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The Russian venture capital market grew more than by 10 times since 2007
EY represents analytical report "The World and Russian venture capital market research for 2007-2013", prepared with the support of RVC. The large-scale investigation not only sums up the key quantitative and qualitative results achieved in the period of the Russian venture capital (VC) market formation, but also contains a number of important findings about current state of the industry taking into account the tendencies of development of the global VC industry.
According to results of the research, for the last several years the Russian VC market has shown multiple growth: from $108 million in 2007 to $1213 million in 2012. Owing to record volume of transactions in 2012, Russia came to the 2nd place in Europe and to the 5th in the world by the venture investments volume.
Last seven years were characterized by essential increase and growth of efficiency of the VC infrastructure in Russia: the number of funds, business incubators, and active business angels has increased. At the same time, the industry remains to be competitive: management companies with good history of investments and the developed reputation continue to successfully attract new money; however neither of these companies control an essential share of the market yet. This is a distinctive feature of the developing VC markets which haven't entered a phase of consolidation yet.
According to the report "The World and Russian venture capital market research for 2007-2013", the most attractive to technological businessmen and investors are the two segments of Russian VC market: information technologies and consumer services. In particular, 2013 showed that social networks and recommendatory services still didn't get out of fashion though their contribution to cumulative statistics of the market is noticeable more likely due to the number of transactions, instead of their volume. The segment of mobile applications, possessing good prospects from the point of view of the Russian products' and companies' entry on the global market, is significant also.
The research marks serious structural changes of the Russian VC market. During the period of the industry formation (2007−2012) the crucial role belonged to the state and to created in the country institutes of development which were solving problems of the financial resources availability and the infrastructure formation. Lately the share of the state investments in the Russian VC market significantly decreased, and the most part of transactions is being carried out now by private Russian and foreign investors. So, for example, the share of investments of the funds created with the RVC support in the cumulative volume of all VC transactions in the Russian market decreased from 39% in 2010 to 13% following the three quarters of 2013 results, with the volume of the RVC funds' investment remained approximately at one and the same level.
The Russian VC market still remains in the early stage of its development. The number of sales of the companies to investors (exits) in the market is insignificant as the Russian companies are not prepared yet to buy actively startups, and the practice of sales to foreign strategic investors is not sufficiently widespread. At the same time, for the last several years a number of successful exits of venture investors (Yandex − $1435 million, "Tinkoff Credit Systems" − $1087 million, and some other) was recorded in the Russian market.
Global trends on the VC market exert serious influence on the Russian VC industry. The monetary policy of many countries increases availability of funds to the Russian companies, seeking to come to the international level. The most attractive to the Russian players is the American market owing to its volume and know-how. The Russian technological entrepreneurs successfully use the approved western business models, and some of talented Russian developers start their own businesses in the Silicon Valley.
Alexander Ivlev, Managing Partner, EY (Russia), makes comments: "The VC sector continues to be exposed to difficulties caused by deep financial crisis. However, despite the severe conditions, the Russian VC market shows good indicators. It means that the efforts of state organizations and the market participants conduct to creation of informational open business ecosystem and that the future is connected first of all with creation of innovative economy".
Igor Agamirzyan, Director General, RVC, emphasizes: "Findings of the research confirmed our experts' opinion: domestic VC market comes to new level of its development. At this stage, we see our task in correction of disproportions existing today in the market − phasic, connected with insufficient availability of capital at seed and pre-seed stages of innovative projects, and sectoral, when in the majority of priority branches, except the Internet, electronic commerce and communications, the lack of capital is noted. We'll direct our efforts to infrastructure development in regions, stimulation of the human capital inflow to knowledge-intensive branches, including – through the development of cooperation with universities".
The full version of the Report is available on the RVC site: http://www.rusventure.ru/ru/programm/analytics/docs/201402_RVC_EY_venture_markets_RU.pdf
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