Central regions | Finance, business | Technology & innovation
New report uncovers key deficiencies of Russia’s VC market
17 Jul '18
Russian Venture Company (RVC), the national fund of funds nurturing the innovation industry in Russia, has published this year’s report on the state of the venture sector in Russia’s economy. The Russian VC market is still a dwarf compared to the global leaders, the key findings in the report tell us.
Russia’s venture capital market accounts for a meager 0.01% of the GDP, a level that places Russia next to countries like Slovakia or Spain and is but an estimated 30% of the venture markets in the leading economies such as Germany or France. By the end of 2014 the Russian market discontinued its free fall that had begun back in 2012, but no real growth has been observed since then.
The authors of the RVC study polled a number of investors and found that in the latter’s opinion, one of the key snags that hinder the development of the domestic VC market is a very limited number of projects which investors find interesting. While the nationwide pipeline of projects has shown certain growth over the past few years, the quality of those has deteriorated, the investors complained.
Another deficiency the study has uncovered in the Russian venture industry is the lack of business competencies found in most entrepreneurs and project teams. That gets seriously in the way of turning research results into real commercial products.
RVC also pointed to very limited exit opportunities as a debilitating factor in the development of Russia’s VC market. The number of investor exits has plunged over the past couple of years. Facing low venture asset liquidity, the number of investors operating in the Russian market has shrunk.