Venture investment volumes in Russia remained at a rather high level in 2014, but state funds accounted for an important fraction of this activity while many foreign funds decreased or ceased operations in Russia. This is one of the key findings of the 2014 report by RMG, an independent Moscow-based investment company, whose English version has just been released in partnership with East-West Digital News.
The Russian venture market in 2014: Key numbers
The Russian venture market in 2014: Main findings
No volume contraction was observed in 2014
- The Russian VC market reaching $668 mln in total.* However, state-related funds and PPP activity were largely responsible for market growth.
- For all investment stages except the growth stage, the medium deal size shrank (by 33% on average).
- The IT sector is still dominating in total volumes and average transaction amounts. The most attractive market niches in 2014 were software development, media and fintech as well as industrial technologies.
Government influence on the market increased noticeably
- Nearly a dozen state-owned and semi-state funds appearing in the investment scene. Among the most active were the Skolkovo Foundation, Moscow Seed Fund and FRII (IIDF).
- The main part of project financing at the seed stage came from state-owned funds, having opposed PPPs in the past. Business angels activities were rare and non-system-based.
Due to unfavorable geopolitical and economic conditions, VC funds faced new issues.
- Several Russian funds began selling their domestic portfolio and/or suspended operations in Russia.
- A growing number of cross-border deals (Russia-based VC fund backing foreign projects) took place with Israel, South-East Asia, the Baltic States and Southern Europe becoming popular destinations in addition to Silicon Valley.
- On the positive side, the legal environment has become more favorable to investors as new terms and notions were introduced in Russian legislation in 2014-15.
Please click here to download the full report.
Topics:
Data & Reports, Finance, M&A, Policies, Venture / Private equity
