $101 million to $87 million (the capital of such funds increased from $2.89 billion to $3.18 billion, their number - from 124 to 140). 73% of private funds still invest only in IT and only 8% are focused on the real sector (among funds with state participation, such 25%). The forecast for a boom in corporate venture capital funds has not yet come true - they account for only 13% of the market ($532 million versus $402 million in 2016), their number grew slightly over the year - from 15 to 17, and investments amounted to only $7 million and concerned exclusively projects in IT.

"Despite the end of the recession, on an absolute scale, the venture capital industry in Russia is still quite compact," said Alexander Povalko, head of the Russian Venture Capital Company (RVC). ^[16]According to him, it is possible to expand the supply of venture capital at the expense of large companies, business angels and non-state pension funds. In the meantime, RAVI expects an increase in investments due to new funds created with the participation of RVC in the form of an investment partnership. According to RVC, in 2017, such funds invested $51.7 million in 27 transactions.

RVC data

Angel Business Deals

Firrma, with the support of RVC and the National Association of Business Angels (NABA), presented an annual ranking of business angels.

According to the study, in 2017, 177 public transactions were made in the angel business investment market, while the top 22 angel business accounts for 65% - 116 transactions. In total, Russian business angels made 11 exits, 5 of which were made by representatives of the top 22. The average check of transactions ranged from 1 million rubles. up to 1 million dollars. In terms of the industry structure, the most investment-attractive areas were financial technologies, e-commerce, medicine, fashion and VR/AR.

The rating takes into account professional investors who regularly make transactions, for which venture investment is the main business and work. In addition, at least two business angel transactions per year must be confirmed by public information.

In the selection of the most active business angels for the specified period, the first place was taken, as last year, by Alexander Rumyantsev, who made 28 transactions in a year. Roman Povolotsky invested in 6 projects and took second place. The third line in the ranking was taken by Igor Rybakov with 5 confirmed transactions.

In 2017, activity in the angel business investment market of venture capitalists increased. So, the co-founder and ex-shareholder of the Group of Companies Morton Aleksanr Ruchyyov invested in 3 projects (Awerspace, Smart Valley, ICO Lab Ecosystem), co-founder QIWI Sergei Solomin, according to the study, acts as LP in several funds at once and is an active private investor (2017 - Theories and Practices, Consortium of the British Higher School of Design).

Many participants in this year's rating were included in the rating for the first time. In particular, Miroslava Duma, who this year launched the Fashion Tech Lab venture fund (FTL) and invested in 2 projects in the fashion industry (Orange Fiber, Diamond Foundry), managing partner of the Armor Capital Management investment fund Boris Zhilin, who invested in the Meet For Charity and Elementaree projects.

Top 10 most active business angels in Russia:

• Alexander Rumyantsev - 28 confirmed deals
• Roman Povolotsky - 6 confirmed deals
• Igor Rybakov - 5 confirmed deals
• Oleg Evseenkov - 3 confirmed transactions
• Alexander Boykov - 3 confirmed deals
• Artem Rudy - 3 confirmed deals
• Boris Zhilin - 3 confirmed deals
• Boris Ryabov - 3 confirmed deals
• Dmitry Sutormin - 2 confirmed deals
• Dmitry Sysoev - 2 confirmed transactions

The ranking did not include entrepreneurs investing in their companies, exchange investors, multimillionaires, philanthropists, as well as people who support projects from altruistic beliefs.

Venture Fund Deals

According to the annual rating of the activity of venture funds Russia from, Firrma whose strategic partner is a RVC partner - in EY 2017, three times more venture funds were created - 11 than in the previous year (4). Also, at the end of the year, a similar indicator was recorded for the fund's transactions, as in 2016 - 391.

The ranking takes into account Russian funds that have concluded at least two venture capital transactions over the past year, at least one of which was made with a Russian company. The activity of funds is estimated in terms of the number of invested projects for the period from December 1, 2016 to December 1, 2017. The rating divides funds into 4 categories: classical funds, seed funds, new funds and foreign investors. The most active classical fund was Runa Capital, which invested more than $20 million in 19 companies. The first place in the number of sowing funds for the second year has been occupied by the IIDF with investments in the amount of more than $20 million in 94 projects. Xsolla Capital became the leader among new funds, and Enterprise Island among foreign investors.

The most active included funds created with the participation of RVC in the form of an investment partnership agreement: RBV Capital, which invested 44 million rubles in Advanced Gene Cell Technologies (AGCT) for the development of methods of treating HIV infection, and the Russian-Belarusian Venture Investment Fund, which allocated more than 800 thousand Belarusian rubles for the implementation of a pilot project for the production of a rehabilitation station, as well as the Softline Seed Fund, which became an investor in sales and customer service through mobile messengers, systems for protecting corporate users from phishing PhishMan and others.

The main trends in 2017 venture capital funds were a rise in the number of new funds - from 4 in 2016 to 11 in 2017 - and active funds - from 42 in 2016 to 44 in 2017. Corporate interest in the venture capital market is growing, companies create their own accelerators and enter into partnerships. In total, Russian and foreign funds in 2017 made 61 exits, local funds - 52 exits, which corresponds to the indicators of last year. Foreign investors are showing interest in Russian startups mainly through accelerators: in 2017, 30 Russian projects were financed by foreign structures, and in 2016 this figure was half as much - 17 projects. There is a shift in local funds to the sowing stage both in transactions and in capital, and the growth of the angel segment, in which 177 transactions were concluded.

IIDF data

European Foundation Speedinvest launches business in Russia

In October 2017, it became known that the Speedinvest Foundation chose a partner for expansion in the Russian Federation. Together with the owner of the developer RDI Group Dmitry Aksenov, Speedinvest is ready to invest €25 million in startups at an early stage of development. Due to political tensions, a number of venture capital funds have reduced their activity in Russia, but startups with Russian roots have retained their potential, experts say. Read more here.

2016

Data from the National Angel Business Association (NABA)

The National Association of Business Angels (NABA), with the support of RVC and Firrma, presented in April 2017 a study of the Russian Angel Monitor 2016 angel investment market.

According to the study, over the past year, 92 transactions involving business angels fell into the public field, and in 2015 - 68. Thus, the growth of the angel investment market since 2015 amounted to about 41% in transactions and about 20% in monetary terms.

According to the Russian Angel Monitor, one of the trends in 2016 in the angelic business investment market in Russia was an increase in the number of private investors by at least 25-30%. According to the authors, in the period 2014 and 2015, when the venture capital market showed a decrease of about 40%, one of the few growth drivers was angel business investing. In connection with the liquidity crisis, people with free funds were looking for new investment strategies, in particular, in technological projects.

An important part of the study was the largest survey of market participants today - more than 60 active business angels of the country took part in it. He identified important trends. Thus, 47% of business angels are ready to invest in knowledge-intensive startups in the fields of biomedicine, production technologies and other areas. At the same time, the IT sector still retains popularity among investors. In it, projects related to data storage and processing (48.72%), fintech (43.59%) and education (38.46%) are of greatest interest to business angels.

In terms of stage, 85% of surveyed business angels prefer projects at the Seed stage of development, and 58% are also ready to invest startups at the earliest pre-seed stage (Preseed).

According to the Russian Angel Monitor, one of the trends in 2016 was a generational change. A number of business angels who have long been present in the venture capital market either moved away from active investment or organized their own funds, in particular, Igor Ryabenky - founded the AltaIR Capital fund, Pavel Cherkashin - Vestor.In.

Deal syndication is one of the key trends in the market. 61% of Russian business angels syndicate their transactions, including with the help of various associations of private investors. Co-investing contributes to the separation of risk and investment among business angels, which is especially important for novice private investors. Associations of business angels - NABA, Venture Club, SKOLKOVO Business School Investor Club, SmartHub, StartTrack, AltaIR Club and others - continue to systematically develop and contribute to the exchange of experience, increase expertise and competencies of their participants.

Increasingly, representatives of big business act as business angels. In particular, the ex-head of the presidential administration of the Russian Federation Alexander Voloshin and the general director of the Rusagro GK group Maxim Basov financed the biotech startup Genotek. Alexey Repik, Chairman of the Board of Directors of the R-Pharm Group of Companies and Co-Chairman of Business Russia, has invested in the Russian Grabr service. In addition, the activity of well-known IT entrepreneurs has increased in the angel business investment market: the general director of the Yandex group of companies Arkady Volozh invested the Israeli project NeuroSteer and the Turkish Getir, the founder of KUPI VIPOskar Hartman and the co-founder of QIWI Sergey Solomin also support startups.

RB Partners and EY data

RB Partners Group and EY conducted a study of the Russian venture capital market:

• The study examined technology deals (venture and more mature deals, including IPOs, M&A As, and partially grants and venture debt) in Russia.
• Geographical coverage: Russia, international companies with the main market in Russia.
• Venture deals mean projects of companies under 10 years old, with revenues of less than $10 million, a deal of less than $100 million. In exceptional cases, transactions with a volume of over $100 million were considered in view of the manufacturability and innovation of the companies.

• Growth in the number of transactions from 297 to 302.
• Tangible growth in investment: from $383 million to $894 million (thanks to large transactions: HeadHunter, Gett, Pixonic, Delivery Club). The market volume of venture capital transactions of the early stages decreased from $372 million to $231 million.
• There has been a market transformation in the B2B segment. If in previous years most investors adhered to conservative directions: enterprise management systems, platforms and traditional B2B solutions, then in 2016 investments in these segments decreased significantly. Investors continue to believe in software segments and cyber security. It is appropriate to talk about the search for new more sustainable investment ideas.
• Leaders have changed in the V2S segment: investments in e-commerce, search services and recommendations have significantly decreased (on the one hand, this is due to a drop in consumption volumes, on the other hand, to a change in technological paradigms). Investors believed in services: transport, travel, repair and cleaning related to the "uberization" trend. In addition, the growing segment of games inspires optimism - this is a global trend, which is supported by the development of VR, AR and AI technologies .
• Private venture capital funds have clearly focused on the least risky and obvious stages: expansion and growth. In the mature stages, the main investors are corporations, in the early stages - the state and business angels.
• Another important trend is the shift in focus of private funds to global startups. At least half of the transactions of the top 10 Russian funds in 2016 were made abroad. Just look at funds like Runa Capital, Almaz Capital Partners, Flint Capital, Maxfield Capital, Target Ventures, InVenture Partners. Ru-Net Holdings is one of the oldest funds of Russian origin, which transferred the main office outside Russia.
• The geography of investors of Russian origin is growing and changing: if in 2014 and 2015 they tried themselves mainly in the markets of Israel and the United States, then in 2016 offices were already opened in Europe. Flint - Berlin, Runa - London, Target - Berlin, etc.
• The average transaction size throughout the year has grown significantly in absolute terms: from $1.3 million in 2015 to $3 million in 2016. At the same time, if the early stages - sowing, startup and growth - collapsed in this indicator, then the dynamics at the mature stages looks very optimistic. The rise in the average check is due to an increase in exit deals and their size. If you look at the deals of the early stages, then the average check decreased to $0.8 million.
• There is also a strong increase in the number of exits - both in terms of money and by piece: from 4 to 14 pieces and from $11 million to $663 million. Of course, large deals have partially made the weather here, but the trend is positive even without them.
• The main segments for investment are software and Internet. It is unlikely that in the coming years the market structure will change. Traditionally, the biotechnology sector slightly diluted the picture of past years. However, it is worth noting that now there is interest of investors in industrial technologies that have already overtaken biotech.

At the end of 2016, the following trends can be noted, which are most likely to have an impact on the market in 2017.

• Public funds and funds with public participation reduce activity, withdraw from projects or close. For example, VTB Capital and Leader-Innovation have practically stopped their investment activities. Rusnano reduced activity at the PE and expansion stages. An exception is the Skolkovo Foundation, which continues grant programs and plans, according to official statements by its leaders, the opening of new funds.
• Corporate innovations and corporate investments are actively developing in various forms: corporate accelerators (IKEA, SAP, and InspiRUSSIA, etc.), corporate funds (Sistema VC, Sistema Asia Fund, etc.) are very active. We can mention a large number of integrations with startups, especially in the field of fintech - for example, the launching Fintech Lab accelerator. In this regard, there was an increase in the number of exits and an optimistic attitude of venture investors on M&A deals.
• The growth of angel investment continues, as does the development of angel, micro-angel groups, as well as p2p and crowdfunding platforms. Among the most active are Venture Club, StartTrack, Investor Club of the Moscow SHU Skolkovo, Investor Club of the IIDF, SmartHub, etc. Also in 2016, the volume of investments from completely new private venture investors increased: top managers of corporations, as well as small and medium-sized entrepreneurs, including from the regions.
• The globalization of startups and funds continues, but without noticeable success. An example is the Russian startup Prisma, which has achieved serious global fame and has long been in the download tops on the App Store and Google Play platforms. Most top-end funds have one or more offices outside Russia: Tel Aviv, San Francisco, Berlin, etc.
• Expectations for the recovery of public capital markets and possible successful IPOs of Russian companies on the Moscow Exchange and Asian exchanges did not materialize.

Venture market growth points, the most interesting technologies and business verticals for investment in 2017.

RVC and PwC data

According to RVC and PwC estimates, in 2016 there was a decrease in venture capital transactions by 29% - the amount of transactions amounted to $165.2 million. But their number remained almost at the same level: 180 agreements concluded. The total volume of transactions made in 2016 was estimated at $0.41 billion. There were no major deals worth $100 million or more in 2016.

The dynamics for the decline were the factor of reducing the average transaction size to $1.1 million and reducing business activity in the Russian market, uncertain macroeconomic indicators and 10% devaluation of the ruble.

Deputy General Director of RVC Bikkulova Gulnara noted that over the past three years, the Russian venture capital market has been quite stable in terms of the number of transactions made with the continuous updating of the investor base. An obstacle to market growth, according to the expert, is the apathy of large Russian business for innovation.

Traditionally, the information technology sector attracted the largest number of investment transactions - 90% or $148.6 million. Of these, cloud technologies and software received $41.8 million, and fintech and social networks received $15 million. The industrial technology sector increased its performance with 21 deals. In the field of biotechnology, investment transactions were concluded in the amount of $9.5 million, which is significantly less than in 2015 - then the figure sounded like $18.1 million.

PwC specialists in the Russian Federation express restrained optimism about the recovery in 2017 in the venture capital Russian investment activity market.

2015

J’son & Partners Consulting

At the end of 2015, J'son & Partners Ошибка цитирования Отсутствует закрывающий тег </ref> allocated 187 venture capital investments in Russian companies with the participation of funds and business angels. Compared to 2014, there is a decrease in the number of transactions with venture capital. The leader in the number of investments in 2015 was the Internet Initiatives Development Fund (IIDF).

In 2015, 160 transactions involving funds and business angels disclosed financial performance. In monetary terms, the volume of investments also showed a decrease to $135 million.

Despite the reduction in transactions involving venture capital funds, their share in the overall structure of investors remains dominant in 2015:87 transactions were made excluding syndicated transactions with their participation. It is also important to note the growing share of angel business: excluding syndicated transactions, angel business investments grew 34.1% in 2015.

Industry analysis

In market analysis, the industry classification of RAVI transactions was used. Industry analysis of funded projects showed that the ICT sector prevails: in 2015, the share of ICT projects is 85% of all funded projects.

In the structure of transactions in the context of industries, "telecommunications" prevail: in 2015, 83.4% of all transactions and 94.2% of the total volume were made in this sector.

In 2015, "aggregators and catalogs" and "business solutions" are leading in the ICT industry sub-sectors. It is noteworthy that in monetary terms, the largest amount of investment falls on E-commerce, which is explained by a significant investment in the CarPrice online auction of $40 million.

Investment rounds

An analysis of investment rounds showed that most of the investment, as in 2014, fell on the sowing stage; however, the number of seed deals decreased by 26.7% compared to 2014.

The structure of transactions for 2015 and the comparison with the same period last year are presented below: there is a decrease in the share of transactions with a volume of $1 million to $5 million, while increasing the share of transactions with a volume of up to $1 million. In quantitative terms, all categories of transactions decreased in 2015.

Investor exits

According to experts from J'son & Partners Consulting, in 2015 there were 11 exits of venture capital funds from Russian projects in the amount of $1202.3 million. This estimate consists of published output sizes and includes the output of Accel Partners, Kinnevik, Northzone from Avito.

Investment in foreign projects

There is an increase in the activity of Russian investors in foreign investment rounds: compared to 2014, the number of transactions involving Russian funds and business angels increased by 34.2%; in monetary terms, the growth was 21.7%. Also in 2015, seven exits of Russian funds from foreign projects were made against nine exits a year earlier.

Barriers and drivers of the development of the Russian venture capital market

As the main barriers to the development of the venture capital market in the Russian Federation, J'son & Partners Consulting experts distinguish:

• slower closing rates;
• Longer time to exit projects
• falling company valuations;
• the banking industry crisis;
• shortcomings of Russian law;
• low budgets for R&D;
• No demand from large customers
• a shortage of teachers in fundamental industries.

Among the main drivers of the venture market development in the Russian Federation stand out:

• growth in the quality of venture projects;
• the fall of the ruble reduced the value of R&D;
• import substitution stimulates demand in a number of areas;
• positive shifts in Russian law, active participation of the IIDF.

Also below are the most promising areas of investment, according to J'son & Partners Consulting:

Conclusion

• There has been a certain stagnation in the Russian venture capital market over the past 2 years: both the number and volume of transactions are declining, while business angels are becoming increasingly important.
• The main investors in 2015 are venture capital funds; there has also been a growing role for business angels.
• The bulk of venture capital deals have been done in the ICT sector. Among the ICT sub-sectors, "aggregators and catalogs" and "business solutions" stand out. The largest investment was attracted by E-commerce.
• The largest number of investments in 2015 was made at the sowing stage; The prevailing amount of attracted financing is up to $1 million.
• The number of exits of direct and venture capital investment funds (+ 50%) is increasing on the Russian market.
• The number of sales of shares by project founders is increasing.
• In the face of a stagnating economy, Russian investors are increasingly oriented abroad: compared to 2014, the number of transactions involving Russian funds and business angels increased by 34.2%.

PwC Technology and Innovation Centre in conjunction with RVC

According to the report, the indicators of the volume of venture transactions in dollar terms decreased, but the observed decline in market volume is largely the result of a sharp drop in the average annual exchange rate ruble by 37%, according to the data. CENTRAL BANK OF THE RUSSIAN FEDERATION

The market for venture capital transactions in dollar terms decreased by 52% compared to 2014 and amounted to $232.6 million.

The average transaction size decreased by 55% and amounted to $1.5 million. The number of concluded venture transactions increased by 21% compared to last year, and the number of exits decreased by 13%, while the total cost of exits in 2015 more than doubled.

The industry structure of the market remained unchanged in 2015, the IT sector retained a leading role in terms of total investment and amounted to 88%, however, the segments of industrial technologies and biotechnology in 2015 showed steady growth and increased their share to 12% in total.

"The results of 2015 demonstrated a general continuation of the trends of the previous year," said Gulnara Bikkulova, a member of the RVC board. - This is most likely an indicator of a certain maturity of the venture ecosystem that allowed the market to resist, and the efforts of the state to support those market segments where the participation of private investors is not enough. This applies primarily to the early stages of project development and development support in high-tech science-intensive industries. "

The number of IT venture deals in 2015 compared to the previous year decreased by 27% and amounted to 97 transactions with a total value of $205.9 million.

The e-commerce segment remained the leader among IT subsectors in terms of the number of transactions and the amount of investments.

In 2015, 17 transactions worth $73 million were completed in this subsector. Cloud technologies and software took the second place in terms of the number of transactions - 11 transactions were concluded in this segment for a total amount of $34.4 million, which is 2 transactions less than in 2014 (by 28% in monetary terms).

In terms of the average size of the transaction, the first and second places, respectively, were taken by subsectors of advertising technologies and reference and recommendation services/social networks ($5.5 million and $5.4 million). The e-commerce subsector took third place ($4.3 million).

The biotechnology sector showed a significant increase in the number of transactions in 2015, showing an almost sevenfold increase in their number from 6 to 39 transactions.

To a large extent, in 2015 this indicator was formed by transactions of funds involving RVC capital. The number of transactions in industrial projects increased from 10 to 15. Despite this, the volume of investments in biotechnology in monetary terms decreased by 48% and amounted to $18.1 million against $35.1 million a year earlier. Investments in the industrial technology sector, on the contrary, increased by 65% to $8.6 million, compared to $5.2 million in 2014.

Separately, the report considers large transactions of more than $100 million. The number of major transactions in 2015 remained at the same level: 2 transactions were made in the amount of $200 million compared to the same number of transactions in the amount of $350 million in 2014. One of the transactions was made in the subsector of games: USM Holdings (HC YuSeM) Alisher Usmanova invested $100 million in the esports community Virtus.pro.

The number of investor exits in 2015 decreased slightly and amounted to 26 transactions, which is 4 transactions less than in 2014. At the same time, the total cost of exits in 2015 more than doubled and amounted to $1.574 billion compared to $731.5 million in 2014.

According to the results of 2015, the number of grants issued amounted to 6074 grants. The total amount of grants amounted to $178.2 million in 2015.

In ruble terms, the increase in the amount of grants issued turned out to be significantly higher than the growth of its dollar equivalent. A significant part of the grants were issued to support projects in the industrial technology and biotechnology sectors.

Traditionally, the main part of the grants was issued by the Fund for Assistance to the Development of Small Forms of Enterprises in the Scientific and Technical Sphere (Innovation Assistance Fund - Foundation for Assistance to the Development of Small Forms of Enterprises in the Scientific and Technical Sphere, or Bortnik Foundation). The number of grants issued by the fund in 2015 amounted to 5792 grants worth $155.4 million.

The total number and amount of grants was influenced by the additional capitalization of the fund in 2015, which made it possible to issue an additional 527 grants. The second place in activity was taken by the Skolkovo Foundation, which in 2015 issued 256 grants in the amount of $21.3 million. According to the results of 2015, the increase in grant activity made it possible to compensate to a certain extent for the decrease in the supply of money for early stage projects.

2014

PricewaterhouseCoopers and Russian Venture Capital Company (RVC)

The volume of the Russian venture capital market amounted to $480.9 million in 2014, the PwC Technology and Innovation Center together with RVC reported in its annual review of the Russian venture capital industry.

The review on the analysis of venture capital transactions announced between January 1 and December 31, 2014 contains data on the main financial elements of the Russian venture ecosystem - infrastructure investments, grant financing, investor exits and large transactions (not taken into account in assessing the market size and not shown separately).

According to the review, during 2014, investment activity decreased by 26% in monetary terms. The volume of investments in the sowing stage increased by 30%, and the total volume of investments in the early stages - by 4% and amounted to $141 million.

Compared to 2013, the number of exits increased by 43% and by 51% in monetary terms. As a result of 30 transactions, investors raised $731.5 million. The indicators for large transactions and the volume of grant funding increased (to 2619 grants).

In 2014, the activity of investors at the sowing stage increased: the volume of sowing investments increased by 30% (to $38.1 million) and thereby the early stage market came close to a record 30% of the total volume of venture capital transactions (against 21% in 2013 and 15% in 2012).

In monetary terms, the second place belongs to the subsector of travel services, which raised $51.8 million as a result of 6 transactions. In third place in terms of attracted investments is the technology segment in the financial sector with an amount of $48 million as a result of 6 transactions.

Biotech and industrial technology sectors shrank by number of deals in 2014, with biotech down 54% to 6 deals and industrial technology down 37.5% to 10 deals.

J’son & Partners Consulting

According to J'son & Partners Consulting, in 2014, the venture capital market amounted to $447.5 million, including new funding - $258.2 million, "exits" from projects - $189.3 million. Experts note a significant decrease in investment activity in the market compared to 2013, compared to which the volume of new capital decreased by 26%.

The number of transactions during the reporting period amounted to 319, and the Internet Initiatives Development Fund remains the leader in terms of the number of transactions - in 2014, the fund financed 104 projects and completed 3 syndicated transactions.

J'son & Partners Consulting specialists previously noted a trend towards an increase in the influence of state investors in the venture capital market. In 2014, this trend was continued, which is explained, among other things, by the high activity of the Internet Initiatives Development Fund.

The number of investments in foreign projects with the participation of Russian investors increased in quantitative terms, but slightly decreased in monetary terms. According to J'son & Partners Consulting consultants, investments in foreign projects excluding syndicated transactions in 2014 amounted to $92.2 million.

In the first half of 2014, J'son & Partners Consulting analysts allocated 120 transactions totaling $241.3 million, of which 110 were cash-in transactions totaling $160 million and 10 exits transactions totaling $81.3 million. The maximum number of investments was carried out by the State Fund for the Development of Internet Initiatives - 37 transactions.

Industry analysis of funded projects showed a decrease in the share of ICT projects in both monetary and quantitative terms. Consultants J'son & Partners Consulting pay attention to the growth of investments in medical projects, which accounted for 8% of the market in monetary terms.

The number of investments in foreign projects with the participation of Russian investors increased both in quantitative terms and in monetary terms, while the share of syndicated transactions changed slightly: in quantitative terms it increased from 28% to 35%, in monetary terms it decreased from 53% to 48%.

There is a certain stagnation in the Russian venture capital market, but an increasing participation of Russian investors in international processes is a positive factor: compared to the first half of 2013, the number of transactions involving Russian capital increased from 18 to 23.

Life.Sreda

According to research by the Life.Sreda fund, the volume of investments in fintech doubles every year: in 2012 it amounted to just over $1.6 billion, in 2013 - $2.2 billion, and in the nine months of 2014 - $4.2 billion. According to the results of 2014, the volume of more than $5 billion is predicted. Among the 37 participants in the ranking of startups worth $1 billion or more, which in January was The Wall Street Journal and Dow Jones Venture Source [1], there were three fintech projects at once: LendingClub ($155M investments\$ 3.8V capitalization), Square ($345M\$ 3.3B) and Stripe ($120M\$ 1.8B). This year, the fourth fintech company with a capitalization of more than a billion was also KreditKarma (credit history management). According to CrunchBase [2], in August 2014, fintech startups attracted investments more rapidly than other areas in the venture capital market. Moreover, giants such as Apple (with Apple Pay), Facebook, Google and Amazon are entering the fintech market. Life.SREDA analysts predict that by 2018 the volume of investments in companies that create innovative projects for the financial sector will amount to $8 billion.

The largest investment segments of the market for the three quarters of 2014 were:

• online lending - $1.46 billion, including
• microfinance/scoring - $568 million,
• P2P lending - $484 million,
• online lending to SMEs - $408 million,
• electronic payment solutions - $661 million,
• services for small and medium-sized businesses - $588 million,
• online trading/investments - $362 million,
• crowdfunding/crowdfunding - $216 million,
• applications for personal finance management (PFM/PFP) - $208 million,
• mobile banking - $207 million,
• Bitcoin - $206 million,
• mPOS (mobile acquiring) - $132 million,
• cross-border transfers - $119 million.

Transactions

The most noticeable investment "exits" of this year were: SAP acquired the SAP Concur Technologies service (accounting for corporate expenses of employees) for $8.3 billion, FleetCor bought Comdata (provider of b2b electronic payments) for $3.45 billion, a consortium from Advent International, ATP and Bain Capital bought Nets (European provider of electronic payments) for $3.14 billion). The bright "exits" of 2014, of course, include the sale by the Chinese corporation Alibaba of the direction of lending to small and medium-sized businesses for $518 million. In February 2014, the American mobile bank Simple.com was sold to a multinational financial group with Spanish roots - BBVA Group for $117 million. The Life.SREDA fund earned 180% per annum on this transaction.

Large investments attracted: the ecosystem for mobile payments and transfers Monitor ($165M from direct sale of shares to investors, including MasterCard), the world's largest mPOS company Square ($150 million), the P2P- lending platform Renrendai ($130 million), online payment service for e-commerce Klarna ($122 million), online pawnshop for luxury goods Borro ($112 million). In the form of debt obligations, Kabbage projects (a small business lending service) were able to attract funds - $270 million, AvantCredit (consumer lending) - $200 million, Square - $100 million.

This year, the most investments were attracted on the Russian market: mPOS operator 2Can ($5 million from, and Inventure Partners Almaz Capital Partners the ESN group), cloud scoring (from Scorista Life.SREDA, investments were not disclosed, the company's estimate is $3-4 million) and Intstabank mobile bank, which became a member of the fintech accelerator MasterCard StartPath in. Dublin

In the history of Russian fintech, the largest transactions remain the 2013 IPO on the Nasdaq of Qiwi (the company was valued at $884 million) and the IPO on the London Tinkoff Credit Systems Exchange (during which the company raised $1.087 billion). In 2013, Russian fintech startups were able to attract direct investments: mobile bank UBank ($8 million from the Runa Capital fund), LifePAD service ($7 million from the Life.Sreda fund), IQcard.ru ($6.2 million from Fastlane Ventures, DirectGroup) and some others. According to the fund's estimates in 2013, Russian fintech projects raised about $40 million.

2013

J’son & Partners Consulting

J'son & Partners Consulting presented in May 2014 the results of a study on the venture capital market of the Russian Federation in 2013. Venture investment means the acquisition of equity capital of new or growing companies, while the acquired share is usually less than a controlling stake. The invested funds are directed mainly to business development. The venture capital market is one of the main sources of financing for innovative projects. In 2013, the total volume of the Russian market exceeded $3 billion, including new funding exceeded $800 million.

In 2013, 278 investors participated in 419 transactions totaling $3.25 billion. The average volume of the transaction amounted to $7.7 million. The volume of cash-out transactions amounted to $2.34 billion or 13 transactions. The volume of new financing (cash-in) in the total structure amounted to $912.5 million or 406 transactions. The average volume of the transaction involving new financing amounted to $2.24 million.

According to a survey of investors conducted by J'son & Partners Consulting experts in early 2014, funds received an average of 1200 requests for investment in 2013. At the same time, the share of projects in the ICT and content industry amounted to 90%. The percentage of meetings with venture entrepreneurs was 10%, the number of transactions from the total number of applications - only 1%.

According to respondents, the venture capital market in Russia in 2013 increased by 25%. Venture investors believe that in 2014 the market will grow by 20%.

The Russian venture capital industry has reached the stage of maturity when there are significant exits from investments made on the market. At the same time, the market continues to develop actively, as evidenced by a significant amount of investments at the early and sowing stages.

PricewaterhouseCoopers and Russian Venture Capital Company (RVC)

The Center for Technology and Innovation PricewaterhouseCoopers and the Russian Venture Capital Company RVC () presented in February 2014 a report on the results of 2013 for the Russian venture capital market. It turned out that despite a significant increase in the number of venture capital transactions, the total amount of invested funds for the year decreased by almost 30%^[17]

The study is based on data from Venture Database and RusBase and includes information on all transactions registered in 2013 with a volume of at least $50 thousand and not more than $100 million in the industrial, bio- and information technology sectors. At the same time, only transactions with Russian or foreign companies operating on the territory of the Russian Federation were taken into account.

Quantitative indicators for the year increased markedly. Thus, the number of venture transactions increased from 188 in 2012 to 222 in 2013. At the same time, 21 investors managed to make a successful exit - the total volume of these transactions was estimated at $2 billion. In 2012, there were only 12 such transactions, and their volume amounted to $21 million. It was due to successful exits that the size of the venture capital market increased in 2013 to $2.89 billion from $1.98 billion in 2012.

The volume of investments, despite the increased number of transactions, decreased from $911.9 million to $653.1 million. Accordingly, the average size of the transaction fell significantly - in the IT sector it amounted to $3.3 million, although back in 2012 it was $5.6 million.

2012

According to research by the Life.Sreda Foundation, the volume of investment in fintech doubles every year: in 2012 it amounted to just over $1.6 billion.

2011: IT sector leads by investment

In 2011, the IT sector accounted for the vast majority of venture capital investments in Russia. Among the leading areas in terms of attracted investments were e-commerce, as well as projects related to online entertainment and social networks. For more details, see: Venture capital investments in the Russian IT sector

2009:92 venture capital funds registered, 15 in operation

In March 2009, the Innovation Institute at MIPT estimated the amount of venture capital funds available in Russia that can be invested at 10-12 billion rubles.

In total, 92 venture funds are registered in Russia, according to the Russian Venture Investment Association (RAVI). But really working among them, according to market participants, only 15 - 20.

According to the Russian Venture Investment Association, the average internal rate of return for projects of Russian funds is 35%.

2008: Market Size $1.3 Billion

As of 2008, the venture capital investment market in Russia was quite young and very different in structure from the markets of Western countries. For example, in our country there is practically no investment in projects at the sowing or initial stage of development (namely, interest in such projects is an indicator of the "adult" market), and among the industries traditional markets prevail - IT (almost 50% of investments in 2008) and mobile technologies (just over 9%).

In 2008, the venture capital investment market in Russia, according to Research.Techart, grew by 25%, reaching almost $1.3 billion. According to forecasts, in 2009, the venture capital investment market will grow by no more than 15-20% due to the fact that many formed funds have not yet spent money, and the crisis situation will significantly reduce startup prices.

Notes