Russia?s angel investing market grows but problems with start-ups and law persist ? IIDF

Russia?s Internet Initiatives Development Fund estimates that in 2012, early-stage angel investing in Internet start-ups grew 20% y-o-y to $370m, but a lack of market transparency and a low quality of projects remained a problem

Russia?s Internet Initiatives Development Fund (IIDF) estimates that in 2012, early-stage angel investing in Internet start-ups grew 20% y-o-y to $370m, but a lack of market transparency and a low quality of projects remained a problem. Innovation news portal reporting the IIDF findings emphasized that almost half of all transactions in 2012 (42%) were unpublished deals with undisclosed terms. The transactions reportedly varied in value from $20,000 to $300,000, with investors getting a 20-to-40% stake in their investees. Typically, as the start-ups go ahead and raise next-round investments, the business angels? initial stakes are diluted to 10-20%. Unlike VC funds that have strict procedures, the business angels prefer personal contacts with developers. According to another estimate by the National Association of Business Angels (NABA), there are approximately 2,500-3,000 active angel investors in Russia. One won?t be able to assess the efficacy of their investments until one or two years from now when the first wave of investor exits from their projects is expected, the IIDF study said...