Russia’s largest startup fund celebrates 5 years of operations
The fund launched in mid-2013 as an instrument to support the emergence of a strong startup industry in Russia. It initially received the equivalent of $200 million – a huge sum if considering the relatively modest size of the Russian startup market, especially at that time.
However, due to the ruble’s sharp depreciation since then, the current value of the fund’s capital has shrunk by around 50%.
The creation of the fund came as an initiative by President Putin; however, the IIDF is not financed by the government. It presents itself as a classic venture fund without disclosing the identity of its LPs. According to insiders, large state corporations are among its backers.
“A full-fledged ecosystem”
Since its inception, the fund has invested 3.18 billion rubles (roughly $50 million at the current exchange rate) in 367 startups. As of May 2017, the fund’s portfolio was valued at 4.36 billion rubles (roughly $69 million), which is 41% more than the money which the fund injected in the companies.
The IIDF has been Russia’s most active venture fund with 43% of all venture deals in 2017.
Slightly more than half of the fund’s portfolio companies are from Moscow (187) and Saint Petersburg (39). Top five regions represented in the portfolio are the Sverdlovsk, Novosibirsk and Tomsk regions, accounting for around 13% of startups. When it comes to the amount of invested funding, Moscow (55%) and Saint Petersburg (19%) are leading the list. Next come the Perm, Novosibirsk and Voronezh regions, startups of which attracted almost 14% of investment from the IIDF.
Beyond simply funding startups, the fund claims to have built “a full-fleged support ecosystem,” which IIDF Director Kirill Varlamov described as follows in a recent interview with EWDN:
“We hold a range of educational events across Russia – thus last year 28,000 people took part in 265 IDFF events. We develop the angel investment market through special training programs as well as through the crowdfunding platform StartTrack, which the market leader with more than 2,000 participating investors to date.”
StartTrack claims to have become the leader of the crowd investment market with over 800 million rubles (roughly $12.6 million) turnover in 2017. The total turnover of the platform reached 1.5 billion rubles (some $23.7 million) since its launch in 2013.
IIDF also supports an acceleration program, which Varlamov says was “inspired from the experience of the most successful funds and accelerators in the world.” Thousands of teams have participated in this program, which gathers a community of experts in the fields of IT, sales, marketing and technology.
Over 95% of the fund’s portfolio companies participated in this accelerator. The companies which managed to reach their KPIs attracted the next seed investment round, which amounted to up to 25 million rubles (almost $400,000) per company. These companies include Stafory, Hot WiFi, Brandquad, UNIM, HoloGroup, Sticker.Place, KidsWay, DocsInBox, Zig-Zag, UseDesk, TalkBank, Convead, MMOGuard and others.
A variety of players and groups are involved in IIDF activities, “from local or international corporations, to industry associations, to students or even children in entire regions,” Varlamov said.
Besides, the IDFF’s experts has been used by lawmakers when drafting regulating IT market regulations and legal frameworks for entrepreneurs and investors, he underlined.
80% survival rate
The fund has mostly invested in the companies in the field of artificial intelligence and machine learning, which account for 13% of its portfolio. Other supported fields include e-commerce, healthtech and fintech.
As of 2017, among the IIDF’s leading startups in terms of revenue were Knopka Zhizni (“Life’s button”) with 240 million rubles (around $3.8 million), Cinemood ($3.2 million), FlowWow with 290 million rubles (almost $4.6 million), and UBIC Technologies with almost 100 million rubles (almost $1.6 million).
Over 80% of the IIDF’s portfolio companies are still alive, while 63 companies ceased their operations and another 15 startups are likely do so. In total 111.3 million rubles (some $1.7 million), or 3% of the IIDF’s total investment,amounts, was injected in these projects.