As Runa Capital announced the launch of its second fund, Runa Capital II, with a focus on Europe, its managing partner Dmitry Chikhachev shared with East-West Digital News his views on the globalization of the startup and venture industry and the international positioning of his fund, which initially focused on Russia.
Runa Capital was initially created to invest in Russia. Then the strategy progressively expanded to other areas – and this larger vision is confirmed in Runa II. Does this mean that there are no more interesting startups in Russia?
Since we focus on specific tech areas and we are looking for best teams within those areas, creating artificial geography limitations is irrelevant. The best tech talents may come from anywhere – and this of course includes Russia. This country remains part of our strategy due to its good supply of engineering talent and our greater ability to generate a local deal flow.
Lately, several funds with Russian connections or origins have been very much focused on California. How do Europe, the USA or Asia compare from your investment point of view?
Fist of all, we are not an exception, and California is part of our target areas. For example, one of our exits, StopTheHacker (acquired by CloudFlare in 2014), was based in the Silicon Valley. But the world of technology is much larger than Silicon Valley!
In terms of market size, the USA is undoubtably the largest one, but at the same time the most competitive. Europe is almost as big as the USA, but fragmented by country borders. Asia is the fastest growing and the least competitive market – and in this perspective it might be the most attractive for startups.
In terms of talent, Europe, Russia and USA are close, as the quality of engineering education is high. Asia is still behind, but we hope they catch up at some point.
When refering to Europe, do you have any countries in mind in particular?
So far we have invested in the UK, France, Germany, Romania, the Netherlands and Israel. Plus, we have potential deals from two more European countries.
The European standards of engineering education are very high, with only small variations from country to country. However, in terms of quantity of talent, the largest economies obviously lead (UK, Germany, France). We will also pay special attention to Baltic/Nordic countries and South-Eastern Europe.
Runa II’s scope includes Eastern Europe: does this encompass Ukraine?
The technology business should be outside of politics, and we are sad about what is going on and about the negative emotional background created by the recent events. But as I said, out goal is to find the best teams, and we do not plan to discriminate on any basis.
The “Russia” label is not very appealing in Europe today. Will you present yourself as a Russian fund? Can you manage a more international image while keeping Russian headquarters, Russian key staff, etc?
We are not a Russian fund as witnessed by the international origin of the capital we’ve raised and by the international mix in our portfolio. Today, business (in the same way as science) is international by essence and discriminating us by the fact that several of our partners were born in Russia and speak Russian would be as wrong as discriminating startups by geography. Since Russia remains a part of our strategy, we’ll keep an office and staff in Russia but we are considering opening a second office in Western Europe. This would make sense from a logistics point of views, as nearly half of our portfolio is based there already.
- Dmitry Chikhachev holds an MS degree in Applied Mathematics and Physics from the Moscow Institute of Physics and Technology as well as an MBA from the American Institute of Business and Economics. Before coming to the venture business, he held executive positions in a variety of sectors – from automated trade, to games, to telecom equipment and services – and in a variety of countries. He speaks English and French in addition to his native Russian.
