Government fund of funds
Development institute of the Russian Federation

News

Interim Investment Performance Report of RVC Backed Funds in 2010

29.12.2010

RVC Corporate Strategy and Business Plan 2010, approved at a Board Meeting in 2009, allowed us to systematize RVC’s activities as an innovation system development institution and one of the key VC market players. 
In 2010 RVC showed a two-fold increase both in number of portfolio companies and amount of capital invested, as compared to 2009. 
During 2010, RVC carried out due diligence of 44 projects submitted by seven RVC backed, approving 17. The Seed Fund received 130 bids from its venture partners, 20 projects were approved by its Investment Committee. 
Capital invested by the funds over RVC’s entire history (fid. 1) totalled over RUB 6 bln, 45% of this chunk, or RUB 2.7, were invested in 2010, which is more than double the amount invested in 2009—RUB 1.4 bln.

1. Breakdown by years, 2007-2010 (money)

A breakdown of RVC backed funds’ portfolio by number of companies shows that, as of today, two thirds of the pool comprising 58 companies became part of the funds’ portfolio in 2010. 

Largest input to the total pool of approved projects was contributed by RVC Seed Fund—20 portfolio companies. RVC Seed Fund pipeline at any given moment of time includes over 50 bids and 20 full-fledged deals. Currently, efforts are taken to coordinate bid processing deadlines in the Seed Fund with the amount of capital demanded in order to encourage entrepreneurs to look for micro-capital (up to RUB 3—7 mln). 

A sector breakdown shows that RVC backed funds invested in 2010 mainly in biopharma, industry and IT (fig. 2).

Fig. 2. Breakdown by funds. 2007-2010 (projects)

Fig. 3 shows that 2010 also brought a considerable change in the portfolio structure adding two more economy sectors—alternative energy and construction materials.

Fig. 3. Capital to different economy sectors 2010

RVC backed funds’ capital breakdown by economy sectors is shown in Fig. 4.

Fig. 4. Capital breakdown by sectors and years, from the moment of inception

In 2010 RVC embarked on an international campaign. Russian innovators got access to cutting edge practices and technologies of the global market. Russian Venture Capital I LP and Russian Venture Capital II LP—two foreign funds recently launched by RVC with a total capitalization of over RUB 600 mln—have already contributed to RVC’s portfolio and co-invested together largest global VC market players.

To further its priority investment activities and foster an infrastructure for technology business, RVC elaborated in 2010 two conceptual frameworks of, and is currently working to launch,

— BioPharmacutical Cluster Fund (RVC BioFund),

— Infrastructure Investment Fund (RVC InfraFund).

These funds’ efforts to screen projects and initiate infrastructure businesses de facto are underway, the funds were pitched to general public at a forum on December 13, 2010.

Next year we are planning to launch funds covering our other priority areas. New investment and infrastructure tools of RVC will ensure synergy of RVC’s entire portfolio of initiatives, ensure efficient partnership of technology companies with current market players both in terms of attracting money and getting services they need, said Andrey Vvedensky, Director of Programs and Projects Department at RVC.

In 2010 RVC hooked up to a system of 22 regional VC funds investing in innovative SMEs, that were launched in 2006—2010, RVC representatives now sitting on the Trustee Boards of these funds. Management companies receive expert support, that has already yielded a positive result: investment committees of the funds have approved 18 projects out of 37 submitted to a total amount of RUB 0.7 bln. RVC is already undertaking efforts to promote these funds’ portfolio companies to the market. 2011 is expected to show a significant increase in the volume of venture capital regional funds will invest with the expert and other support rendered by RVC.

Our liaison with the funds, both those backed by RVC and regional ones, as we ass it, is to establish mutually beneficial contacts between management companies, investors and entrepreneurs. First of all, we expect such contacts will provide a cumulative impact on the ever increasing dynamics of exchange of knowledge, skills and best practices, rather than the actual amount of capital on the market. We believe, total significant increase in the volume of venture investments will increase knowledge and capital. This is exactly the reason why RVC in 2010 consolidated expert support of investment decisions, operated successfully on the international market, which turned RVC into a de facto reputable global market player. RVC funds have doubled their investments in innovative companies. In 2011 we plan to capitalize on what we have achieved and remedy the drawbacks of our venture capital industry. The year to come will be challenging and interesting, noted Jan Ryazantsev, Director if Investments and Expertise Department.

On December 26, 2010, a board meeting took a positive view of RVC’s efforts to develop our innovation ecosystem

In 2009 innovation ecosystem development programs showed their positive results. Our systematic efforts to improve deal flow generation, tender and training projects, engage seasoned entrepreneurs and managers—all this is result-oriented. An innovation agenda and success stories in Mass Media found a positive feedback from the community, which is an important factor attracting more and more talented experts to our industry, said Evgeny Kuznetsov, Director of Development and Communications Department.

RVC will continue its aggressive efforts to develop VC infrastructure and innovation ecosystem in 2011.

We understand that we are at the very beginning of our road to success, but we are happy with the results we achieved in 2010, summed up Igor Agamirzian , CEO of RVC. However, to keep up the pace in 2011, RVC and the entire infrastructure we have created will have to contribute yet more efforts. We are planning to launch a number of complex programs to globalize Russian innovation industry, encourage demand for innovation companies and their products, develop service infrastructure for the innovation ecosystem and its participants’ professionalism and promote innovation activities.



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