After two years of apathy, the Russian venture market showed signs of revival in 2016, reveals the latest edition of the Russian venture report published annually by RG Partners, in partnership with EY and East-West Digital News.
From the seed stage to maturity deals, venture investment amounted to $894 million last year, up from just $383 million in 2015. “Market growth was essentially driven by a dramatic increase in expansion deals, whereas the volume of seed- and startup-stage deals fell to new lows,” notes Arseniy Dabbakh of RG Partners
While the total number of deals at all stages was approximately the same (around 300), the average deal value jumped from $1.3 million in 2015 to $3 million in 2016. Last year also saw 11 exits, with transactions amounting to $663 million, up from just $11 million in 2015.
“The euphoria of 2012-2013 was followed by two years of apathy as the international sanctions against Russia, the plunge of oil prices and of the ruble alike took their toll. The upturn in exits in 2016 makes us hope that a significant part of this money will come back to the innovation ecosystem this year,” says EY Partner Anton Ustimenko.
Key Russian VC market figures in 2016
Key trends in 2016:
Analysis by segment:
- In 2016, traditional B2B technologies (corporate management systems, platforms, e-commerce and search/recommendations) shrank by a half or more, while service start-ups reigned supreme — in which the authors of the report see a possible “sign of uberization.”
- Software and Internet remained investors’ favorite playground, with VC preferences shifting from social networks and e-commerce to education and gaming.
- Investment in industrial tech was on the rise with the involvement of several corporations and private-public partnerships. State-backed or state-related investors were also active this segment, in line with the government’s strategy to develop the national economy.
On the investor side:
- In 2016, private VC funds and corporations focused on the growth and expansion stages.
- Angel investment was vibrant, including the formation of angel and micro-angel investor groups as well as P2P and crowdfunding platforms. Last year also saw a new wave of investments from what appears to be a new type of private venture capitalists, including senior corporate executives and SME leaders, both in Moscow and in the regions.
- State-backed or state-related investors continued to support startups at the seed and start-up stages, remaining key investors in certain segments, even though an increasing part of this support took the form of grants rather than equity investments.
- On the corporate side, 2016 appears as a year of transition. Several Russian corporations made noticeable moves, from startup acceleration to acquisitions, to corporate venturing initiatives. Thus new funds were set up by such powerful players as Sberbank, Rostelecom, AFK Sistema and others. However, a range of Russian corporations have not clearly defined their innovation and venture strategies yet and remained little active in 2016. “There is huge potential for more efficient interactions between venture funds and corporations, and this area could drive an upturn in the venture market in 2017,” believes Ustimenko.
- Several of the Russian venture funds of the first generation are now raising new money. This is no easy task since the key investors for Russia’s VC funds are not institutions (as elsewhere in the world), but high net worth individuals and their families – a relatively small population, a part of which is already deeply involved in venture investment.
- In 2016, many Russian VC funds continued to invest in foreign startups — an orientation which started in 2011 and accelerated in 2014-2015, with Russian investors seeking abroad better profitability in dollar terms. (The present report, however, reflects essentially domestic investment activity.)
Tim Cook has not-so-subtly hinted that Apple is working on some sort of augmented reality product. And while ARKit may be the start, a patent application published today hints at what Apple could be picturing down the road.
- Amazon has a secret skunkworks lab called 1492, dedicated to health care tech.
- Areas of exploration include a platform for electronic medical record data, telemedicine and health apps for existing devices like the Amazon Echo.
Apple has teamed up with Australian-based Cochlear to bring iPhone users the first made for iPhone Cochlear implant.
Approved by the U.S. Food and Drug Administration in June, Cochlear’s Nucleus 7 Sound Processor can now stream sound directly from a compatible iPhone, iPad or iPod touch to the sound processor.
Google’s London-based AI outfit DeepMind has created two different types of AI that can use their ‘imagination’ to plan ahead and perform tasks with a higher success rate than AIs without imagination. Sorry if I made you click because you wanted AIs predicted flying cars. I promise this is cool too.
Scientists at MIT are using Wi-Fi and AI to determine your emotional state. They’ve created an algorithm that can detect and measure individual heartbeats by bouncing RF signals off of people.
Yep. Glass is back.
Engineers will soon conduct a crucial test of a futuristic technology championed by entrepreneur Elon Musk that seeks to revolutionize transportation by sending passengers and cargo packed into pods through an intercity system of vacuum tubes.
Uber announced that it will be combining its rides-on-demand business and UberEATS, its food ordering and delivery business, in Russia and neighboring markets, with Yandex.Taxi, the ridesharing business.
Tesla will up its game in the renewable energy storage market with the largest lithium-ion battery storage facility in the world, to be built for Australia’s Hornsdale Wind Farm, with a completion date of December 1, 2017.
Amazon’s Alexa voice platform has now passed 15,000 skills — the voice-powered apps that run on devices like the Echo speaker, Echo Dot, newer Echo Show and others. The figure is up from the 10,000 skills Amazon officially announced back in February, which had then represented a 3x increase from September.
During official talks with his Brazilian counterpart, Michel Temer, in Moscow on Wednesday, Russian President Vladimir Putin hailed the cooperation between the two countries in the field of technologies.
Putin noted that Russia and Brazil already cooperate closely in space exploration and that there are plans to develop cooperation in Earth monitoring from space.
UCSB researchers have proposed a new method for 3D through-wall imaging that utilizes drones and WiFi
The global risk analysis used by big banks, hedge funds, and governments to inform their decision-making around everything from foreign currency investment to foreign aid is getting the machine learning treatment with the launch of the new startup GeoQuant.
A team of researchers in Australia has created a solution that could make solar energy far more accessible.