2017 became a landmark for RVC: RVC approved a development strategy for 2017-2030 which defines the mission, strategic goal and tools that ensure the work of company’s key areas: development and implementation of financial and non-financial instruments for the development of the venture investment and technological entrepreneurship market, stimulation of the creation of an own venture investment industry in Russia and execution of the functions of the Project Office of the National Technological Initiative (NTI).
The strategic RVC objective will be implemented mainly through the creation of new funds with the involvement of professional investors, investments in existing funds, technology companies, and through working with portfolio companies of funds.
According to preliminary expert estimates, in 2017, the Russian venture market continued its growth trend. Among the key trends, it is important to note the growing interest of corporations to the venture market, which take part in the work of accelerators and create their own corporate venture funds.
In 2017, two road maps for NTI markets were approved: cross-market and cross-sectoral direction of TechNet and a small form of intensive immersion of technically gifted children in the technological project development environment "Circle Movement".
As many as 27 projects of NTI markets have been approved by the Interdepartmental Working Group (IWG) under the presidium of the Council for Economic Modernization and Innovative Development of Russia.
Competence centres for end-to-end NTI technologies were selected. In eight regions, "road maps" for NTI implementation have been developed, 2 have been approved and are still being planned for approval.
ANO NTI University 20.35 was established, the first 100 students were selected and are expected to start research within the Neuronet market.
The project for the implementation of technological competitions of NTI UP Great, organized by RVC, Skolkovo Foundation and ASI was launch. During the project its participants will have to overcome technological barriers. The first two competitions are devoted to the development of an unmanned vehicle for the Russian winter and creation of hydrogen fuel elements for small vehicles. Both competitions start in early 2018, and the final tests are scheduled for the autumn of 2018.
The NTI Olympiad of the 2017-18 academic year was started, organized by RVC jointly with the Agency for Strategic Initiatives in partnership with the largest Russian universities. To participate in the Olympiad, applications were submitted by 20,036 schoolchildren from 85 regions of Russia and CIS countries. The Olympiad is held in 17 educational profiles that correspond to the NTI’s industry priorities.
RVC joined forces with the Ministry of Industry and Trade of Russia, ASI and Skolkovo Foundation to support the Cybathlon contests, the Russian analogue of the world contest in cybathlon, where disabled people are competing in performing domestic operations using technical means of rehabilitation. 2017 saw two competitions. They were attended by more than 100 cybathletes from 37 cities and 20 regions of Russia. The participants crossed the track, ascended and descended stairs and ramps, walked on uneven surfaces and curbs, set the table, moved objects of various configurations and held computer racing with brain signal control.
"Goldberg Cup", competition of student teams to create Goldberg machines, was held for the first time in Russia as part of the World Festival of Youth and Students. RVC acted as the general partner of the event. 58 teams from 26 Russian regions — more than 180 students from 43 universities participated in this contest. The winners received a prize of 50,000 rubles and in 2018 they will attend the international Fab14 forum in France.
Key figures of RVC’s investment activities
To date, 26 funds have been formed with the participation of RVC capital. Their total amount was about 35.1 billion rubles. RVC share in the formed funds is 22.5 billion rubles, the number of portfolio companies approved for investment by RVC funds reached 217. The aggregate amount of funds approved for investing in innovative companies amounted to around 17.1 billion rubles (excluding exited projects).
As of the end of 2017, the main sectoral investment directions of funds formed with the participation of RVC capital were medical technologies and pharmaceuticals (30%), information technologies and the Internet (29%), and energy (10%).
Creation of investment instruments
RVC and Skolkovo Foundation signed an agreement to create three joint venture funds in the form of an investment partnership agreement (IPA): Skolkovo Venture Foundation — Industrial I, Skolkovo Venture Foundation — IT I, Skolkovo Venture Foundation — Agro I. The volume of RVC investments in each fund amounted to 1.5 billion rubles. Aggregate amount of funds is 6.6 billion rubles. The United Aircraft Corporation (UAC) has already announced its intention to invest up to 300 million rubles in the Skolkovo Venture Foundation — Industrial I. IBS also announced its plans to invest 100 million rubles in Skolkovo Venture Foundation — IT I.
Venture Foundation established by RVC Seed Fund and TSU (Tomsk State University) officially started its work. The budget of the foundation was 33.3 million rubles. Shares of RVC Seed Fund and TSU — 75% and 25%. This is the first venture fund in Russia where the university acted as a direct participant as a party to the investment partnership agreement. DI-Group holding became the managing company of the fund.
RVC, FRDV and RUSNANO signed an agreement to create the Far Eastern Foundation for Development and Implementation of High Technologies. The volume of the fund at the first stage will amount to 4.9 billion rubles. 70% in equal shares will be invested by FRDV and RUSNANO, 30% will be invested by by RVC. The average amount of one investment in venture-level projects will not exceed 100 million rubles, in projects of the growth stage, no more than one billion rubles. Legal form of the foundation is an investment partnership, RUSNANO is chosen as the managing partner (GP).
RVC, Roscosmos and VEB Innovations announced the formation of a venture fund in the format of an investment partnership agreement. The venture fund will finance small innovative companies in the areas of activity of Roscosmos State Corporation. Until April 1, 2018, RVC, Roscosmos and VEB Innovations intend to submit for signing to their authorized bodies the drafts of the investment partnership agreement as well as other documents defining the Fund’s operation procedure.
Main performance indicators of funds established with the participation of RVC capital
During the year, 11 new project companies were approved for investment, totaling 438.4 million rubles. In general, RVC funds in 2017 approved provision of investments to 14 project companies in the field of investment activities, for a total of 507.82 million rubles. The total amount of monetary funds approved for investment is 17.1 billion rubles.
2017 saw six "exits" from portfolio companies of funds with the participation of RVC capital.
The activities of funds created with the participation of RVC capital and their portfolio companies
DaVinciCapital, managing company of DaVinciPre-IPO fund established with the participation of RVC capital, took first place in the nomination "Best Direct Investments Team" in 2017 at PREQVECAAwards.
Gazprom Neft PJSC signed a memorandum with Phystech Ventures and North Energy Ventures, established with the participation of RVC's capital. The companies agreed to exchange information about start-ups in the oil and gas industry, monitor and prepare an expert analysis of new technologies, discuss prospective needs in the market, and interact with funds’ portfolio companies.
Phystech Ventures and North Energy Ventures signed cooperation agreements with the Ufa State Oil Technical University. The agreements will allow university developers to receive venture financing as well as receive support from foundations for cooperation with corporations. An important stage was the organization of a joint competition of technological oil and gas projects as well as the opening of a new site for the G100K project in Ufa - an international accelerator for oil and gas start-ups whose first graduates completed the program in spring 2017 in Moscow on the premises of the University of Oil and Gas named after Gubkin.
RVC Infrafund in partnership with private investors have co-invested in the engineering company "TB Composite". The project aims to introduce technologies into various Russian industries to help reduce costs caused by brittle fracture of ceramic materials.
Bonti managed to raise $11.7 million during the "B" financing round. Financing was opened by the fund's investment RBV Capital (established with the participation of RVC and R-Pharm capital). The funds received by the company were spend on further development of botulinum neurotoxin (EB-001), for use in medical and aesthetic purposes. The market potential of the product is estimated at several billion dollars of annual turnover.
Leader-Innovations Venture Fund established with the participation of RVC's capital and under the trust management of CJSC Leader as well as private investors of the project early stage sold their shares in CDNvideo. The buyer was a Chinese company Wangsu Science & Technology Co Ltd (brands - ChinaNetCenter and Quantil). Deal value is not disclosed.
VTB Capital Asset Management successfully completed the deal on sale of the Grid Dynamics project, which is in the venture Fund of the ZPIF of long-term direct investments of VTB - Portfolio Investments. The buyer was Chinese IT-company Automated Systems Holdings Limited (ASL). The total deal value exceeded $128 million, the Fund's share in the deal was 22.4%. Return on the Fund's investment has exceeded the original invested capital by up to 15 times.
The venture fund RBV Capital established with the participation of the RVC and GC R-Pharm capital remitted the first tranche of financing to Advanced Gene & Cell Technologies (AGCT). The total investment will amount to 44 million rubles. The project will allow for the first time in Russia to bring the technology of genomic editing to the clinical practice to treat the most serious and socially significant diseases.
RVC Biofund increased the share of participation from 54.44% to 69.48% in the scientific-production company "PrimeBioMed", accumulating achievements in the field of molecular and cellular diagnostics.
Alpina Publisher publishing group, a portfolio company of RVC Infrafund, managed to raise investments for the development of the ‘Theory and Practice’ website as an aggregator of educational services. Sergei Solonin, co-founder of Qiwi group and co-director of the NTI Finnet working group became an investor and received 35% of the special project.
Support of technological entrepreneurship
GenerationS, the largest accelerator in Russia and Eastern Europe held by RVC, for the fifth year unites entrepreneurs from all over the world. In 2017, around 3,470 start-ups from 237 cities and 13 countries applied for participation. At the same time, 30% of the total number of Russian projects came from Moscow and about 70% of applications — from entrepreneurs in other regions. Based on the results of remote examination and face-to-face selection, the projects will participate in corporate accelerators. Once the training is over, the teams will present their developments to partners who will decide on further cooperation.
For novice entrepreneurs in GenerationS, a Preaccelerator, a federal program to develop early stage start-ups, is expected to start in early February 2018. Projects that have passed the program and with expert mentoring support will be able to bring their product up to the next stage.
In GenerationS-2017, seven accelerators run simultaneously, with more than 20 partners acting as customers. Among them, Faberlic, STS Media, GC NMZhK, Vympelcom, PJSC ODK-Saturn, Voentelecom, RosElectronics, Aviation Centre named after S.V. Ilyushin and others. Apart from corporations, the partner network of GenerationS includes more than 250 government entities, universities and commercial companies.
To enhance the international status of the GenerationS project in 2017, partnerships have been built with a number of foreign corporations, government agencies, infrastructure facilities and venture funds. In 2017, fifteen finalists of accelerator tracks were selected for participation in internships and international exhibitions. Among the venues where the finalists were represented — a week of innovation and technology in Singapore (SWITCH), SLUSH, Hannover Messe, Germany Startup Tour as well as an internship to immerse into the Silicon Valley’s innovative infrastructure.
According to monitoring of start-ups — GenerationS participants held in 2017, the volume of investment in graduates is 2.39 billion rubles. Around 70% of start-ups earn profit following acceleration program, 27% of the total number of graduates received investments from private and public funds, 25 start-ups became participants in overseas accelerating programs after GenerationS, and 73 start-ups successfully implement international expansion. The analysis included an assessment of about 270 start-ups, which at various times participated in the accelerator.
In 2017, as part of the educational program for technological start-ups, 12 sessions of Regional Practical Consulting Sessions (RSPC) were held in Yakutia, Khabarovsk, Almetyevsk, Barnaul, Yekaterinburg, Arkhangelsk and other Russian cities in coordination with the Ministry of Economic Development and the Ministry of Education of the Russian Federation. During the educational intensive courses, about 300 entrepreneurs received the necessary knowledge for the commercialization of technology projects.
In 2017, the position of director of RVC Department "Management of technological projects" of the Faculty of Innovation and High Technologies of the Moscow Institute of Physics and Technology (MIPT) was occupied by the General Director of RVC Alexander Povalko. Since 2012, more than 90 people have completed the master's program of the department. Graduates are in demand as analysts of venture funds, technology entrepreneurs and managers of technology projects. As part of RVC's educational activities, in 2018, issues on the development of similar programs will be reviewed in a network format in cooperation with the leading Russian universities - MSTU named after N. E. Bauman, ITMO, TSU, FEFU and others.
As part of the expansion of partnership with universities, a Memorandum of Cooperation between RVC and the Far Eastern Federal University was signed in 2017 to train technological entrepreneurship and provide comprehensive information support to start-ups.
On December, 12, 2017 the winners of the sixth annual national rating of Russian high-tech growth companies TechUspekh-2017" were announced at the IV Congress "Innovative Practice: Science plus Business". The rating is organized by Russian Venture Company in partnership with the HSE (Higher School of Economics) and PwC and has been held since 2012.
According to the rating results, despite the crisis in the economy, the total revenue of participants reached 285 billion rubles. A strong growth is shown by small high-tech companies — compared to the year before, their number in the rating increased by 20%, and the proportion of the total number of participants reached 50%. According to the survey, 76% of companies believe that their development can be applied in the NTI markets. Of these, 53% of companies either already have such a product, or are developing it. Most of these projects are carried out in the segments "Healthnet" and "Safenet." The national rating "TechUspekh" is the basis for the priority project of the Ministry of Economic Development of Russia "National Champions". In 2018, the rating can be taken as a basis for the search of promising companies for global NTI markets.
In 2017, RVC for the fifth time in a row co-organized "Open innovations", the largest forum in Russia on key achievements in innovative economy sectors. Within the framework of the forum, RVC held an international conference called "Corporate Venture Funds: pivot to innovations", which became the highlight of the first forum day. RVC experts delivered speeches as speakers of the business program.
The awarding ceremony of the VII All-Russian competition of innovative journalism Tech in Media '17 held by RVC since 2011 took also place as part the forum. The contest helps to attract public attention to the issues of Russia’s innovative development. Professional journalists as well as registered central and regional media — TV channels, radio stations, print media, Internet media, media outlets issued by universities as well as Internet blogs are invited to participate in the competition. In 2017, authors from 30 Russian regions presented to the jury more than 500 materials on four thematic tracks such as Venture business, New energy, Artificial intelligence and Life sciences.
In 2017, the first professional award in Russia called "Communication laboratory" for specialists in the field of scientific communications was established. The award was created within the framework of the same name project with the aim to establish quality standards for scientific communications in Russia. The award was preceded by the audit of communication practices in more than 1,500 scientific research and scientific and educational organizations, 15 of them were added to the shortlist of the award and 5 became winners.
Until the end of 2018, a strategy for the development of the venture market should be submitted to the Russian government. It is developed by the Ministry of Economic Development jointly with RVC. Proposals to be added to the strategy were prepared by more than 250 experts and investors invited by RVC to a dialogue within the framework of the IV annual forum "Ecosystem of Innovations". The main trend associated with expectations of all forum participants is involvement of corporations in the venture industry. Other important trends included an increasing interest in working on international markets, increased expectations for raising funds from institutional investors. The core problems include a lack of quality projects and regulatory imbalances.
The international activities of RVC in 2017 were aimed at the formation of a positive attitude towards Russian innovations in the global market, integration of technology companies into global technological chains and globalization of the Russian venture market. In geographical terms, the territory of interests covers developed markets of Europe and North America, and technological hubs — Singapore, South Korea, Israel and others.
In 2017, the Forum "Investments in innovation" organized by RVC jointly with Chinese partners, the Venture Committee of the All-Chinese Association for the Financial Promotion of Science and Technology and the Fakel Centre was held in Harbin, China. RVC presented strong technology companies from the RVC portfolio and partner funds; Chinese partners have demonstrated their readiness to build mutually beneficial cooperation with them. Consideration is given to plans to hold a similar Forum in Russia in 2018.
In connection with the adoption of the new RVC strategy, partnerships with foreign management companies have acquired a special role to increase venture capital through the creation of new funds. Cooperation with foreign GPs is also conducted through membership in a number of investment associations — BVCA, IVC, ILPA, Invest Europe, IATI.
Currently, the network of RVC foreign partners consists of 1,500 organizations of the innovation ecosystem from 40 countries, and it includes state agencies, corporations interested in new technologies, universities and technical transfer centres, state development institutions and venture funds. Export revenue of RVC funds’ portfolio companies amounted to 1.88 billion rubles for three quarters of 2017.