Venture funds with Russian capital or Russian origins were far from being inactive this summer, which saw more than two dozens of significant deals made public and several new funds and accelerators launched. The invest-abroad trend, which started a few years ago, has been accelerating recently, as witnessed by the number of deals which involved US, Israeli, Asian and Australian startups this summer.
However, Russia’s domestic venture scene also saw some impressive developments, including a $40 million round of funding for an online broker of used cars and the emergence of a venture fund worth up to $300 million.
Russian money for US startups
Nearly 10 transactions involving US startups and Russian money were reported during the summer:
- In early August American Well, a Boston-based telemedicine startup, announced that it received $5 million from InVenture Partners.
- Cinarra Systems secured $20 million in a Series B funding round which involved SoftBank, the Japan-based telecom subsidiary of SoftBank Group Corp as well Siguler Guff & Company and Almaz Capital, two funds with activities in both the USA and Russia. Almaz had led Cinarra’s previous round in 2013.
- In July Driveway Software, a Silicon Valley startup providing smartphone-based telematics solutions, raised $10 million in a funding round led by Ervington Investments, property of Russian billionaire Roman Abramovich. Driveway’s seed round, in 2013, involved Russian funds AltaIR Capital, IMI.VC, and Kernel Capital.
- 3D sensor developer Occipital Inc. announced in July a $13 million Series B round with the participation of Grishin Robotics, a fund launched in 2012 by Mail.ru group CEO Dmitry Grishin. Also involved in the deal were Intel Capital, Shea Ventures and existing investor Foundry Group.
- That same month Maxfield Capital invested $500,000 in OnFarm, a California-based agrotech startup.
- Prosper, a P2P lending platform, secured $13 million from Moscow-based Target Ventures.
- Chicago-based social fintech platform TradingView received $3 million from iTech Capital, a fund with Russian origins now operating globally, in exchange for a minority stake. Also participating in this Series A round, which totalled $3.6 million, were Chicago startup accelerator TechStars and US business angels.
- In August San Francisco-based Virool received $5 million from Flint Capital, as reported by Firrma.ru. Founded in 2011 by a Russian team, Virool defines itself as “a self-serve social video advertising platform that allows anyone with a video to reach their desired target audience on Facebook, mobile phones and niche sites.”
- Flint also injected $4 million in WalkMe, an interactive online guidance and engagement platform. This cloud-based service helps professionals – for example, customer service managers – “guide and engage prospects, customers, employees and partners through any online experience.”
The positioning and operations of these and other funds with Russian origins are increasingly international. Over the past few years, Almaz Capital – which initially targeted startups from Russia and neighboring countries – has invested in a number of US startups, with a particular focus on software projects founded by Russian émigrés in the Valley.
Target Ventures, which opened an office in the Valley this past spring, announced a new office in Germany – a country where the fund already invested several times. Thus in 2014 it took part in Delivery Hero’s $88 million Series E round; it also led a €20 million round for international cruise booking portal Dreamlines.
During the summer Runa Capital, another Moscow-based fund, opened an office in Silicon Valley, while Starta Capital, a fund which started in Moscow last year with just $3 million, launched an accelerator in New York City.
In Israel
- In late June Klear, formerly known as Twtrland, raised $1.5 million in new funding from Altair and TMT Investments, two international venture funds with Russian backers. The company is developing a “social intelligence platform that helps you do smarter marketing.”
- LogDog, a mobile app that helps protect online accounts from being hacked, raised $3.5 million in new funding, reported Techcrunch. The round, led by Tel Aviv-based BRM Group, included a contribution from Maxfield Capital, which also took part took part in the previous round in Nov. 2014.
- In August Geektime revealed that advanced battery developer StoreDot had raised $18 million. The round of funding involved Norma Investments Limited on behalf of Roman Abramovich, as well as Singulariteam and Samsung Ventures. The Russian billionaire had already invested $10 million in the company in 2014, according to Firrma.ru.
Meanwhile, Flint Capital fund announced that a new Israeli partner, Levi Raiz, had joined its team. Initially targeting the Russian market, the Moscow-based fund began investing in Israel in 2014.
In Asia
Life.SREDA, a fund launched in Moscow in 2012 to invest in fintech and mobile project, confirmed its shift to the Asian market.
- The Russian fund took part, among other investors, in a $15 million round for Fastacash, a Singapore-based social payment platform. The round was led by Rising Dragon Singapore.
- Life.SREDA also signed a partnership agreement with Marvelstone to invest $20 million in fintech startups. The Seoul-based fund will share its expertise in Asian markets while Life.Sreda will support startups with its fintech expertise and international networks. The memorandum also involves the companies’ respective startup accelerators: Marvelstone’s 10K in South Korea and Life.SREDA’s InspirAsia in Singapore.
- On its side, in late June, Frontier Ventures participated in a $8 million round for Singapore-based restaurant reservation service Chope.
Originally targeting Russian startups, Frontier Ventures recently moved its head office to Singapore to invest in Southeast Asian startups.
Also screening the region is Skolkovo. The Russian tech hub took an active part in the Echelon Asia Summit, which was held in Singapore in late June. Skolkovo was also among the organizers of Seoul’s Business Week in early September, where hundreds of Russian and Korean players met to develop business ties between the two countries.
In other countries
- In July BitFury, a major Bitcoin Blockchain infrastructure provider and transaction processing company, secured $20 million in funding from Russia’s iTech Capital, Georgian Co-Investment Fund and DRW Venture Capital. Founded in 2011 by Valery Vavilov and Valery Nebesny, BitFury has management offices in San Francisco, Washington, D.C. and Amsterdam, as well as data-centers in Iceland and the Republic of Georgia.
- That same month, consulting marketplace Expert360 received 4.1 million Australian dollars (approximately $3.1 million) in a funding round led by Frontier Ventures, reported Firrma.ru. This was the first-ever significant venture deal reported in Australia involving a Russian fund.
Russian startups still appealing to investors
Some optimism returned to the declining Russian venture market when CarPrice.ru, a major Russian online broker of used car, announced that it had raised $40 million in a Series B funding round in late July. The round was led by Baring Vostok Private Equity Fund V with the participation of Almaz Capital and other unnamed investors. The startup is now considering expansion to such new markets as Europe, Asia and South America.
Among the other notable deals of the summer were the following:
- Oskar Hartmann and Vladimir Lupenko invested 100 million rubles (approximately $1.5 million) in their new project Aktivo.ru. This platform allows Russian citizens to acquire shares in real estate properties via a simple and almost immediate online procedure, reported online publication Megamozg.
- In August API.ai raised $3 million from an international investor consortium to develop further its voice user interface (VUI) technology intended for gadget and app developers. This investment round was reportedly led by SAIC Capital, an affiliate of Chinese car manufacturer SAIC Motor. Intel Capital, Alpine Technology Fund and Motorola Solutions Venture Capital joined as co-investors, the Skolkovo Foundation reported.
- GeoCV, a startup which is developing a mobile app for creating 3D-models of interiors, received $1.15 million in August from two Moscow-based funds, Emery Capital and Starta Capital. In a previous round in January this year GeoCV received $100k investment from Starta Capital and the Moscow Seed Fund.
- In early September GetIntent secured $1 million from Moscow-based fund Buran VC and German businessman Thomas Falk. GetIntent, which has offices in Moscow and New York City, provides transparent and convenient access to RTB infrastructure. Its platform handles all kinds of ad formats.
- In August HR portal JungleJobs attracted $500,000 from Moscow-based funds Impulse VC (which is backed by Roman Abramovich) and TheUntitled, according to Rusbase.
- In July MenuForYou, a Moscow-based startup which has developed a restaurant management solution, received $400,000 from B2B Lab in exchange for a stake of at least 25%, wrote Firrma.ru.
- In late June e-publishing service Ridero secured $850.000 from an unnamed individual investor, as reported by industry media. The Russian startup, which was founded in 2013, intends to develop activities in Poland and Germany.
- Takebus raised 3 million rubles (approximately $500,000) from Moscow Seed Fund, the venture arm of the Moscow city authorities, and individual investor Oleg Evseenkov, as reported by Firrma.ru in early August. Last year this startup, which sells bus tickets online, received an investment from the IIDF (FRII).
Also worthy of note is Rambler’s acquisition of a majority stake in RCO, a major software publisher and service provider in the field of computational linguistics and unstructured data analysis. The Russian media estimated that the deal amounted to some 75 million rubles (approximately $1.25 million).
New venture funds
The launch of three venture funds this summer served to confirm that the Russian venture industry was far from agony.
- Focusing on B2B solutions for the consumer segment, B2B Lab was launched in July by Alexander Boiko and Vadim Potrashkov, two shareholders of Russia’s leading B2B marketplace B2B-center.ru. To begin with, the B2B Lab intends to invest $2 million in up to five projects until the end of the year. Its first investment went to MenuForYou (see above).
- Dagestani oligarch Ziyavudin Magomedov announced his intention to invest “up to $300 million” in startups from Russia and other countries. The new fund, christened Caspian VC Partners (CVC), is managed by William Shor, a former executive at Summa, a group owned by Magomedov. CVC will invest from $1 million to $5 million in startups in the fields of transportation, agriculture, industry, the consumer sector, and robotics, reported Russian business daily Kommersant. Among CVC’s first portfolio companies are Uber, Uber China and Hyperloop, which develops innovative transportation technologies.
- Focusing on medicine and biotech, another fund, Primer Capital, has partnered with Skolkovo, VEB Innovations and other Russian organizations. Its initial capital amounts to a 100 million ruble capital (approximately $1.5 million), according to Rusbase.
New accelerators
Three new accelerators appeared in Russia:
- MegaBeta, which will focus on digital medicine, in partnership with investment firm Medme, as reported by Rusbase;
- Numa Moscow, the Russian branch of a major, internationally-oriented French accelerator, which has teamed up with Runa Capital;
- 500 Startups, a leading US accelerator, which in early September announced the appointment of Diana Moldavsky to manage operations in Russia and other Eastern European countries.
