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Russian VC Firm NGI Will Invest Heavily in French Startups

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Russia was once known for its undying adoration for all things French back in the day, and a century and a half later you could argue that some of that spark is still hanging around. New Generation Investment, the Russian VC firm part-owned by Leonid Reiman, former Minister of Communications and Information Technologies, has announced that it would like to start investing into the startup scene in France.

It’s starting with a fund of €20 million ($26.4 million) — relatively modest by American standards but decent in France considering how little is invested in startups in the country. During the first quarter of 2012, French companies raised €168 million ($222 million) from venture capitalists while American companies raised $5.8 billion. That works out to VC investment being 26 times lower in France than it is in the U.S.

So why is NGI looking at France? It sounds like at least part of the reason may not be that it’s an untapped market but that it’s seen as a safe harbor while so much of the rest of Europe is in economic turmoil: “[France] has assets — especially in the technology industry. During this period of crisis, Europe can take leading positions in different spaces,” Reiman said told Les Echos. But he also added that France may just be the first step in that strategy, with a look at wider Europe also on the cards.

NGI is not the only VC backed by Russians that is investing in France. Runa Capital in March put $1.5 million into French app analytics platform Capptain.

It’s not only Russians, either. The Samwer brothers’ Rocket Internet has funded two startups in the online furniture space — Bamarang and Westwing — as part of its Blitzkrieg plan. Westwing is based in France and Bamarang has an office in France — and they are both more commonly known as Fab.com clones.

NGI is due to announce its first investments in coming months, with the first being a VoIP service.

In addition to new investments, NGI already has some French assets in its portfolio: that includes a 51 percent stake in Mandriva, which it has had since 2010. Mandriva is the French company that created Mandriva Linux, a Linux platform that has — surprise! — found clients among organizations in the Russian public sector. It’s not all been smooth sailing for Mandriva: earlier this year, it was on the brink of bankruptcy after being hit hard by competition. NGI nearly bought out the entire company to help keep it afloat but ultimately that deal did not go through.