Russian and global venture markets in 2007–2013
Russian venture capital industry shows triple-digit growth since 2007. The record-breaking volume of deals in 2012 made the Russian venture market the second largest in Europe and the fifth largest in the world.
The amount of incubators, angel investors, angel clubs, start-ups and early stage deals has also significantly increased over the period. Investors are clearly showing trust in the Russian venture market.
The growth is driven primarily by investments in IT and the consumer market, the main driver of which is the shift to online retail. In Russia, as well as in other countries studied in the survey, the IT and consumer market segments are easier to innovate in than the other segments and provide a shorter return on investments.
“The venture investment industry is still going through difficult times coming out of the severe financial crisis. In these circumstances, the rapid rise of the Russian venture market suggests that stakeholders continue to believe that the efforts of the government and market players will result in a transparent business ecosystem and that the way to the future lies in building an innovation-based economy.”
EY Country Managing Partner for Russia
The Russian venture market is growing in terms of:
- Volume — from US$108m in 2007 to US$1,213m in 2012
- Number of venture funds
- Number of incubators
- Number of angel investors and angel clubs
- Number of start start-ups
- Number of early stage deals
IT and the consumer market are the preferred market segments:
- Venture industry growth is driven primarily by investments in IT and the consumer market.
- Investment in the consumer market segment is being driven by the shift to online retail.
- Private venture funds tend to invest in internet companies, while state-operated funds prefer science, materials and chemicals.
The Russian venture market is in the early stages of maturity:
- There are relatively few exits: Russian corporations have not actively pursued M&A, and international exits are not common yet.
- There is a large and growing number of small funds on the market. Consolidation is yet to begin.
- The ecosystem and access to information on investors and centers of excellence are fragmented.
- The Russian government plays a significant role as the provider of the infrastructure, creator of the ecosystem and the endorser of the venture market as a whole. In the venture market, the key institute responsible for this is RVC.