The venture market shows a growing investment activity

The venture market shows a growing investment activity

"Overview of the Market. Direct and venture capital investments in nine months of 2016" was presented at the special session of the "Venture Market: year’s results and future trends" within the Innovation Ecosystem Forum on 5 and 6 December.

The venture market keeps its position, showing the investment activity, which is based on the fourth quarter may exceed the level of 2015. Over the three quarters of 2016, as many as 145 transactions were carried out; a total invested capital amounted to $ 105 million. (74% and 71% of the total level of 2015).

The venture market actively continues to attract new players: for the three quarters of 2016, as many as 13 new venture capital funds appeared — it is only one-third lower than the previous year. The proportion of funds with state participation, which entered the market this year, has decreased dramatically compared with 2015: This year, 12 out of 13 new funds are private.

The corporate investment trend is continuing to strengthen, while in the corporate funds there is a growing number of investments at early stages. Their share was 21% in the first three quarters of 2016 (13% in 2015), the amount exceeds 8% by the end of the previous year (22% in the first three quarters of 2016 compared to 14% in 2015).

The activity of venture capital investors to withdraw from the previously invested companies noted at a high level — 85% compared to 2015 (29 exits in the first three quarters of 2016, compared to 34 in 2015). This is largely the result of previous years: Parastatal funds have provided in the reporting period 65% of total exits involving venture capital funds (44% in 2015). This reflects the role of the state as a catalyst of venture investment in Russia in 2006-2010.

If the situation on the venture capital market looks relatively well, however, in the private equity sector, there is no significant activity recorded. According to the experts, investors are waiting and do not want to risk investing in projects. In the first 9 months, the number of investments has barely exceeded 30% of the indicators of 2015, while the volume of investments amounted to only 45%. In the distribution of venture capital investment, the sectorial imbalances persist. The main interest of venture capitalists has traditionally been concentrated in the ICT sector — about 74% of the total and 77% of the total investment. More than half of the investments in the sector is the ICT sector carried by parastatals funds.

"Negative trends do not prevail, and more importantly they are not decisive indicators of the market state. They can be sooner attributed to the objective costs of the economic situation and be considered as a starting point for the formation of new trends, corrective vector of market development", commented Nikkonen Albin, executive director of RAVI.

"We see the transition state of the market, in which its model is changing. Previously, the market grew due to the companies that appeared during the period of the nineties and 2000s, quickly formed foundations of the middle and late stages, "skimming the cream" from this stream of businesses. However, by 2013-2014, this model has exhausted itself, and the lack of investment objects originated. We are sure that in 2-4 years, the market will begin to grow actively, and on checks and on the number of deals already in the wake of a new generation of companies", concluded Evgeny Kuznetsov, Acting General Director of RVC.

If you need a full version of the survey, follow this link.


On “Overview of the Market. Equity and Venture Investments"
Overview is currently the most comprehensive analytical document describing the state of the venture capital industry in Russia. For its preparation, the RVCA experts conducted a comprehensive study of the market of equity and venture investments including survey, which was attended by representatives of leading investment institutions.

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