Report: Russian VC market changes little, focus keeps on, but money shrivels
28 Mar '17
PwC and RVC, Russia’s government fund of funds for innovation, have published their sixth joint “MoneyTreeTM: Venture Market Navigator” annual report on Russia’s VC industry for 2016.
According to the report, the total number of venture deals inked last year barely changed (184 transactions in 2016 vs. 180 in 2015). The total investment value, however, experienced nothing short of a nosedive, sagging from $2.19bn in 2015 to just $410m last year.
The sectoral structure of Russia’s VC market in 2016 showed relative stability, with IT accounting for the lion’s share of investment (90%). The number of deals in the IT sector increased 13% from the 2015 results. The trend stems from an ever growing importance businesses across sectors attach to information technology, and from investors’ willingness to shell out their money for projects that tap IT for increased efficacy in business processes.
In the IT sector, it was the cloud tech and software segment that raised most of the investment ($41.8m, or 28% of the total), followed by fintech and recommendation services / social networks ($15m, or 10% of the total each).
The biotech and industrial tech segments accounted for about 10% of the total, with the industrial segment showing a noticeable growth last year to 21 deals from 15 the year before. In the biotech segment, however, both the number of deals and the overall investment value declined: 26 deals in 2016 vs. 39 the year before, and $9.5m vs. 2015’s $18.1m. The biotech segment was largely propped by government funds and VC funds operating on a public-private partnership (PPP) basis.
The partner analysts found that in 2016, not a single transaction worth more than $100m was inked. In 2015, there were two such deals worth a total of over $200m.
Last year there were 30 investor exits, up four exits from 2015. The total amount of money the investors gained in their exits, though, shrank by an impressive 13 times to just $120m, a sharp decline from 2015’s $1.57bn.