RMG and EWDN report: Q4 most successful in 2013 at Russia’s venture transaction market

Rye, Man & Gor Securities (RMG) and East-West Digital News (EWDN) have announced a fresh issue of the Russian Venture Capital Market Overview, which includes a detailed analysis of Russia’s venture capital market in the 4th quarter of 2013 and a rundown of 2013 trends and events. 

The primary goal of this report is to make Russia’s innovative sector more alluring for both foreign and domestic investors and increase the efficiency of contacts between investors and innovative companies seeking financing.

In an exchange with Marchmont News an RMG spokesman outlined the key takeouts from the report:

• 4Q turned out to be the most successful quarter of the year in terms of both VC invested and deal count. Russian venture companies received $99m in 126 deals, and two exits were worth a further $88m in total.

• Total venture capital invested in 2013 fell by 31% year-on-year from $907m to $622m.

• The market appears to have reached its lows in summer 2013, and RMG expects results in 2014 to be better than in 2012.

• VC investors were better disposed towards late-stage projects in 2013, with 41 deals at the growth and expansion stages compared to 29 in 2012, while the number of early-stage deals declined from 335 to 301.

• The “division of labor” between private and public investors, which is a distinguishing feature of the Russian VC market, was reinforced in 2013. On the private side, private venture funds and corporates directed 90% and 69% of all their capital to the IT sector, respectively; on the public side, 66% of all investments made by state-backed development institutions went to the industrial tech and biotech sectors.

• Last year brought no significant changes in the sector structure of Russia’s VC market: IT accounted for about 83% of total capital invested in both 2012 and 2013.

• The B2C segment remains the pillar of the Russian venture capital environment but, as it is gradually becoming saturated, investors are diversifying more actively.

“Russia’s VC market, which is becoming more and more mature and efficient, remains fundamentally attractive to both foreign and domestic investors. However, the lack of information and transparency is still a major obstacle impeding its healthy development,” said Arseniy Dabbakh, the director of corporate finance at Rye, Man & Gor Securities.

“Venture capitalists are keeping an eye on the Russian high-tech market, which hasn’t been much affected so far by the slowdown of the Russian economy,” noted East-West Digital News chief editor Adrien Henni.