Russian venture market has fallen practically by one half

Following the results of the 1st quarter 2014 Russian venture market fell practically by one half. The total volume of transactions decreased by 42%, and their amount declined by 38% in comparison with the similar period of the previous year.

For the 1st quarter of the current year 79 transactions were closed, for a total amount of 109 mln USD. At that 49 mln USD is accounted for the exit of investors from projects and only 60 mln USD – for new financing. Such results have become minimal since 2012.

The experts note that softening of the venture market may be still more significant, if not for the activity of Internet Initiatives Development Fund (IIDF). The Fund was founded at the discretion of the President in July of the previous year. The Director of the Fund Kirill Varlamov announced then his intention to invest 6 bln RUB in different Russian startups during the coming three years.

The experts note the brisk growth of the volume of transactions in the sector of information technologies (IT). Following the results of the 1st quarter 2014 the share of IT sector made 44% from the total volume of transactions.

The most significant transactions of Russian venture market in the 1st quarter 2014 became the investments of the Fund iTech Capital into the service for the search of airline tickets Aviasales and into the provider of cloud communication services Mango Telecom. 10 mln USD were accounted for each transaction.

One of the main changes of Russian venture market is focusing of corporations on computer technologies and equipment. We remind that back in the previous quarter 89% of assets were invested in software and internet. Private funds, apart from investments into computer technologies, pay their attention increasingly to the development of biotechnologies. So called business angels or private investors take more and more interest in projects on the development of industrial engineering in recent times.

Today it can be stated that Russian venture market is in the search of a catalyst of growth. Surely, deterioration in economic and political environment impaired the volume of foreign venture investments. However, such exacerbation of economic relations with the West can be of benefit to Russian investors. In case of the decrease in capital supply it is possible to make arrangements with entrepreneurs on more favorable terms.