Last year, Venture funds invested about $80 million or less than 0.2% of the world’s investments in Russia, estimated experts of Ernst & Young.
Majority of venture funds of the leading centers (see extract) invest money not only in the domestic market but in overseas market as well. Most of them intend to increase the volume of foreign investment by 2015 according to overview of Ernst & Young. For the previous year, the total amount of $48.7 billion of venture capital funds were attracted in various investment projects in the world through 4900 deals against $45.6 billion, a year earlier. The record - $49.4 billion in 2007.
The U.S. accounts for 70% ($32.6 billion almost 3000 transactions) of the total investment. The index of Western Europe - $6.1 billion, China — $5.9 billion. The Region of Central and Eastern Europe, including Russia, attracts a little amount so far, but shows good growth rates: $123 million in 17 transactions was attracted only in the first half of 2011 compared to $76 million in 23 transactions for the whole 2010. The share of Russia in the region investment volume is about 30%, or about $40 million, says Oleg Danilin, a partner of Ernst & Young. He suggests that $30-40 million was attracted in the second half. And although the absolute value of investment in Russia is increasing, it is no longer dominant in the region, says Danilin.
Ernst & Young underestimates the Russian segment of the venture funds, assures CEO of the Russian Venture Company (RVC) Igor Agamirzyan: “In 2011, only the funds of our system (with the participation of RVC or controlled by RVC) made deals to the amount of $75 million, in which the RVC accounted for a quarter of the market”. “Over the past two years, a dramatic change has occurred: the investment volume has increased almost 2 times – we can see a significant growth in the interest of foreign investors and, consequently, reduce the state’s share in this industry”, - notes Agamirzyan. “But Russia has a large bias in the sphere of IT industry, telecom, with a low proportion of such popular aspects in the world as biotechnology or environmentally friendly technology, - IT – less intensive in input use”, - says Chief Investment Officer of the “Skolkovo” Foundation Alexander Lupachev. Russia’s share in the global clean technology sector is zero – the majority of projects are poor and not ready for financing by institutional investors, adds Director of Clean Technologies Fund of the Republic of Tatarstan Polina Burnos. It is still possible to attract the sources of individuals in the main in the innovative companies, and in the West – institutional investors and pension funds make up the main basis, states Lupachev: “Such funds have no actual country limitation, but due to the high risk premium they expect Russia to have a greater profitability – 45-50% per annum with an average 30%, it significantly reduces the choice of projects”. Russia has its own venture capital funds and number of funds are slightly less than the U.S. – about 100, “however its volume of financing is insignificant and substantially below the global practice”, says a partner of Ernst & Young, Leonid Saveliev.
The problem is insufficient experience in communication with foreign investors, not all Russian companies are able to convince them in a proper way, says Managing partner of Runa Capital Foundation Dmitry Chikhachev: “There is no such prejudice against Russia”. Foreign investors are also short of clear exit strategy of investment in Russia, there are two ways – stock exchange allocation or sale to the strategist, both of the ways does not work properly, adds Lupachev.