DST Uncovered: Russian Super VC Invests Into Groupon
Amid recent news of Groupon closing a $950M funding round, it might be easy to miss that Digital Sky Technologies was one of the main investors. The Russian super VC is on a serious shopping spree. Apart from the Groupon deal it recently invested $50M in Facebook and is said to be eyeing a stake in Twitter, who is likely to be the next web darling to close an investment round soon. Add that to DST's stakes in Zynga, Vkontakte, Nasza-klasa.pl (leading Polish social network), HeadHunter.ru (Russia's largest jobs website) and a complete ownership of ICQ, Mail.ru and Odnoklassniki and you'd see a meer part of DST's might.
DST is a late-stage investment fund based in Moscow and ownded mostly by Russian investors, though Goldman Sachs, South African Naspers and Chinese Tencent own over 40% of the fund. Apart from the recent lavish investments, personalities behind DST are what makes it so interesting. What unites all of the Russian DST investors is that they are all in their fourties, graduates of top Moscow universities, most from physics, IT and maths backgrounds. They gained their weilth through investment or by building a successful service.
Yuri Milner, quoted 'Facebook's Russian Sugar Daddy' by Newsweek, was Mail.ru's CEO in early 2000 and is currently on the board of Mail.ru and Vkontakte. Alisher Usmanov, quoted by Forbes to be among the world's 100 richest men with estimated $2.7 billion fortune owns Russia's biggest mobile operator MegaFon and is a major shareholder of London's Arsenal Football Club and US-based blogging platform LiveJournal. A big deal all around.
Little is known about the rest of the investors who include Gregory Finger, DST's founding partner and current president, who also made a career in investment and is currently serving on Mail.ru and Hunter.ru's boards. Igor Matsanyuk founded a casual online gaming company in early 2000 and is now presiding over Astrum Online Holding, which is a leader in online entertainment in Eastern Europe with over 20 million users. Finally, Sergey Orlovsky is founder and CEO of Nival Group, one of the leading online games developer in Russia.
Is DST good for online businesses? So far they've been investing almost exclusively into Russian and US web giants and only at late stages. Thus, they're handy for those who made it big already but of no use for early-stage start-ups anywhere in Europe. It's a pity DST is not interested in emerging successes from the old continent - the place is full of potential. Maybe in the future the fund would help up-and-coming European successes go global?
Image taken from primitus.com
Judging by odnoklassniki.ru website, which became quite awful and seems to be losing to vkontakte.ru (d'you know many other social networks that require new users to pay by SMS to register?), by ICQ, which went on losing its users by blocking external clients like QIP, I'd say that DST is one big disaster for the users and companies as a whole. The level of mail service mail.ru is providing is horrible as well - I was getting lots of spam and many useful letters were filtered out, at least that's how it was a year ago.
Typical contemporary Russian approach - drain as much money as possible while you still own your business and to hell with the rest.
I admit that for the CEOs it might be a blessing if a company is bought by DST. Corruption is a typical trait of Russian business and it would seem natural to me if DST paid a lot to CEOs directly to close the deals.