New Research Suggests Russian VC Has Dumped Seed For Late Stage And Exits

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Whatever is happening in the political sphere (and let’s face it, quite a lot is happening), Russia’s home-grown technology market continues to grow as the market matures. Although the seed funding boom has effectively ended, mid- and late-stage startups taking advantage of the market’s scale are now attracting a lot of investor attention.

What’s been lacking is a collection of hard data to describe what’s going on. So it is of significant interest that today Russian investor Fastlane Ventures has released its Russian Internet Deal Book. This shows that Russian investors are indeed looking at the late stage more and 2014-2015 the “RuNet” (shorthand for the vast Russian-speaking Internet) will see more exits among companies.

The new research covers more than 600 deals made in the Russian internet in 2012-2013. Based on this data, the research evaluates market volume and dynamics, the main trends and players.

Andrey Kulikov, Fastlane Ventures investment manager says: “The Russian Internet is reaching a new stage of development. Venture capital funds based in 2010-2012 are now completing their first investment cycle, and will have to raise capital again in 2014-15. At the same time, there will be more exits. On average it takes about seven years from the foundation to the sale of a startup, therefore numerous companies created in 2006-2009 are now close to exit”.

Here’s a run-down of the to-line data, and below a slide-deck to impress your friends with your knowledge over dinner.

• The Russia tech investment market is maturing: deals in later stages (C, D, E) accounted for 45% of total investment volume in 2013, while in 2011 there were only 13% of these more “mature” deals. Fastlane expects that in the years 2014-2015 many of companies invested at the late stage will reach the point of exit.

• There has been an increasing number of mergers, acquisitions and secondary deals. There were 30 liquidity events in 2013, compared to only 10 in 2011.

• There has been more investment in financial and advertising services, as well as games. At the same time, e-commerce is becoming less popular as an investment. In 2013, investments in e-commerce accounted for 58% of all investments in RuNet, 10% down on 2012’s level.

• The average number of investments in the RuNet is a ‘deal a day’.

• The share of Russian money in RuNet increased. Some 53% of all investments in the RuNet were of Russian origin in 2013, compared to 42% in 2012.

• There is no more (according to Fast Lane’s research at least) ‘free money’ from the state: in 2013 state grants in the tech space dropped by three times compared to 2011

• The market’s growth appears to have slowed as it’s matured. While in 2011 tech investments soared 130% over the year, by 2013 that growth had trickled to 4%. This is the evidence, says Fast Lane, that the seed stage boom is over.