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Russian venture capital investments are at record levels

posted onOctober 12, 2021

Russian venture investment market reached $1billion in the first half of 2021, a new study found. This is an all-time record, according to Dsight, a Moscow based business intelligence company with a focus on investment, which published the report.

“Over the last few months we have been watching the Russian market grow continuously, and cruise along to Europe’s top 10 venture regions,” Arseny Dabbakh, Dsight's founder wrote.

The period was marked by the $250 million deal between Russia’s leading online video platform ivi and a consortium of investors including VTB Bank and the Russian Direct Investment Fund (RDIF), two private firms linked to Russian billionaires — Roman Abramovich’s Millhouse Capital and AG Invest, which is affiliated with industrial magnates Alexander Abramov and Alexander Frolov. Three other venture and private equity majors were also involved: Baring Vostok, Flashpoint Capital and RTP Global. 

With the $250m under its belt the Moscow-based “Netflix of Russia” plans to expand the platform’s content catalogue and foster the creation of original content. IPO plans are also on the table for a foreseeable future. Meanwhile, its audience exceeds 50 million unique monthly users, and the service has a catalogue of some 100,000 titles from 400 Russian and international studios.  

The mega hit transaction drove total investment by corporations and corporate funds in 1H 2021 to $359m, up 2.5 times y-o-y; these players accounted for almost 40% of all deals in the market. According to Dsight analysts, another $359m came from private funds, a tenfold y-o-y rise.

Russian Venture Capital Investment

(Source: Dsight)

The second-largest (but obviously dwarfed by the ivi deal) transaction in Russia’s market was the $75m purchase of a 15% stake in car-sharing company Delimobil  by state-owned VTB Capital. For the investor’s parent firm, Russia’s second-biggest bank, VTB, the deal marked its pioneering investment in the short-term car rent market. Delimobil, with a fleet of over 15,000 vehicles and more than one million members, intends to use the funds to continue to expand operations and its business reach, ahead of a planned 2022 US IPO. 

“Total investment and the average investment per deal swelled across stages. Projects at the Start-up stage, even without ivi deal, were head and shoulders above all others: a total of $100m worth of transactions with a $2.9m average value per deal vs. $23m and $0.9m last year, respectively, according to Dsight findings. The Seed stage was the runner-up with investment grown a handsome 172% to $23 million” notes Dsight.

The first half of the year also saw many Russian entrepreneurs expand globally “and not only across the Atlantic but also to Europe, Southeast Asia, and Africa” raising funds to develop their projects. Several sectors are concerned, from foodTech  to medTech, to edTech, to logTech. 

In the reporting period, business angel investments doubled to $49 million, while the average value per deal shot up 160% to $2 million.

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