DSight, a business intelligence agency focusing on the Russian venture market, has just released the English version of its latest yearly report.
Russian venture investments amounted to at least $868 million in 2019 (excluding exits), up 13% year-on-year, says the report. Although this performance remains very modest by international comparison (USA: $136 billion, UK: $14.3 billion, Germany: $6.6 billion), it set “a historic record,” claims DSight.
Much of this growth is attributed to increasing deal amounts. These amounts grew nearly two-fold in seed stage transactions (to $0.2 million), more than three-fold (to $1.1 million) at the “start-up” phase and 1.6 times (to $78 million) as far as mature companies were concerned.
Meanwhile, only 230 transactions were reported in 2019, down 26% from 2018. The number of exits remained stable at 38.
Russian venture market evolutions 2016-2019
On the pre-seed and seed investment scene, a new generation angel investors and micro VCs surfaced while corporations and corporate accelerators continued asserting themselves aggressively.
Niche funds continued springing up in such segments as fintech, agritech, sports tech, and industrial tech. Several independent funds refocused on fresh business models — from venture loans to venture builders or studios.
Meanwhile, all private VC funds, with few exceptions, set their sights on international projects or Russian ones operating globally, notes DSight co-founder Arseniy Dabbakh.
B2B and B2C companies were equally attractive to investors, with 112 and 118 transactions, respectively. In terms of amount, B2C outpaced B2B investment ($537 million vs. $332 million). Deals involving business software companies turned out to be the most numerous.
Deep tech companies demonstrated a strong appeal, particularly in the fields of machine learning, 5G Internet, IoT, medicine technology, industrial safety and personal data protection.
“In the early 2010s, by contrast, marketplaces and various aggregators startups were more popular; now this era has come to an end,” commented Vitaly Mzokov, the head of Kaspersky Innovation Hub.
Notable deals of the year
Among the year’s largest deals were the following, as reported by East-West Digital News:
- $400 million committed for the AliExpress Russia social commerce JV
- Ozon’s $150 million convertible loan
- Ivi.ru’s $40 million round of funding
2019 was rich in large acquisitions involving foreign players:
- Naspers’ full acquisition of Avito at a $3.85 billion valuation
- BlaBlaCar’s acquisition of bus ticketing platform Busfor
- Huawei’s acquisition of Vocord
- Russian-founded Veam sold to major US fund
- Russian-founded Nginx sold to US company
Methodology
DSight used public data in its research. They considered only transactions involving startups with a Russian legal entity, whereas some other venture studies tend to cover all transactions involving Russian investors, including those involving foreign legal entities.
DSight was less restrictive when it came to covering large transactions. Deals of up to $150 million are included in this analysis, whenever the concerned companies had previously dealt with VC investors.
Other reports with different methodologies offer fairly different market numbers. Thus, an investor ranking prepared by state fund of fund RVC, encompassed a larger number of deals (776 vs. 230 for DSight), but did not seem to cover some large ones. Hence a lower market volume estimate ($522 million vs. $868 million for DSight).
Another study, just released by Skolkovo Ventures, puts Russia’s venture transaction volume last year at some $966 million (622 billion rubles), based on just 214 deals analyzed.
The Dsight report includes contributions from CrunchBase, DS Law, EY, Kaspersky, investor association NAIMA and East-West Digital News. Click here to download your free copy.
