Russian VC market grew in 2015 despite low demand—RVC and PwC research

Print 31 March 2016
Marchmont Innovation News

The total volume of Russia’s venture capital market grew to $2.19bn in 2015 from $1.67bn the year before, the U.S.-Russia Business Council (USRBC) reported, quoting a joint  Russian-language report  by Russia’s RVC, the national fund of funds for innovation, and PwC released a few days ago. 

These numbers include both initial investments in start-ups and exits (the subsequent sales of shares in start-up projects by investors). Although the number of new start-up investment contracts increased by 21% vs. 2014, the total volume of investments dropped by 52% to $232.6m, the researchers found. 

The average contract amount declined to $1.5m from $3.3m in 2014. The report pointed out that the drop in investments was largely due to the steep ruble devaluation last year. Most investments were made in the IT sector (88%), followed by industrial and biotechnologies (12%). 

The report noted that many Russian venture funds, which were established 5-8 years ago, have reached a threshold when they must exit their start-up projects. (Funds must sell their portfolios at the end of their life cycles which generally do not exceed eight years.) However, the domestic market for these projects remains small. Last year, Russian firms accounted for a mere 0.6% of the total volume of start-up exits globally and 2-3% in Europe, according to Global Tech Exits Report. Some venture market players believe that Russian start-ups should shift their focus towards international markets.

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