Stagnant but alive: Russia’s VC market finds stability
18 Dec '18
Analysts at RB Partners earlier this quarter issued an in-depth study of Russia’s venture market in the first six months of this year. These are the key findings from the report.
The market has found stability, showing no change over the past four quarters. The number of deals dropped yoy in 1H 2018.
Investments at the seed stage grew considerably, a trend we have watched build up for a few years now. It’s probably an increased interest from angel investors and accelerators that is responsible. The latter were involved in about 80% of all early stage investment deals. Venture funds were lackluster at this stage.
Across other stages, moneys were smaller. We saw no growth in the number of deals, unfortunately, in spite of investors verbally willing to shell out funds. Certainly, questions arise as to the quality of investments in the early stages; conversion is still relatively low, but perhaps an improvement may take a few more years.
At the advanced stages, the average investment per deal grew. Those few projects investors typically find attractive got beefed up with greater moneys than before.
Stagnant as it may seem across stages, the overall picture is somewhat prettified at maturity. It’s the first six months that saw Gett and Ozon close their impressive rounds which accounted for two-thirds of the entire investments in the market.
Despite predictions, ICOs did not dishearten the venture markets in Russia and globally. Comparison between 1H 2018 and ICO-flooded 2H 2017 gives us a 50% shrinkage in the number of ICOs (with double the investment amounts, though, as the market has been maturing in line with expert forecasts, and unprofessional investors appear to have left it).
So, we have seen a relative calm over an at least three year period, characterized by a barely changing number of deals, bigger moneys, an increase at the early stages and slump at the advanced ones, and eventual leveling with huge deals taken into account. On the other hand, it’s good to know that despite all the threats which experts warn should reduce VCs to ashes (global crisis, offshore crackdown, sanctions, ICOs and whatnot) the market is still alive and steady.