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PwC and RVC announce the sixth annual review of the Russian venture industry “MoneyTreeTM: Venture market navigator” for 2016

27.03.2017
PwC and RVC announce the sixth annual review of the Russian venture industry “MoneyTreeTM: Venture market navigator” for 2016 money-tree-rus-2016.jpg

According to the report, total number of the concluded venture transactions in 2016 remained on the same level (184 transactions in 2016 against 180 in 2015). And in dollar equivalent, venture market reduced by 29% comparing to the value of 2015 and amounted to 165.2 million USD (232.6 million USD in 2015). Accumulated volume of transactions in venture ecosystem is 0.41 billion USD comparing to 2.19 billion USD in 2015.

The study notes that the main reason of reduction is decrease of the average transaction value to 1.1 million USD comparing to 1.5 million USD in 2015. In 2016, substantial pressure on the Russian venture market was put by the general business slowdown, uncertainty in forecast of the key macroeconomic rates and devaluation of rouble (-10% for annual average value of 2016 comparing to 2015).

Gulnara Bikkulova, Deputy General Director, Member of the Management Board of RVC remarked: “Russian venture market during the last three years demonstrates stability from the point of view of transactions quantity in continued updates of the investor base, new investors begin exclusively with the Russian transactions, more experienced investors invest as a part of international syndicates. In the meantime, it's obvious that non-stable economic situation in general, lack of constant interest to innovation from the big Russian business are the substantial barriers for growth of the venture market.”

Market industry structure in 2016 remained unchanged; the leading role in total volume of investments was preserved by IT and amounted to 90%. Number of transactions in IT comparing to 2015 increased by 13%. This trend is caused by the growing role of IT technologies in all fields of business and readiness of the investors to invest in the projects related to application of IT to increase efficiency of business processes.

The main volume of the attracted investments in IT sector (41.8 million USD or 28% of total volume) was allotted to cloud technologies and software. The second and the third places in volume of attracted investments were divided between the financial technology sub-sector (Fintech) and information and recommendation services/social networks (15 million USD and 10% of total volume for each).

Biotechnology and industrial technologies sector together amount to about 10% in total investments volume. Industrial technologies sector demonstrated considerable growth in 2016: from 15 to 21 transactions. In biotechnology sector, reduction of both quantity of transactions (from 39 in 2015 to 26 in 2016) and volume of attracted investments from 18.1 million USD to 9.5 million USD is observed. Volume of investments in biotechnology sector was mainly formed by the state funds and venture funds with state participation. The most active were funds with RVC capital.

According to the report, in 2016, there was made no big transactions exceeding 100 million USD. In 2015, there were 2 such transactions, total value amounted to 200 million USD in the previous year.

In 2016, the number of investors exits increased by 4 transactions. And the total value of exits decreased in 13 times and amounted to 120 million USD comparing to 1,573.5 million USD in 2015.

According to the research methodology, grants are considered separately in the review. According to the results of 2016, the number of grants provided amounted to 4,651. Traditionally, the main part of grants was provided by the Foundation for Assistance to Small Innovative Enterprises in Science and Technology (Foundation for Assistance to Innovations or Bortnik Fund) — 4,075 grants for the amount of 92.3 million USD. Skolkovo Foundation granted 576 grants for the amount of 29.1 million USD.

Alexandr Kardash, senior corporate finance manager of PwC in Russia: “Despite the slowdown in venture market in 2016 in money equivalent, the number of transactions remained almost unchanged, which speaks for stable high activity of venture investors. Take into account that, in 2017, revitalization of general investment activity in Russia is forecast, we can estimate further development perspectives of the Russian venture market with moderate optimism.”



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