RVC Names the Way to Increase Venture Capital in Russia
Valery Melnikov / © RIA Novosti
The creation of a fund of funds with the participation of state corporations will significantly increase the volume of venture capital in Russia, the Head of Russian Venture Company (RVC) Alexander Povalko told RIA Novosti.
Last week, at the meeting of investors with Russian President Vladimir Putin, the idea of creating a fund of funds with the participation of state corporations was being discussed. Currently, RVC is the only fund of funds in Russia. It has 29 funds in its portfolio with a total capitalization of about $1 billion.
According to Povalko, in the next few years, the development of the venture industry in the Russian Federation will be associated with the activation of corporate investors. In 2019, according to RVC, various corporations in Russia took part in more than 130 venture transactions — through accelerators, corporate venture funds, or direct investments; in 2018, there were 80 such transactions. Active players included Sberbank, Mail.ru, Kaspersky Lab, AFK Sistema, Gazprom Neft, S7.
“RVC supports the idea of creating a corporate fund of funds, voiced at the meeting with the President. ... The opportunity to invest in a fund of funds will become a fundamentally new format for the innovative development of large businesses, which guarantees a lower level of risk due to the high diversification of investments and the involvement of market professionals in management. It is important to note that fund of funds management is a special competence that is different from venture financing and M&A transactions. And there are only a few professionals in this field,” he said.
“The expansion of the instrument by creating a corporate fund of funds will also significantly increase the supply of venture capital in the country. According to the development strategy of the venture market, which was developed by RVC and the Ministry of Economic Development of the Russian Federation, to create a balanced financing structure, the share of corporate investments in Russia should be at least 32% by 2025 and at least 35% by 2030. In monetary terms (in 2030 — ed.), it is approximately 950 billion roubles,” he said.
The Head of RVC noted that in developed countries, funds of funds are an essential element of the venture capital market: over 300 funds of funds operate in China worth 2.4 trillion Yuan, 250 of which are with the state capital, in the USA — about a hundred of them.
“It was the funds of funds that played a significant role in the development of the largest venture capital markets in Israel, Europe, and Asia. ... Despite the small volume of the venture capital market, and it is relatively small in all countries, accounting for tenths of GDP, the role of the venture capital industry is huge,” he added.