J’son & Partners Consulting presents short results of the Research: Russian Venture Investment Market, Results of 2014.
Venture market is one of the key financing sources for innovational projects. Venture market volume in 2014 was 447,5 mln.USD, incl.new financing - 258,2 mln.USD, “exits” – 189,3 mln.USD. J’son & Partners Consulting’s experts mark considerable decrease of investment activity vs 2013 on the market, new financing volume decreased for 26% (from 347 mln.USD till 258 mln.USD).
During the analysis the following data had been used: actual received venture investments made by business angels, investment companies, private, corporate and government venture funds during one round of investments. If a company received financing in two or more rounds, each round was counted as a separate deal. Under venture financing was considered a purchase of share, charter capital of new or growing companies, and the purchased share was less then controlling share. Investments are mainly aimed at business development and not on the buyout of current shareholders (founders) of the company.
Investments, made by companies’ founders in the total volume of new financing, private equity, made in venture companies on the mature stage of development, had also been considered.
J’son & Partners Consulting experts specified the following types of deals:
1) Russian startup deals;
2) Investments in foreign start ups – participation of Russian investors;
3) Syndicated deals in Russian and foreign projects.
What Happened on Russian Venture Market in 2014
Among key news and actions on Russian Venture market in 2014, J’son & Partners Consulting’s experts specified the following:
1) Russian President signed the Law About Changes of the Second Chapter of Russian Tax Code – aimed at support of small business. Tax payers can use tax rates at 0% during 2 tax periods. More to this, Vladimir Putin signed the Law about de-offshore, which obliged tax payers to report about participation in foreign companies.
2) Luxemburg Fund Mangrove Capital Partners closed its operational activity on Russian territory.
3) 3 new techno parks were opened in Russia: Universitetsky in Sverdlovsk Region, Rameev in Penza and Zhigulevskaya Dolina in Tolyatti.
4) 4 start-ups from IIDF accelerator stopped its development: HotReader, MaminaShkola, Bustourpro, Online Dealer.
5) 1 December 2014: Smart Park – business incubator was officially launched in Ufa. Incubator – is a working space, business-accelerator and communication platform.
6) Alexander Borodich became business angel of the year, according to the IV Yearly Award NABA
7) Skolkovo Fund and Energoprom Group signed partnership agreement in November, under which RAD center will be constructed on the territory of Innovational Center Skolkovo.
8) Business angel Arkadiy Moreins launched anti-accelerator for start-ups in December 2014.
9) Sberbank and Silicon Valley Bank launched subsidiary, which will provide debt financing to innovational companies.
10) University Innopolice became a partner of National Singapore University.
11) Yandex purchased Auto.ru in June 2014.
12) Synergy Innovations launched International Center of Perspective Researches in Education in the city Shenzhen based on Research and Scientific Institute Tsinghua.
13) Microsoft opened second technological center in Moscow. The value of the center is estimated in 15 mln.USD.
The following venture funds had been launched in 2014:
- Ocean Ventures;
- Starta Capital Accessor Fund I;
- Run Capital;
- FinSight Ventures;
- DST Global V;
- Joined Fund RBC and R-Farm;
- New Venture Fund Life.Sreda;
- Second FundRuna Capital;
- Gagarin Capital;
- Ingate Ventures;
- Restart Capital.
Investments in Russian Projects
J’son & Partners Consulting’s consultants didn’t include the following deals with Russian companies in market estimations:
1) Pavel Durov (founder of social network Vkontakte) sold his share - due to doubts in the economic base of the deal;
2) MTS and AFK Systema invested in eShop Ozon – due to the character of the deal – private equity;
3) American Company Ingram Micro purchased share in Parallels company – due the character of the deal – not venture one;
4) Yandex purchased Auto.ru – as the company didn’t attract venture investments from the beginning;
5) Deals with HeadHunter, RuTube, SafeData participation;
6) IPO of Russian companies during 2013-2014.
J’son & Partners Consulting’s experts estimated Russian venture market in 447,5 mln.USD. The number of deals during reported period – 319. Internet Initiatives Development Fund – is a leader by number of deals for the reported period – 104 invested projects, 3 syndicated deals.
In money value the volume of new financing decreased for 26% vs 2013, volume of “exits” increased 5 fold – 189,3 mln.USD. In general, 9 “exits” finished in 2013 for 1,62 bln.UDF, including IPO – 1,58 bln.USD.
New Financing; “Exits”
J’son & Partners Consulting: the number of new financing deals decreased for 5% in 2014, while “exits” increased 13 times (excl.IPO in 2013). Analysts explained such major growth of “exits” by worsening macroeconomic situation in Russian Federation and by planned end of investment cycles by venture funds.
New Financing; “Exits”
J’son & Partners Consulting’s specialists marked growing trend of government investors’ influence on the venture market. This tendency continued in 2014, explained by the high activity of Internet Initiatives Development Fund.
Venture Funds; Corporate Investors; Founders; Government Funds; Business-Angels; Others.
The most active months by number of deals are February, June and September – quarterly acceptance of start-ups by Internet Initiatives Development Fund.
January; February; March; April; May; June; July; August; September; October; November; December
The analysis of investment projects revealed that share of ICT projects decreased in $, while the number of deals remained almost the same. Services is the most fast growing industry: the number of deals increased 5 times vs 2013. The number of deals in Technologies and Medicine industries’ projects increased two fold.
Investments into Foreign Projects
Investments in foreign projects with participation of Russian investors increased in numbers and decreased in $. According to J’son & Partners Consulting consultants estimations’, investments in foreign projects (excl. syndicated deals in 2014) was 92.2 mln.USD in 2014. Increase in the number of deals with foreign projects was 7,5% vs 2013; deals’ volume decreased for 1,4 %.
In 2014 Russian Venture Market volume was 447,5 bln.USD or 319 deals.
The activity is slowing down on venture market: the number of deals in new financing remained at the same level, but investments volume decreased for 26% vs 2013. Number of “exists” increased 5 fold during 2014, number of deals – 13 times.
Among positive factors – participation of Russian investors in international processes: increasing number of investments into foreign projects and number of syndicated deals.
The most attractive industries for investors are still ICT and Retail Trade.
New venture funds are established despite the unstable economic situation.
Detailed Results of the Research are Presented in the Full Version of the Report: Russian Venture Market, Results of 2014
Methodology and Sources of Information
Chapter 1. Main Activities on Russian Venture Market in 2014
Chapter 2. Russian Venture Market in 2014
2.1. Brief results of 2014
2.2. Market volume, pcs. and $
2.3. Dynamics of venture deals in 2014
2.4. Classification of deals by round of investments
2.5. Classification of deals by volume of investments
2.6. Largest venture deals in Russia in 2014
Chapter 3. Analysis of Russian Projects in 2014
3.1. General description of projects
3.2. Industry structure of projects
3.3. Analysis of investments in B2B and B2C segments
3.4. Support of mobile apps
3.5. Analysis of “survived” projects, launched in 2014
Chapter 4. Investors on Russian Venture Market, 2014
4.1. General description of investors
4.2. Geographical classification of investors
4.3. Investors’ typology
4.4. Profiles of largest investors
Chapter 5. Cash-out Deals in 2014
5.1. General description of investors’ “exists” in 2014
5.2. Largest “exits”
Chapter 6. Foreign Projects
6.1. Analysis of foreign projects in 2014
6.2. Structure of foreign projects
Chapter 7. Syndicated Deals
7.1. General description, 2014
7.2. Largest syndicated deals
7.3. Syndicated deals with foreign investors
7.4. Syndicated deals in foreign projects
List of Companies Mentioned in the Report
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.