The Internet initiatives development Fund has calculated that investments in Internet-Startups at the most early development stage in 2012 reached $370M. For one year the market increased 20%, but herewith the main challenges in the branch development - its cloudiness and projects’ low quality – remain.
The volume of the Russian business-angel investment market (invest at the idea stage) in Startups in 2012 comprised $370M (20% higher than in 2011, - $310M), herewith almost half (42%) comprise non-disclosed deals, that informs the report, prepared by the Internet initiatives development Fund (IIDF). The standard range of investments at this stage comprise $20-300K, and investors usually get in the project a share of 20-40%, which in fund’s attraction by Startups at next stages additionally is divided 10-20%. The important peculiarity of such investors is that they prefer private contact with developers, as compared to venture funds, which regulate all procedures.
According to estimates of the National Business-Angel Association, in Russia there are about 2.5-3 thousand active business-angels. About efficiency of their investments it is possible to judge in one or two years, when the first mass enters of investors from projects are expected, is noted in the investigation. Still the vast majority of such Startups is unprofitable, or they entered a small profit, but reinvest it in business development.
Mostly positive dynamics of private investments market in Internet-Startups is explained by decrease of required investment volume. However there are many deterrents of the industry development. For example, this is the low quality of Startups (causeless ambitions of founders, steep demands to companies’ estimation), low quality of a business-model working-out), distrust between participants of venture industry, competitiveness of angel investments with Government money, - inform questioned business-angels by the Internet initiatives development Fund. Hereto added problems of the Russian legal environment – in particular need to form numerous papers in deals execution with LLC and disadvantages in the optional legislation, complicating mechanisms of the team motivation.