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The Conservatism of Investors, New Funds, and the Exit Market Crisis: What Happened to Russian Venture in 2019?

Source: Inc.

Investor Alexei Solovyov published the annual study of the Russian venture capital market “Venture Barometer 2019”. In partnership with RVC, the expert analysed the leading industry events, the interests of investors and learned their opinion about the necessary conditions for market growth. Inc. cites key findings of the work.

Russian venture is coming back to life

In 2019, new funds continued to be launched: they opened under management at 46% versus 30% in 2018, the study said. Three-quarters of market players also attracted new investors. In addition, the level of investment activity exceeded last year.

Russian or foreign start-ups

The share of investments in Russian companies amounted to 28% in 2019 compared to 21% in 2018. At the same time, the average percentage of the number of start-ups from Russia in the portfolios of investors is kept at approximately the same level — 54%. From 81 to 100% of the portfolio, they occupy 34% of investors.

Investments only in foreign projects amounted to 21%, and the attraction of Western companies as new investors for funds — 12%.

According to analysts, rumours about the outflow of investors from Russia are greatly exaggerated: only 5% of the entire base of potential study participants left the country or stopped investing in Russian start-ups.

What projects investors chose

Not the first year, FinTech start-ups have remained the most popular among investors. However, as Soloviev notes, in 2019, there was a boom in interest in the EdTech segment, which rose to 2nd place. Interest in the food industry remains at a high level.

For the first time this year, investors drew attention to technologies for energy, new materials, technologies, and solutions for industries and e-sports.

Exit Market Crisis

In 2019, 49% of the exit polls surveyed did not have, and large Russian IT companies became strategists in only 12% of transactions. The lack of activity of strategists prevents the market from developing, its participants believe. In their opinion, the state should support exits.

“Among the key results of the year, I especially note the further strengthening of the role of corporations, the emergence of new integrated models of innovative development that allow companies to transform their business systematically. A major victory for our industry was the IPO of the Russian company HeadHunter on the American stock exchange. Our market can be congratulated on the new private unicorn,” says RVC Investment Director Alexei Basov.

In September, investor Alexei Solovyov introduced the “Barometer of Online Education”. The study involved more than a thousand founders of online schools and EdTech companies. Most of them do not have experience in the field of education and continue to work in parallel at the same time.

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