MC Leader may invest $10M in iiko

MC Leader may invest $10M in iikoVenture Fund Leader-innovation managed by MC Leader which includes the structures of Yuri Kovalchuk and Gazprom among the co-owners, is in talks to buy shares of a producer of software for cafes and restaurants iiko. Expected value of the transaction is $10M. It will not be easy for iiko, set up by ABBYY's founder David Ian, to achieve significant sales growth in Russia because 70% of the market is controlled by UCS Company with R-keeper system. Therefore iiko relies on foreign markets.

Two sources familiar with the negotiations told Kommersant about the fact that venture capital fund Leader-innovation of Management Company Leader will invest $10M in iiko's software products for restaurant. The founder of the company David Young and the CEO Roman Avramov declined to comment, as did the MC Leader.

In January, it was reported that the company is in talks with several large investment funds to attract investments for international expansion; the markets of Asia and Eastern Europe - Bulgaria, the Czech Republic and Poland were considered for this purpose.

MC Leader may invest $10M in iiko
This is not the first round of investment for iiko: a venture capital division of Troika Dialog Company invested several million dollars in the development of the company and received 36% of iiko in 2007. 17% of shares is owned by David Ian (who set up ABBYY - a company with a turnover of more than $100M which operates in 11 countries), the rest is distributed among a group of individuals.

This is a utopian idea, but nevertheless Maxim Nalsky, my partner, and me has invested money in order to create the best managing system for restaurant business, - David Young said, the founder of ABBY and iiko in an interview with Forbes in the summer of 2011.

Iiko project was launched in August, 2005 by David Ian and Max Nalsky. Product's development is conducted in Kazan. According to the company, the number of restaurants that use iiko's products exceeded 2.5 K. The key clients are MR Planet of Hospitality, Coffee House and the group of companies of Arkady Novikov.

The software for restaurants registers selling food, arrival and departure of employees, automates the calculation of food cost and wages.

We plan to have at least 50% of sales abroad by 2015 - David said in that interview with Forbes in July, 2011. - We started selling in 2008. The number of installations iiko's software exceeded 1.4K over the past two years. The installation of the program could cost about 30-60 K RUR for one restaurant and 300 K RUR for the other (depending on the number of workstations). Unlike other systems, our combines significant number of business processes - warehouse and finance, cash, and personnel management (motivation schemes, loyalty systems, CCTV), - he said.

According to the Commercial Director of UCS Company (a competitor of iiko; produces software for restaurants under the name R-keeper, leader in its segment) Galina Retoeva, the number of restaurants in Russia increased by 20% each year before the crisis, and now has returned to pre-crisis growth levels. Russia has no more than 20 thousand restaurants now. The market is not big. And iiko has only two major chains, - Galina notes. According to her, UCS controls 70% of the market; R-keeper (costs 110K RUR for one restaurant) is installed in 25 thousand restaurants in 34 countries. Therefore it is logical that the company of David Yang and Maxim Nalsky counts on foreign markets.