case russian venture_industry_-_3_komanda
TRANSCRIPT
Russian Venture
Industry
Team #3
Yulia Rusinova
Kirill Yatsushko
Davit Seropyan
Alex Demachev
Kirill Medvedev
Daniil Gagarin
2 Introduction
Market overview
Key participants, market size, history
of development
Efficiency valuation
Initiatives on State Fund’s
performance evaluation
Legislative framework
The initiatives on legislative
framework improvement
Potential partners
Potential partners in Russian Venture
Industry: funds, accelerators,
universities etc
Fiscal framework
The initiatives on fiscal framework
improvement : tax exemptions and
new solutions
Strategy for 2015-2020
Prospects of the Russian Venture
Industry sector
Investment proposal
Projects, efficiency analysis,
alternative investments
Our complex analysis of Russian Venture Industry includes:
3 I. Executive Summary
• National – BRIC and Israel
• Local, B2B - funds, universities,
accelerators.
Cooperation
Should focus on creation of innovative
culture by stimulating it in entrepreneurs
and intellectual property protections
Government
Funds should focus on development of
unified efficiency reporting standards.
Reporting efficiency We propose
• tax indulgence for small innovative
companies
• fiduciary responsibility and clear laws
that will protect venture enterprises.
Legal
Venture investors switch to Seed and
StartUp stage financing and reduce the
amounts of Expansion stage deals
Projects stage
Funds might seek greater projects
quality due to current crisis and lack of
capital
Project quality
4 Market overview
1.98
2.89
1.69
2012 2013 2014
Market value in 2104 is $1,69 bln. and has a
26% decrease since 2013 due to political risks
Venture deals; 480.9; 28%
Big deals; 350; 21%
Exits; 731.5; 43%
Grants; 127.3; 8%
Exits comprise 43% of MV and has a 51%
increase from 2013*
*excl. TKC and Vkontakte in 2013
Average deal
$ 3.3 bln.
0
100
200
300
400
500
600
2012 2013 2014
Seed
StartUp
Early stage
Expansion
Late stage
Venture investors switch to Seed and StartUp stage financing
and reduce the amounts of Expansion stage deals
145
102.8 127.3
2012 2013 2014
The number of grants has increased by 55% due to Skolkovo
and Bortnik fund’s activities
1693 702 2619
Number of
deals
Ma
rke
t va
lue
, $b
ln
Gra
nts
dis
trib
utio
n,
$m
ln
The MV has decreased by 26%. Investors focus on earlier stages M
V d
istr
ibu
tio
n
20
14
, $
mln
Ve
ntu
re d
ea
ls
dis
trib
utio
n,
$m
ln
5 Market overview Market players
State development institutes The most active venture funds*
Accelerators and incubators Education
*http://www.kommersant.ru
7 Potential partners
At the national level Russia can build strong relationships
in the sphere of venture technologies with BRICS
countries and innovative Israel National level
There are almost no difficulties in building business
relationships with funds, universities and organizations
from the most innovative parts of the world. B2B level
Cooperation is possible at the National and B2B level
Top 5 deals in the VC 8
$860 million
2013
An IPO Oleg Tinkoff TCS Bank
$700 million
2013
Durov sale of its share of UCP PE
Fund II
$244 million
2013
IPO payment service QIWI
$175 million
2014
"Yandex" has invested in Auto.ru
$150 million
2014 AFK "System" and MTS invested in
Ozon.ru
Legal initiatives
Legislative and fiscal framework The initiatives on legal and tax improvement
Tax initiatives
Improvement of the existing laws instead of the creation of the Federal Law
Clear definition of the rules of the rights to the results of scientific and
technological activities obtained wholly or partly at the expense of the
federal budget
To amend the civil laws that restrict the right to freedom of coming out party of
a LLC
Introduction of fiduciary responsibility
Adoption of legislation to protect the rights of venture financier
Release of ten years from the payment of VAT, income tax and property of
residents of the Institute for Development
Set the reduced rates of insurance premiums to the Pension Fund
Exempt from paying contributions to the Social Insurance Fund and Health
Insurance Fund
RVC
ROSNANO
SKOLKOVO
IIDF
I. Increasing of innovations financing volume
II. Infrastructure development
Initiatives:
• Development of unified efficiency reporting
• Accounting for amount of budget financing
• ROE, IRR disclosure
• Creation of integrated base with efficiency ratios for Development institutes
Fund’s Quality
Results
Effectiveness
Disadvantages:
• Do not account for financing volume
• IRR is not applied
Basic KPI:
• Private investments share,
• Investing in portfolio companies/funds
• Revenue from invested companies
Basic KPI:
• Invested volume
• Number of invested projects
• Attracted private investment volume
Disadvantages:
• No unified format of reports
• Difficulties of funds’ comparison
• No quality valuation
Implementation of the efficiency valuation standards would drive the venture investments
development and improve the efficiency of expenditure of budget funds
Efficiency evaluation 10
Current crisis Current crisis has a positive influence
on venture industry in Russia
Increased longevity of
each project
Reduced amount of
investments available
for problematic
projects
Smart Money
Private funds will
become more cautious
in choosing projects
Project quality will
increase
Increased project
competition
Government
Government influence
in venture industry will
continue to increase
via its companies
(RVK, Rosnano, etc).
Scope for improvement There are various problems in Russian
venture industry today that are
expected to be solved in near feature.
People
Low level of competence
and innovation of
entrepreneurs
Bureaucracy
Lack of tax stimulus
for innovation
industry
Patents
Low level of
intellectual property
protection
Government
Imperfection of
public
procurement
If government targets these problems, the share of
innovation sector will rise from current 11-15% to 30%
and Russia will stand in line with developed countries.
Strategy for 2015-2020 Prospects of the Russian Venture Industry sector
11
12 II. Investment proposal Traditional investment ideas are not appropriate for the investor due to their low IRR
Deposit IRR 8.2%
Micex IRR 10.34%
RTS IRR -43.19%
Therefore, we
should invest into
venture projects
13 Portfolio summary We propose investing in IT, Biomed, Hi-tech companies
IRR ~ 90%,
Investment Horizon = 5 years,
Number of projects = 16,
Well-diversified
IT 40%
Biomed 30%
Hi-tech 30%
Investment volume - $145 mln
14 Portfolio overview We propose investing in IT, Biomed, Hi-tech companies
IT Hi-tech
Biomed
ООО «КвазиКристаллы»
15
Attachments Certain projects description
Clusters & Companies Investments IT $ mln Vezet Vsem 15 Big data 10 MoneyMan 10 Fresh Office 10 Pay Me 6 Forecast Now 3 MiiiX 4 Hi-tech Megador 14,5 Cardiwear 14,5 Kvazikristalli 14,5 Biomed G-Derm 14,5 Precious Electronix 14,5 Lex Quantrum 14,5 Total 145
First Russian online payday
loan provider.
Series A investments: $3m.
We suggest: investing $10
million
According to research of Prostor Capital the most promising IT investments are BigData, financial
solutions and “internet of things”
Wonga – UK comparable (NI growth of 300%)
B2B service that allows card
payments.
Annual turnover: $7,2m.
Initial investments: $0,4m.
We suggest: investing $6
million Classic acquiring in Russia
Double Data targets banks and other financial institutions who need
to improve their performance for a variety of processes – from
customer acquisition and assessment to debt collection.
Skolkovo resident.
Series A investments: $3m.
We suggest: investing $10 million.
31.7% - Annual
growth of Big data
market
$23 800 mln – Big
data market value in
2016 (IDC)
Value
IRR (years) 127%
Breakeven 9 months
Payback 23 months
ROI 10,6х
System inventory management of commercial enterprises Forecast
NOW! allows to predict demand for products based on various
factors, to automate the procurement process, and to analyze the
efficiency of the warehouse.
Technology: neural networks and genetic algorithms.
We suggest: investing $3 million.