'Venture capitalism works like the solar system: when the sun moves, the rest follow',- said Lubov Simonova-Emelyanova of Almaz Capital Partners. The sun in this metaphor is Digital Sky Technologies (DST). The fund's sheer size and growing activity prompted other Russian investors to increase their investment activities. Russian venture capitalists are expected to make much more investments this year compared to 2010. The catalyst might have been DST's announcement of opening a new fund, DST Global2, which already invested in Groupon this January and is said to be negotiating a $100M-worth funding round with Spotify. Following the lead Almaz Capital Partners announced their plans to invest in four start-ups with the overall sum of investment comprising $30M.
Founded in 2008, Almaz Capital currently has $100M in funding. The fund invests in companies working in IT, mobile, telecommunications, e-commerce, data storage and management of business processes. Estimated length of investments is 3-6 years.
There are five companies in Almaz Capital's portfolio today: two B2B software companies Parallels and Acumatica, a minority stake in Yandex (estimated to be worth $7-8M), a developer of social networks for businesses Apollo Project and a casual game developer Alaware Entertainment. In January this year Almaz Capital made a hefty profit by selling its share of Qik to Skype.
Almaz Capital is not the only Russian VC expected to increase the number of their investments this year. The other much talked-about fund is Runa Capital. This February their fund increased by $20M, making up a total sum of $50M. Most of that money has not been used yet.
Runa Capital acts as a seed investor and so far it has invested in two start-up: OnAir3G and Hivext. The total sum of both investments does not exceed $3M. According to Dmitry Chihachev, Managing Partner, Runa Capital is now negotiating investments with six start-ups. Each might receive about $1M investment. Runa Capital is expected to fund up to nine companies this year.
There is already a growing number of start-ups and software entrepreneurs in Russia and CIS building companies for various industries. Having multiple active investors hungry for good deals is a long-awaited piece to the puzzle.
Image by Caston Corporate