RVC and PwC present the annual review of Russian venture capital industry “MoneyTree: Navigator of the Venture Market” for 2018 and the first half of 2019


The venture capital market, which forms the basis of the venture capital ecosystem, in the first half of 2019 showed an increase of 161% up to $248.1 million compared to the first half of 2018, when its volume was $94.9 million. At the same time, 129 deals were completed, which is 48% more than a year earlier (87 deals). At the end of 2018, the market grew by 78% to $433.7 million as opposed to $243.7 million in 2017. At the same time, the number of deals compared to 2017 slightly decreased — from 205 to 195 deals. Thus, the Russian venture capital market showed almost three-fold growth in the first half of 2019 and a twofold increase in 2018 compared to 2017.

The average deal size in the first half of 2019 increased to $3.1 million. A year ago, this figure was equal to $1.5 million. Noteworthy is the almost seven-fold increase in the average deal size at the expansion stage (from $2 million to $13.3 million). The positive dynamics of this indicator is associated with the transformation of the venture model and the gradual blurring of the boundaries between venture and direct investment. At an early stage, the average deal amount increased 2.5 times (from $0.9 million to $2.3 million). At the start-up stage, there was a twofold increase in volumes — from $1.2 million to $2.7 million.

The largest deals were the purchase of an 18.7% stake in AFK Sistema in March 2019 for $119.3 million, a deal involving RDIF, Rusnano Sistema Sicar and WayRay start-up for a total of $80 million in September 2018, as well as another deal of Sistema and in December 2018 worth $57 million.

In terms of the stage structure, investor demand continues to shift towards more mature projects. In the first half of 2019, as many as 60% of the total investment fell on the expansion stage, while in the first half of 2018, this took 55%. In 2018, as many as 80% of all deals in value terms accounted for the expansion stage, in 2017 their share was 68%.

The information technology sector traditionally remains the leader as to the number of venture capital deals and as to the amount of attracted investments. According to the results of the first half of 2019, the sector showed a positive trend both in the number of deals and in the total amount of funds raised. At the same time, the leader was the e-commerce subsector. In 2018, deals in the information technology sector accounted for 94% of the total amount of all deals in the market. The share of biotechnology and industrial technology sectors was 3.3% and 2.7%, respectively.

Corporate investors are becoming increasingly active players in the venture capital market. In value terms, the volume of such deals almost tripled — from $34 million in 2017 to $89.9 million in 2018. The most active venture investors were Sberbank, Yandex, MTS and Mail.Ru.

According to the results of six months of 2019, thirteen investors withdrew, which is eight more withdrawals than in the first half of 2018. Their total value amounted to $53.2 million. The number of investor withdrawals in 2018 increased by 7% to 32 deals, and the total value increased by 61% to $128.9 million, compared with $79.9 million in 2017. The largest withdrawal — the purchase of service by MTS in February 2018 for $55 million, which was a withdrawal for iTech Capital, Sergey Solonin and a number of investors.

“The Russian venture capital market is experiencing a new stage of development, and its performance has shown steady positive dynamics for the third year in a row. At the same time, the landscape of the venture capital industry, the structure of industry and stage preferences are gradually transforming along the lines of mature Western markets. A key factor in the growth of capital supply is becoming corporate players who are actively developing venture tools and form a portfolio of innovative projects. Creating corporate venture capital funds, providing them financial leverage and expert support will be one of the priorities of RVC in the coming years,” said Alexei Basov, Deputy General Director and Investment Director of RVC.

“The total volume of Russian venture ecosystem in 2018 amounted to $662 million, which is 61% more than a year earlier. According to the results of the first half of 2019, the market showed double growth compared to the first half of 2018, amounting to $348 million. Also, in the first half of 2019, Russian funds began to participate more actively in deals with foreign start-ups: the volume of such deals amounted to $860 million, which is two times more compared to the first half of 2018 and 1.5 times more than for the whole of 2018. This may indicate market development, as Russian investors participate in large deals with international funds, although they often act as minority investors in investment rounds. Investor optimism regarding the gradual stabilization of the economy, increased activity of corporate funds, and the interest of foreign strategic investors will also further strengthen Russian venture market,” commented Oleg Malyshev, the Head of Transaction Support at PwC in Russia.

In the first half of 2019, as many as 2,357 grants worth $46.4 million were issued, which is 23% more in monetary terms ($37.1 million) compared to the first half of 2018 and 4% more in quantity (2,266 grants issued). The number of grants issued in 2018 fell to 3,955 units, however, in monetary terms, their volume increased to $99.3 million.

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