An VC firm headquartered in Berlin with €700 million in assets under management, Target Global has just opened an office in London, coming in addition to its Moscow and Tel Aviv offices. In this interview, the firm’s General Partner Mike Lobanov shared his views about the Russian venture market and the prospects of Europe’s key startup ecosystems.
How did your team come to venture activity?
Prior to launching Target Global, we were involved in asset management: we invested in bonds and shares, traded in volatile options, and grain, oil and gas futures. But we wanted to be entrepreneurs and we were looking for something at the junction of what we were good at (asset management) and what we wanted to do (entrepreneurship). We found venture activity to be right at that junction.
Who are your fund’s LPs?
We have about 150 investors. There are some institutional investors, some individual investors, and family offices – coming from Russia, Germany and Israel. Among these LPs are the insurance company Allianz, the subdivision of the large bank Northern Trust 50 South, the former Chief Managing Director of Alfa Bank Alexey Marey, the founders of Lamoda.ru [a leading Russian online retailer – editor] Niels Tonsen and Dominik Picker, and many others.
Some members of your team, including the key figures, come from Russia. Does Target Global still maintainties with Russia? Are you ready to invest in the Russian companies?
There are interesting projects in Russia. We had several successful exits there selling Foodfox to Yandex and TimePad to [prominent tech businessman] Sergey Solonin. Recently we have invested in Russian fintech projects. Right now, oyr portfolio includes Pravoved.ru, Newton Broker and Osome. And we’re closing another deal right now in Russia.
However, this venture capital ecosystem isn’t mature yet, and the scarcity of buyers severely limits the profit potential from this activity. This is why we don’t have that many Russian companies in our portfolio, and invest more actively in other countries.
Last month Target Global opened a new office in London, adding to those in Berlin, Moscow and Tel Aviv. Don’t you think Brexit could have a negative impact on London’s startup ecosystem?
We’ve always been active in Great Britain: with or without Brexit, London will continue to be one of the world’s most innovative technological hubs with high growth rate. Of course, Brexit can have an impact on the economy for the next several years, but it doesn’t mean opportunities will disappear. Britain continues to produce entrepreneurs and startups that are capable of succeeding globally. Brexit brings only a nuance to that picture, so it has no impact on our investment decisions in the UK.
In which other European countries would you consider developing activities in the future? Do you have plans for France or Spain, which are other major startup ecosystems in Europe?
Right now, we are present in four cities: our headquarters are in Berlin and we have offices in London, Moscow and Tel Aviv. Last year, we made a number of investments in Spain – in Travelperk, a B2B travel platform, and Badi, a service to find rooms for rent or flatmates. These companies are among the most dynamic ones in the region. We’re seriously considering opening another office in Barcelona and have already delegated our first employee there.
France is somewhat out of our focus for the moment because competition is fierce there. In addition, the French market is quite specific, both in terms of language barrier and local business culture.
