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$900m in, $2.3b out - the Russian venture industry in 2013

0 15 May 2014

J’son & Partners have become the latest organisation to produce an overview of the Russian venture market in 2013, following in the footsteps of PwC, Rye, Mann & Gore, Fastlane Ventures, Rusbase and E&Y

According to J’son, who included all deals involving either Russian startups or Russian investors, there were 419 rounds in 2013 totalling $3.25 billion. While the vast majority of deals were cash-in (406), these added up to just $912.5 million. In comparison, just 13 cash-out deals totalled $2.34 billion. 

This represented 25% growth on 2012, and investors surveyed by J’son reckon that the sector will grow by around 20% this year. 

Some other key statistics in J’son’s report are:

  • Foreign investors were involved in 15% of deals, which were worth around 30% of total investment. 
  • Russian projects were valued slightly higher than foreign projects, especially at the Round B stage, where they were worth 30% more on average. 
  • The share of syndicate deals is quite high - 36%.
  • B2C startups dominate the market - they were involved in 72% of the deals and raised 82% of the funds.
  • IT startups are the most popular - they completed 317 rounds, 160 of which were for internet services.
  • The e-commerce sector attracted the most investment ($371.6 million)
  • The government sponsored Internet Initiatives Development Fund (FRII in Russian) invested in the largest number of projects. 

In addition to gathering data, the report’s compilers also surveyed local investors. On average, each received 1200 applications from startups, of which 90% were IT-related. Investors met with around 10% of applicants, and ultimately funded just 1%. 

Compared to the US, venture investment in Russia represents a small share of GDP. In the States it makes up 0.17%, against 0.04% in Russia. However, Russia is on a par with Europe and ahead of China, where venture investment was worth just 0.03% of GDP. 

The report’s authors conclude that the market has now reached a sufficiently mature stage to see significant exits. However, it also continues to develop, as seen from the large number of seed and early stage deals.

They also suggest that the involvement of Russian investors in foreign projects and foreign investors in Russian projects is a positive sign. 

Source: J'son & Partners

Top image via Shutterstock

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