Venture Market Navigator 2016
PricewaterhouseCoopers and the Russian Venture Company present the sixth annual review of the Russian venture industry "MoneyTreeTM: Navigator of the Venture Market" for 2016
According to the report, the total number of venture deals concluded in 2016 remained at the same level (184 deals in 2016 versus 180 in 2015). At the same time, in dollar terms, the venture capital transactions market decreased by 29% compared to the indicator for 2015 and amounted to 165.2 million US dollars (232.6 million US dollars in 2015). The total volume of transactions in the venture ecosystem amounted to 0.41 billion US dollars, compared to 2.19 billion US dollars in 2015.
The study notes that the main reason for the decline was a decrease in the average transaction size to $ 1.1 million compared to $1.5 million in 2015. Significant pressure on the Russian venture capital market in 2016 was exerted by the general decline in business activity, uncertainty about the forecasts of key macroeconomic indicators and the depreciation of the ruble (-10% on the average annual value of 2016 compared to 2015).
Gulnara Bikkulova, Deputy General Director, Member of the Management Board of RVC noted:
"Over the past three years, the Russian venture capital market has been demonstrating stability in terms of the number of transactions with a constant updating of the investor base, new investors start with exclusively Russian transactions, more experienced ones invest as part of international syndicates. At the same time, it is obvious that the instability of the economic situation in general, the lack of sustained interest on the part of large Russian businesses in innovation are significant barriers to the growth of the venture market."
The industry structure of the market remained unchanged in 2016, the IT sector retained the leading role in terms of total investment and accounted for 90%. The number of transactions in the IT sector increased by 13% compared to 2015. This trend is due to the increasing role of IT technologies in all areas of business and the willingness of investors to invest in projects related to the use of IT to improve the efficiency of business processes.
The main volume of attracted investments in the IT sector (41.8 million US dollars or 28% of the total) fell on the cloud technology and software subsector. The second and third places in terms of attracted investments were shared by the technology subsectors in the financial sector ("fintech") and reference and recommendation services/social networks (15 million US dollars and 10% of the total volume for each).
The segments of biotechnologies and industrial technologies account for about 10% of the total investment volume. The industrial technology sector showed significant growth in 2016: from 15 to 21 transactions. In the biotechnology sector, there is a decrease in both the number of transactions (from 39 in 2015 to 26 in 2016) and the volume of attracted investments from 18.1 million US dollars to 9.5 million US dollars. The volume of investments in the biotechnology sector was largely formed by state funds and venture funds with state participation. Funds with RVC capital were the most active.
According to the report, no major transactions worth more than $100 million were made in 2016. In 2015, there were 2 such transactions, the total amount was 200 million US dollars a year earlier.
In 2016, the number of investor exits increased by 4 transactions. At the same time, the total cost of exits decreased by 13 times and amounted to 120 million US dollars compared to 1573.5 million US dollars in 2015.
Also, in accordance with the research methodology, grants are considered separately in the review. According to the results of 2016, the number of grants issued amounted to 4,651. Traditionally, the main part of the grants was issued by the Foundation for the Promotion of Small Forms of Enterprises in the Scientific and Technical Field (the Innovation Assistance Fund or the Bortnik Foundation) - 4075 grants in the amount of 92.3 million US dollars. The Skolkovo Foundation has issued 576 grants, in the amount of 29.1 million US dollars.
Alexander Kardash, Senior Manager of PwC Corporate Finance Department in Russia:
"Despite the reduction of the venture capital market in 2016 in monetary terms, the number of transactions has not changed much, which indicates the continued high activity of venture investors. Given that the general investment activity in Russia is expected to recover in 2017, we can be cautiously optimistic about the future prospects for the development of the Russian venture capital market."
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28.03.2017