A new wave of funds: Russian investors assert themselves on the domestic and global markets

A new wave of funds: Russian investors assert themselves on the domestic and global markets
By East West Digital News in Moscow May 21, 2021

The Russian venture scene is tiny, but vigorous: several new funds were announced over the past few weeks, targeting a variety of sectors and geographies, sometimes with very specific approaches, reports East-West Digital News (EWDN).

RUB10bn for Russian tech start-ups

One of these new funds was announced by TealTech Capital, a PE/VC firm owned by Yury Alasheev, Andrey Ivashchenko and Andrey Krivenko, three businessmen from the food production, food retail and pharma industry respectively.

Funded by its founders exclusively, TealTech’s first fund has invested RUB4bn in total since 2017, backing 43 projects at various stages of maturity. At the pre-seed and seed stages, the portfolio includes mums' marketplace Kid-to-Baby, educational assistant Mishka AI, neuro training software developer Neurochat, and many other projects.

TealTech now intends to launch a new fund, TealTech 2, targeting some RUB10bn ($135mn). TealTech says it will not take any management fee, but retain a carried interest of 50% of the profits well above the 20% industry standard.

“We don’t find it very fair that funds take 2% for the management, we’re ready to take the risks,” Kirivenko explained in an exchange with Forbes Russia.

Chasing gaming start-ups across Eastern Europe

Executives from My Games Venture Capital (MGVC) and other players of the gaming industry are in the process of raising at least $50mn for a gaming-focused fund. Dubbed ‘Games Fund,’ the vehicle will invest across Eastern Europe, injecting up to $2mn into pre-seed and Round A start-ups and up to $5mn at later stages.

As reported by EWDN, Games Fund says LP interest has exceeded expectations. It has already received support from Lev Leviev (co-founder of VKontakte and founder of the LVL1 fund) and a London-based investment bank, among other investors. Under plans, the fundraising will be closed by the end of the summer.

50 LPs to invest in Russian-speaking founders

Another international fund is being created by Andrey Taburinsky, a former Mail.ru Group VP, and Roman Tyan, ex-investment director at Fort Ross Ventures. Dubbed NRG Ventures (‘New Russian Generation’), this new fund targets Russian-speaking start-up entrepreneurs operating in foreign jurisdictions typically the US and the EU. Under plans, NRG will invest $500,000 on average in some 50 companies, from pre-seed to Series A.

Citing recent stats from top US accelerators, Taburinsky and Tyan say that international start-ups with Russian-speaking founders show particularly high success rates. Thus, 25% and 40% respectively of recent 500start-ups and Alchemist batches were start-ups with such founders.

NRG Ventures wants to raise $25mn from up to 50 LPs at the initial stage telling them they may expect a “83.5% IRR” (internal rate of return) as early as 2023. Registered in Delaware, the fund will be associated with an in-house venture studio and leverage the “ecosystem” which Taburinsky and Tyan say they have built for the past few years.  

NRG’s first investment ($300,000) went to BestMap, a start-up launched in San Francisco by a young Russian entrepreneur, Anatoly Corp. This graduate from the Tomsk university touts himself as the “World’s Youngest Publicly Traded Human.” Bestmap which aggregates all mobility providers in one app is not his first start-up.

Proptech fund from real estate major

MR Group, an established real estate developer, has launched a corporate vehicle (‘MR Ventures’) to invest some $50mn in start-ups in particular, those developing automation solutions for the construction industry, as well as sectorial marketplaces and investment platforms using big data.

While targeting start-ups from Russia and Russian-speaking neighbouring countries, the fund might extend its operations to the European and American markets, business daily Vedomosti learned.

MR Ventures is managed by Renata George, a Russian-American entrepreneur turned angel investor then turned VC. She did not answer EWDN’s questions on the fund’s strategy.

$10mn for Phystech graduates

As reported by Kommersant, a special $10mn fund will take care of projects presented by graduates from the Moscow Institute of Physics and Technology (MIPT), a prestigious technology university also known as Phystech.

This vehicle is the creature of Flashpoint (previously Buran VC), a VC firm operating across Central and Eastern Europe, Finland and Israel, in association with i2BF Global Ventures, a US-based fund with Russian connections.

Dubbed ‘Phystech Leadership Fund,’ the new fund will contribute $200,000 checks to rounds involving MIPT graduates, helping them with scaling their technology in Russia and abroad.

Russian state money to woo foreign start-ups

This new wave of funds also includes a yet-to-be-named state-backed vehicle. In early April Sber, the state-controlled financial and digital giant, and RVC (Russian Venture Company, now affiliated to the sovereign wealth fund RDIF) announced plans to launch a joint $100mn fund for early-stage tech start-ups. As reported by EWDN, the fund will target start-ups based in Russia as well as foreign with plans to enter the Russian market.

Sber president Herman Gref saw in this initiative “the first step toward the implementation of Russia’s innovative development strategy and the reform of development institutions.”

According to him, Sber and the RDIF “aim to establish a culture of technological and science-intensive entrepreneurship in Russia to cultivate unicorn start-ups that will be competitive in the international arena.”  

This article first appeared in East-West Digital News (EWDN), a bne IntelliNews partner publication.