Russian venture capital market analysis by RusBase

Russian venture capital market analysis by RusBaseIn May 2013 we saw the continuation of a well-established venture market trend, as media projects and internet startups focussing on marketing and search proved most popular with investors. Almost all the startups that attracted funding raised between $300K and $500K, which corresponds to 3-4 months worth of operations for a growth-stage project. Investors’ continued interest in these projects can be explained by the sustained growth of e-commerce and social media, which both use and are used by internet marketing firms.

However, May was not such a good month for developers of computer software. Demand for their products fell and the sector remains on the margins of the Russian venture market. There was also little to cheer for the ailing travel sector, whose ongoing troubles showed no signs of letting up as more firms had to be shut down.

In 2012 the the Russian venture market (including Ukraine, Kazakhstan and Belarus) hosted at least 8 successful exits (i.e. startup was sold to strategic investors or merged/absorbed into another company). We do not include the Begun - Rambler deal, which was not exactly venture capitalism, while a number of other small deals are excluded either because they are mergers with littel hope of success or because the startup in question was from outside the region. Overall, in 2012 the return gained by investors in the majority of exits was less than 20 to 30 times, which shows that leading players in the market are still reluctant to spend serious money to acquire fast growing startups (with the exception of Viewdle). In other words, it is still the case that successful Russian startups must look to the West in order to secure a high price for their company.

Below you can see an infographic analysis of the Russian venture market in March 2013, brought to life by GoVisual.