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The Strategic Session of the Bank of Russia Discuss the Issues of “Exiting” of Venture Capital Investors from Technology Projects

16.10.2020

On October 15, Deputy General Director — the Investment Director of RVC, Alexey Basov, spoke at the Bank of Russia's second strategic session to discuss the Consultative Report “Development of Alternative Investment Mechanisms: Direct Investment and Crowdfunding.” The event was dedicated to the issues of venture investors' exit from technology projects.

The discussion was attended by the Managing Partner of Da Vinci Capital — Oleg Konev, Deputy General Director of the Fund for Infrastructure and Educational Programs of RUSNANO — Alexey Kachai, General Director of the New Industry Venture Fund — Tatyana Morozova, Vice President for Investment, Director of the Investment Department of Sberbank — Oscar Ratsin, Executive Director for RII of the Moscow Exchange Gennady Margolis, Managing Partner of Sistema Venture Capital — Dmitry Filatov. The session was moderated by Alexander Galitsky — the managing partner of Almaz Capital.

As Alexei Basov noted, RVC has accumulated significant analytical material that makes it possible to assess the state of the Russian venture capital market competently:

“We often see more than research companies that operate on expert or public data.”

In his opinion, among the leading trends associated with the “exits” of venture investors from technology projects, one can single out noticeable participation in foreign companies' exits.

“We are used to thinking that the share of foreigners in our market is decreasing; however, if we look at the outputs of RVC, we will see that this is not so. At the same time, we understand that participation in transactions of the state and the need to settle accounts with it does not increase attractiveness in the eyes of foreign investors,” Basov said.

Among the largest deals with the participation of international strategists in the RVC portfolio, Alexey Basov mentioned the sale of Bonti to Allergan and the acquisition of Vocord by the Chinese giant Huawei.

Another tendency is related to the fact that the mechanism of public exits is still weak.

“We do not yet see this mechanism such as “exits” through an IPO work on a large scale. Simultaneously, the market demand has formed a critical volume, which will make it possible to operate more actively with public platforms and remove several barriers. This will increase the number of exclusively Russian or parallel IPOs at several venues,” underlined Alexey Basov.

Corporations are the second most popular source of exits.

“Despite the small number of active buyers who systematically work with the venture capital market, the main technology segments have received specialized beneficiaries in the person of corporations. The first level of formation of corporate takeover markets, in terms of specialization, has already been achieved. The next level is creating competition. This state of the market is not far off,” he said.

The activity of unstructured players in the venture capital market often remains outside the field of vision of experts and researchers, summarized as a “broad market”. According to Basov, these numerous players make the primary market, if not in money, then in the transactions.

“The vector of further development is associated with filling the market with new types of players, admitting new sources of capital to it, primarily non-state pension funds, as well as a whole range of regulatory changes,” Basov summed up.



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