Russia's venture capital market continues to come to life, and rumours of an outflow of investors from the country are “greatly exaggerated,” according to the annual venture barometer 2019 study. Of the unfulfilled hopes of market participants, it points out the high expectations of Arab, Asian, and state money. Skeptics believe that the main problem of the venture capital market in Russia is “in its absence”.
Russia's venture capital market “continues to come to life,” according to the annual study “Venture Barometer 2019” (available to Kommersant), conducted by venture investor Alexei Solovyov in association with Russian Venture Company with the participation of MTS Corporate VC, EY and DS Law. In 2019, investors justified plans to attract external capital to funds — 75% of respondents attracted new investments, which indicates a “healthy state of the market”. In 2020, more surveyed investors plan to raise money than in 2019: 86% vs. 72%. However, investors are still disappointed with the possibility of exiting projects: in 2019, 49% of respondents did not have them in 2018 — 59%.
Also, last year's expectations of investment investors from Asian and Arab countries did not materialize: 32% of respondents considered them promising, but in reality, attracted such investors in 2019, only 2% of respondents. In addition, hopes were not realized that state-owned companies would become active strategic investors and would buy start-ups, said Alexei Solovyov, adding that perhaps “state-owned corporations need more time to disperse.”
External factors continue to have a significant impact on the venture capital market, the study notes. If, in 2018, the main event for the market was the sanctions policy, then in 2019, it gave way to the cause of the founder of Baring Vostok — Michael Calvey. However, statements about an almost complete outflow of investors from the country in recent years are “greatly exaggerated,” the study said: only about 5% of the entire base of its potential participants left Russia and ceased to engage in venture capital investments or invest in Russian projects. Among the positive developments, the study named the successful IPO of the “private unicorn” Headhunter in May 2019.
However, many analysts are skeptical about market estimates. The main problem of the Russian venture capital market is its absence, said Kirill Belov, managing partner of the Impulse VC fund.
The venture capital market in Russia is “practically absent”, and its main problem is the lack of an IPO in Russia, agrees Timur Nigmatullin, the investment manager of Otkritie Broker. In his opinion, foreign IPOs of Russian companies are, as a rule, the result of a “successful combination of circumstances”.
He notes that in such a situation, start-ups often have to make a product for a specific customer — for example, Yandex, Mail.ru Group, and Sberbank.
By: Julia Stepanova.