Case russian venture_industry_-_5_komanda

1. Venture Capital Market in Russia
TEAM 5

2. Venture Capital Market
TEAM 5 | #
Main Russian Venture FundsKey points
$75mln
$50mln
$40mln
$144mln
$60mln
$30mln
Main Government Institution of
Development
Top-5 Deals in Russia
Date Investments
Основные
цвета
2011 $8.3 mln Yandex
2012 $38 mlm Intel Capital, Acton Capital Partners, Accel Partners, Balderton Capital
2014 $150 mln АФК «Система», ОАО «МТС»
2013 $25 mln IMI.VC
2011 $19 mln Inventure Partners
Investors
• size of venture capital market - $447.5mln
• number of deals during the 2014 – 319
• The leader in the number of transactions –
IDFI (104 projects)
281
268
4
52
0 100 200 300
2013
2014
Size of the VC market, $mln
Exits New projects
281
268
4
52
0 100 200 300
2013
2014
Number of deals
Exits New projects
deals – 9
Investments - $230mln
deals in 2014 - 104
deals - 183
Investments in 2013- $27mln
deals – 89
Investments - $230mln
Source: EY, RusBase, RVC

3. Suggestions for improving the framework of the VC in Russia
TEAM 5 | #
Legal framework of the VC in Russia
• Flexible mechanism of formation and the
order of the Investment Fund
• No restrictions in the choice of
investment
• Limited liability of participants within the
value of contributions in proportion to
their size of investment
• Protection of the investment fund in case
of bankruptcy
• Sale of government accelerators
Tax credits and tax policy Evaluating the performance of
state institutions
1) Number of exits
2) Profitability of projects
3) Payback Period
4) Number of failed projects
• Tax exemptions
• Tax incentives in the form of
"vacation"
• New zones with special tax
regulations
5) Internal Rate of Return
Source: EY, RusBase, RVC

4. History of Russian Venture Industry. Main events
TEAM 5 | #Source: theangelinvestor.ru, EY
“EBRD” created 11 venture founds
with capital about 20 m $
International Finance
Corporation started to invest
in Russia. For that there was
created Russia-USA found
with capital 440 m $.
RVCA was created. It was first
professional association.
1998 economics crisis.
Only Quadriga Capital,
Eagle and Norum
survived.
Market started to grow. Yandex, Ozon, Rambler raised
first investments and became a leaders. And also it was
first successful exit in Russian market
RVC was created. RVC got
the majority of Russian
department of
economical development
founds .
Russian department of
economical
development made
program to increase
investments in regions.
(1995) (1996) (1997) (1998) (2001) (2005) (2006)

5. Significance of government on Russian venture market
TEAM 5 | #Source: EY, RusBase, RVC
Amount of investments by RVC’s founds
Amount of investments by other founds
Number of investments
Value(m$)
Proportion of invest RVC’s founds on Russian
venture market
State institutions achieved their goal: to make a huge
impulse to Russian market of venture industry. Now the
majority of investments are made by private Russian and
foreign investors.
Role of government
Russian government have a biggest impact on
developing national innovation economics. At the
2004-2009 government created several national founds,
which attracted a lo of people to new economics,
innovations and enterprise.
In 2010 in Skolkovo there was created a program, which
let residents pay less taxes and other expenses.
Cause of government changes in law system, Russia get
92-place(19 up!) in ranking of easiness of doing
business.
The main important found is RVC.
Russian venture industry is growing faster than GDP.
Biggest state
founds:

6. History of foreign venture capital in Russia
TEAM 5 | #Source: slideshare.net/AndreyKulikov/, agequal.ru
Share of foreign capital and co-investment
Percent of foreign capital is growing persistently and fast, especially because of
co-investment.
The vast majority of deals were originated by Russian investors.
However, when we look at volume of capital deployed, foreign capital is driving
this. In 2011 at least half of deal’s volume was made by foreign capital.
The key of growing foreign capital is co-investment and participations foreign VC’s
in later stages.
Top foreign founds in 2011-2013
Intel Capital
Mangrove Capital Partners
Ventech
Kreos Capital
Number of deals
4
4
4
3
Accel Partners 2
0
50
100
150
200
250
300
2010 2011 2012 2013
Foreign
Foreign and Russian
Russian
undisclosed
0
100
200
300
400
500
600
700
800
2010 2011 2012 2013
Foreign
Foreign and Russian
Russian
undisclosed
Number of deals with Russian and Foreign investors
participation
Breakdown of capital deployed by origin of investors, $m
m,$Numberofdeals

7. Perspective partnership
TEAM 5 | #Основные источники: EY
Azure Benchmark
Canvas Venture
Fund
Andreessen
Horowitz
The most perspective
partnership
The most perspective sphere in Russia is IT, so
we suppose to focus on venture funds, which
are usually investing in IT-sector.
Russian IT-sector is growing persistent and
fast. Also not government investors prefer to
invest in it.
Focused on
Communications,
Consumer,
Enterprise, Internet,
IT Infrastructure.
The firm's portfolio
includes
TopTier, Vmware, W
orld Wide
Packets, and VAPPS.
$330M
Focused Technology
& Financial Services.
Canvas currently has
investments in
Minted, MySQL, Ope
nTable, ResearchGat
e.
$2.3B
Focused on
Communications,
Consumer, Internet,
IT Infrastructure.
Canvas currently has
investments in
HealthLoop,
Totango, FutureAdvis
or, CrowdFlower.
$175M
Focused on Internet.
The firm's portfolio
includes Apptio,
Skype.
$950M
Breakdown of investments in Russia e-
commerce, 2010-2011
e-commerce
other e-commerce
travel
collective buying
42%31%
11%
16%

8. Strategy for Russian venture industry
TEAM 5 | #Основные источники: EY, firrma.ru
Develop accelerators, create new
education programs in IT
Government’s funds should
change focus to IT-sector, as the
most perspective one.
Partnership with foreign venture
fund (especially co-investment).
Develop law system and make
taxes smaller for statups
VC in Russia will continue growing fast
Russian market of venture industry is growing since
108,3 m $in 2007 to 1213 m $ 2012.
Russian VC is growing mostly because of IT-sector
Russian venture industry is in beginning of its way.
If we choose this strategy we will grow even more
faster.

9. Investment proposal
TEAM 5 | #* All projects have seed stage. Sources: sites of the companies and team analysis
Plan of investment
1. Invest in all projects 1-2 $mln
2. After 1-1,5 years
is necessary to choose
5-6 the most successful projects and distribute
remainder investments between them
Projects* Description Exp ROI,%
Computer accessories 80
Anesthesia Equipment for breath 88
Legal music for business use 82
Program of storage and use of discounts and
bonuses
70
Platform for creation applications 43
Analysis and monitoring of social media 60
Logistic optimization 65
Biotechnology for skin 80
Access to oncological diagnostic in the world 68
Mobile Internet for tourists 50
Business analysis via mathematical methods 84
Access to robots programming 80
Financial management and optimization of
family budget
33
Finance management for children 50
ИнсайдЭр Фарм New way to treat cancer 90
E-payments 95
Business Integrator of payments 80
•PayPlugin +12 $mln
•ИнсайдЭр Фарм +30 $mln
•Anekom +25 $mln
•CloudPayments +15 $mln
•Liberty Grant +10 $mln
•Бубука + 5 $mln
•ТРИК + 15$mln
•Octodon +16 $mln
Total: 128 $mln

10. Comparison with alternative Investments
TEAM 5 | #* Data of Bonds are used for 4-6 years, the others – for 5 years.
Investments in mutual funds with high risk and
some bank deposits have similar return.
Return for 5 years in Russian market
After 5 years our Portfolio ROI= 83,5%
12%
10%
4%
1%
4%
60%
9%
16%
5%
90%
53%
66%
80%
40%
bond Роснефть
bond Аэрофлот
eurobond Газпром
eurobond Яндекс
eurobondАльфа Банк
pref. shares Сургутнефтегаз
shares Нирникель
shares Газпром
Московская Биржа
deposit Арксбанк
deposit ВТБ 24
deposit Банк Россия
mutual fund Арсагера
mutual fund "Илья Муромец" Сбербанк
Fund can get such profit but with no
significant risk decrease.

11. OUR TEAM
TEAM 5 | #* Data of Bonds are used for 4-6 years, the others – for 5 years.
• GALUSHKINA MARIA – P. 1-3
• VLADISLAV SCHADRIN – P. 4-6
• IGOR MUDRENKO – P. 7-9
• ALENA GERASIMOVA – EX.2