Sistema Venture Capital Sistema VC

Sistema Venture Capital manages media assets AFK Sistema and functions as a private equity fund.

Aktivs

As of December 2015, SMM owns and manages:

• CJSC "TV Company" STREAM "(operates 9 paid off-air channels),
• Stream technology company (creates and manages media services for operators),
• United Russian Studios (owns shooting pavilions in St. Petersburg),
• Advertising agency "Maxima,"
• CJSC "CTV" (satellite TV operator).

Performance indicators

2015

In 2015, according to Gulnara Khasyanova (December 2015), the company's revenue remained at the same level, but taking into account the fact that in April the production company RWS left SMM, the revenues of the remaining assets of the media company increased. AFK reports indicate that SMM's revenue is growing primarily due to the Internet company Stream.

If in 2013 SMM's net profit amounted to 1 million rubles, in 2014 - 140 million rubles, in 2015 - 230 million rubles, the president of the company predicted in December 2015.

2014

SMM revenue in 2014 decreased by 3.8% to 3.4 billion rubles.

History

2023

Sale of Segmento advertising platform to MTS

On April 6, 2023, MTS announced the purchase of the Segmento advertising platform from the Sistema AFK venture capital fund. As a result of the deal, MTS will strengthen its own advertising circuit and strengthen its position in the AdTech market, the press service of the Russian telecommunications operator reports. Financial and other parameters of the agreement are not disclosed. Read more here.

Acquisition of 100% advertising platform Segmento

The venture capital fund AFK Sistema became the sole owner of the Segmento advertising IT platform. This became known in early February 2023. Read more here.

2022: Sale of stake in UK drone software developer Five.ai

Bosch buys Five.ai, whose investors included Russian AFK Sistema. Information about this appeared on April 12, 2022. Bosch plans to buy out all Five shares, which means that the minority stake in Sistema will change owners. Read more here.

2021

Sale of interest in Datasine to Shutterstock

In early August 2021, AFK Sistema announced the sale of its stake in Datasine to Shutterstock, which develops an online platform of the same name for the sale of visual content. The seller in this transaction was the Sistema_VC venture capital fund, which is part of the state corporation. Read more here.

Investing in the online travel service FinalPrice

On July 5, 2021, OKS Group announced to TAdviser that it had invested in the online travel service FinalPrice, co-investors were Sistema VC and Almaz Capital funds. The volume of the round amounted to $1 million. Read more here.

Exit from Observe Technologies with 4x yield

In February 2021, it became known about the withdrawal of the venture capital fund AFK Sistema Sistema_VC from Observe Technologies. The return on investment turned out to be 4 times. Read more here.

Investing in NFWare

Startup NFWare, the developer ON for virtualizations network functions on January 14, 2021 TAdviser announced the attraction of $1.4 million from an international group of investors, including Sistema_VC. More. here

Investment in telemedicine services developer Bioniq

On January 13, 2021, it became known that Bioniq had attracted about $15 million in investments. Almost half of this amount - $7.2 million - was provided by AFK Sistema. In addition, the Luxembourg venture capital fund OKS Group invested in the developer of telemedicine services with the participation of a number of other investors (together they provided $7.8 million). Read more here.

2020

Investment in agrotech company KisanHub

In mid-November 2020, the British KisanHub company raised £1.12m to develop a platform for the digital transformation of the agri-food industry. The supply chain management platform KisanHub uses big data and machine learning to help farmers, agricultural technicians, purchasing managers and management teams make informed decisions. More. here

Investment in the SQream big data analytics platform

At the end of June 2020, it became known that AFK Sistema, through its venture capital fund Sistema VC, invested in the SQream big data analytics platform. Read more here.

Investment in Connecterra Cow Health Monitoring System Developer

On June 22, 2020, the developer of the Connecterra cow health monitoring system announced the attraction of €7.8 million in investments. The Series B funding round was attended by Sistema VC venture capital fund AFK Sistema, as well as a number of other investors, including ADM Capital, Kersia, Pymwymic and Breed Reply. Read more here.

Investment in technology developer for self-driving cars Five AI

On March 4, 2020, it became known that the Sistema VC venture capital fund (one of the Sistema AFK funds) and a group of international investors invested $41 million in Five AI. Those who invested in the UK startup included Trustbridge Partners, Direct Line Group, Lakestar, Amadeus Capital Partners, Kindred Capital and Vision Capital. Read more here.

2019

Investment in online meat and seafood selling platform Licious

In mid-December 2019, Sistema Asia Fund, a venture capital fund of AFK Sistema, invested in the Indian online platform for the sale of fresh meat and seafood Licious. In total, as part of the next round of financing, Licious received $30 million, which is planned to be invested in business expansion. Read more here.

Uniphore Software Systems Speech Recognition Software Developer Investment

In early July 2019, it became known about the $38 million funding round for Uniphore. The investment deal was led by California-based March Capital Partners.

In addition, Sistema Asia Fund, AFK Sistema venture capital fund, as well as National Grid Partners, Patni Wealth Advisors and Chiratae Ventures, have invested in the developer of speech recognition software. Read more here.

2017

Investment in NFWare

In March 2017, Sistema Venture Capital reported that it, together with a number of other funds, invested in NFWare, acting as this round of financing by a lead investor. The total volume of investments from all investors of the round amounted to $2 million. Read more here.

2015

Renaming to Sistema VC and converting to an investment fund led by Alexei Katkov

In December 2015, it became known that the Mass Media System (SMM) in early 2016 will be transformed into a private equity fund and will change its name, Gulnara Khasyanova, president of this company, told Vedomosti. The fund will be led by Alexey Katkov. Khasyanova herself will remain on the board of directors of the fund and will participate in its management, she says. Previously, Kommersant wrote that she would go to work at Micron (also part of AFK). Khasyanova and the representative of Sistema do not comment on this.

The new fund will invest exclusively in technology projects, but not in media companies, Khasyanova and Katkov say, but they do not disclose any more details. The fund will be called Sistema VC, sources told Vedomosti in AFK. Khasyanova and Katkov confirmed that they really proposed this option of a new name for the company, it is now being considered.

In 2015, SMM developed and defended a strategy focusing exclusively on investments in Internet companies, primarily technological ones.

"And we realized that SMM's media assets will not help us in any way and there will be no synergy here, the implementation of the strategy is possible without being tied to them, so we are building a new fund from scratch and, as it were, in parallel with our media business," Khasyanova said. "Moreover, we clearly realized that the existing assets do not allow building a really large media history on their basis^[1].

If earlier part of SMM's assets were unprofitable, then over the past two years the company has managed to achieve that all its assets are profitable, and the holding as a whole began to make a profit, she points out. According to Hasyanova, this happened both due to revenue growth and due to a decrease in the costs of the management company. If in 2013 the net profit of SMM was 1 million rubles, in 2014 - 140 million rubles, in 2015 - 230 million rubles, the president of the company predicts. The SMM employee says that part of the cost optimization was the reduction of employees of the management company. Another employee points out that the company's profit increased primarily due to the service "Stream," the package of which SMM received from "Sistema" and whose results are consolidated just since 2014.

Now SMM media assets are up for sale, Vedomosti sources in Sistema assure. Khasyanova says that there is no task to urgently sell assets:

'They're self-sufficient now. Of course, if we get a good offer, we will sell them. "

Previously, Vedomosti sources in Sistema said that the Internet company Stream and DTV could go to MTS. MTS has already bought Stream and CTV, says a source in the SMM, the deal will soon be announced.

The Maxim agency back in 2014 came under the control of the ADV advertising group, and the film studio will become part of the holding's development business, not media.

Negotiations on the sale of paid SMM channels have been conducting for more than a year, its employees, as well as the heads of three media holdings, who received the relevant proposals, told Vedomosti. One of them says that SMM asks for at least 1 billion rubles for these channels.

Khasyanova said that there are offers from potential buyers for SMM assets, but the company will share the details later.

In 2013, AFK decided to part with media assets if this business does not show clear progress, Vedomosti sources in the holding say. Khasyanova increased the profitability of SMM, but could not radically change the situation, they say. Two SMM employees say that this is not surprising: "Khasyanova is an experienced manager, but here it was necessary to have deep knowledge of the media market, which she did not possess." Another interlocutor of Vedomosti believes that she does not know how to communicate with creative people who create media.

Why couldn't Yevtushenkov build a large media business? Vedomosti interlocutors explain this in different ways. AFK never had an "anchor" asset in the media, for example, a large broadcast channel around which it was possible to build a business, and building this business from scratch turned out to be too costly - in money and resources, says a Sistema employee. In general, the media business in terms of the ratio of risk and financial return for Sistema as an investment company turned out to be unattractive, he summarizes. Among the Russian oligarchs, almost no one was able to recoup large investments in media, recalls the head of a large media company, the exception is Alpha Group, which very successfully and on time sold Yuri Kovalchuk and his partners a package in CTC Media. The head of another media company says that Yevtushenkov, with all his desire to make a large media holding, was distrustful of projects in this area:

"He was

offered many times to invest in internet companies - with little revenue but growth potential, but he did not believe in them to the last and did not want to risk large amounts. As a result, the projects went to other investors. "

In the early 2000s Yevtushenkov negotiated with the founders of Yandex, but did not believe in them and missed the loudest history of Runet, recalls the source of Vedomosti.

Sapronov is confident that AFC needed to bet on existing assets and develop them, and not look for external facilities for multi-billion dollar investments.

"To be honest, I

didn't even imagine how difficult this business was. And if he had imagined, then maybe he did not climb. Although, of course, all this is very interesting, "Yevtushenkov said in an interview with the MK newspaper back in 2001, answering questions about his media assets

.

The businessman, according to his acquaintances, complained that he was not lucky with the leaders of the media business all the time.

"People

do this business like no other," agrees a source in the SMM. - People who either know how to make products or not. Yevtushenkov did not find the right person for this business and did not find a common language with those who managed media assets with him. In any case, it is impossible to land a manager from another industry to manage a media company. In the vast majority of cases, such a manager will harm more. "

This interlocutor of Vedomosti is glad that Katkov, who has been working on the Internet market for a long time, will manage the company - the successor to SMM: "This gives hope that the fund will work out."

For Sistema VC, areas such as advertising technologies, financial services, Internet things, online games and virtual reality are interesting. In the field of virtual reality, the foundation looks primarily at games and educational projects.

RWS leaves SMM

Yevtushenkov's media business and internal conflicts were torn apart. In 2015, Yuri Sapronov, founder of the production company RWS (was the largest business in SMM), regained control of the company (his stake increased to 70%), the rest of the shares are now directly owned by Sistema, and not SMM, as before. The reason for the company's withdrawal from the SMM was the tough conflict between Sapronov and the head of the company, Gulnara Khasyanova, Vedomosti sources said.

2014

Yevtushenkov's arrest disrupts the deal to invest in the game portal Kanobu

Vladimir Yevtushenkov always had great ambitions in the media business, over the previous 20 years he made many attempts, but he did not succeed in creating a large entertainment holding. For a businessman, the media business has always been a personal question, he really wanted to make a "beautiful" story, explains the source of Vedomosti in Sistema. And although it has long been clear that SMM is a set of small, unrelated assets, without significant growth potential and even the possibility of a single strategy, Yevtushenkov until recently did not want to abandon this all and went through various development options, adds Vedomosti interlocutor.

In the fall of 2014, SMM defended to shareholders the strategy of investment in the so-called new media, that is, in media Internet assets, Gulnara Khasyanova confirmed. The crisis in the advertising market prevented this strategy from being implemented, she points out. Previously, Vedomosti sources in Sistema said that as part of this strategy, SMM was going, in particular, to invest in the Kanobu gaming portal and the deal fell through at the last moment due to the arrest of Yevtushenkov.

Gulnara Khasyanova - head of the company

After the departure of Vladimir Khanumyan, SMM began to manage Gulnar Khasyanov.

2013: Revenue growth 34% to $110m

The revenue of Mass Media Systems against the background of the launch of new services in Stream and the increase in the audience of channels in 2013 increased by 34.3% year-on-year, to $110 million.

2012

Purchase of a controlling stake in the Muscovy channel

In 2012, Yevtushenkov made another attempt to enter the broadcast TV market. Sistema bought a controlling stake in the Muscovy channel, which broadcast several hours a day on the broadcast frequency of TVC. The holding hoped to exchange these shares for a stake in the TVC itself, but the plan failed, the shares of Moskovia were sold to the Moscow government.

Vladimir Khanumyan - head of the company

In 2012, AFK invited Vladimir Khanumyan, former executive director of CTC Media, to head SMM. He did not have time to defend his strategy and in early 2014 moved to Gazprom-Media.

2011

Loss for the year $35.3 million

In 2011, Sistema Mass-Media's revenue increased by 7.9% compared to 2010 to $101.9 million due to the growth of revenue from distribution and aggregation of content as a result of the organic growth of Stream TK, as well as the doubled revenue of the advertising segment.

• OIBDA excluding one-time write-offs for 2011 decreased by 52.6% to US $19.3 million compared to US $40.8 million in the same period in 2010. OIBDA margin was 19.2%. The OIBDA of SMM was significantly affected by the decrease in the revenue of CJSC Russian World Studios (RWS) and the recognition of the impairment of the RWS library due to the revision of the forecast for secondary sales.

• In 2011, net loss excluding one-time write-offs increased from 2010 net loss to US $35.3 million.

• The debt burden decreased by 13.1% compared to 2010 to US $83.1 million.

• The subscriber base of Stream TK increased by 15.8% to 6.2 million compared to 2010.
• The share of revenue from advertising TK Stream increased by 2.6 percentage points in 2011 and amounted to 12.6%.
• The volume of the RWS library grew by 21.6% to 1471 hours.
• The number of hours of own production and the number of hours of RWS content sold in 2011 amounted to 261 hours and 295 hours, respectively.

Peter Gervey is the Peter Gervi

Yevtushenkov was well aware that he did not succeed in a big breakthrough in the media, and in November 2011 he hired Peter Gervi, the founder of CTC Media, as the manager of SMM. Sistema is unhappy with the slow growth of SMM, sources in the holding explained then, Gervi was supposed to create points of growth for the company and sharply increase its capitalization. But Gervi worked at Sistema for less than a year. The holding did not approve of the SMM development strategy developed by him. Gervi drew beautiful plans, asked for multibillion-dollar investments in "new media," but could not prove to Yevtushenkov that these investments were guaranteed to pay off.

RWS raises a loan of 1.2 billion rubles secured by a video content library

In July 2011, the RWS film company attracted a loan from ING Bank and Sberbank of Russia secured by a video content library. The size of the 3-year club secured loan provided to RWS on the security of rights to the video content library owned by the company amounted to 1.2 billion rubles, the participants in the club loan were ING and Sberbank banks, the guarantor was Sistema Mass Media OJSC.

2007: Sale of part of the package of Literaturnaya Gazeta

On May 16, 2007, AFK Sistema announced the sale of 39.9 percent of the shares of its Publishing House Literaturnaya Gazeta OJSC.

According to the publication, the buyer of the shares was the Regional Public Fund for the Support of the Development of Domestic Literature (ROF), which is headed by the editor-in-chief of Literaturnaya Gazeta, writer Yury Polyakov. For the sale of part of the shares of the publishing house, Sistema raised $3.2 million, thus valuing the entire house at $8 million.

After the transaction with the "System":

• 20.1 percent of the shares remained owned by Sistema Mass Media OJSC,
• 25.03 percent - from the affiliated CJSC "Investment Company Mass Media,"
• 14.97 percent is owned by the Moscow government.

The declared circulation of the newspaper at that time was 83 thousand copies.

According to Kommersant, the holding is not averse to selling the remaining shares of Literaturka and the Rossiya newspaper.

2006: Sale of the newspaper "Metro"

In 2006, the holding sold 59.4 percent of the Metro newspaper to structures close to the head of the Moscow metro, Dmitry Gaev.

2004: Entry into the pay-TV market

In 2004, Leiviman promised that SMM would become a "pioneer in many areas of broadcasting" and spend up to $150 million on a project to create "multimedia networks" with video viewing, game download and e-commerce services. Sistema did not become the leader in the pay TV market. By the end of 2015, its paid channels generate stable revenue, but are not among the top 20 most popular in the country.

2000: Failed film investment

In the early 2000s Yevtushenkov became interested in cinema. SMM became a co-owner of the production company Thema Production, created by Mikhail Dunaev and Jimmy de Brabant. This company was going to produce "mass English-language cinema" and shoot it in Europe. Yevtushenkov agreed to invest "tens of millions of dollars" in such paintings. At first, everything developed perfectly: Thema Production co-produced films by such eminent directors as Woody Allen and Werner Herzog. Allen's Match Point participated in the Cannes Film Festival, and Herzog's film claimed an Oscar, but never received a nomination. The following investments in cinema became less and less successful, Yevtushenkov refused to produce, and Dunaeva fired.

In 2005, Sistema announced that it would build a large film studio in St. Petersburg, which would become a platform for filming not only Russian films, but also Hollywood projects. Construction costs grew with the scale of the project - $7-8 million to $150 million. But Hollywood and European film companies did not shoot here. All this time, Yevtushenkov tried to find a major partner for the studio, but to no avail. In 2010, he agreed to launch the second pavilion together with the All-Russian State Television and Radio Broadcasting Company, but construction did not begin. In 2012, he practically convinced the state to unite this film studio and Lenfilm, but several Russian directors sharply opposed the project. In the same year, SMM closed a television studio in Moscow due to a lack of orders, and on December 2015, the St. Petersburg film studio Sistema announced that for the same reasons it would give half of the space for exhibitions and cultural events.

Sistema did not succeed in creating a vertically integrated cinema holding: in 2007, AFK previously agreed to merge its film company with the largest cinema chain Karo at that time, but the deal was again not concluded.

1997: Yevtushenkov buys TVC channel and other media assets

Yevtushenkov acquired the first media assets back in 1997, three years after he created Sistema. It was the TVC channel (used primarily as a political resource in the campaign of former mayor Moscow Yuri Luzhkov), the Voyage and Rest magazine and the newspapers Metro, Kultura, Smena, Literaturnaya Gazeta, Poccia.

TVC quickly returned to state ownership, and the newspapers with the Sistema magazines sold or closed in the next 10 years. Also, the businessman quickly parted with those acquired in the late 1990s. radio stations - "Moscow Says" and "Public Russian Radio." As the then general director of SMM Alexander Leyviman explained, the radio business was sold because it is "too small."

At the same time, Yevtushenkov said that his Maxim agency was one of the three largest in the advertising market. The agency failed to save these positions.

Notes