The Untitled, one of the most established VC firms investing across Russia and Eastern Europe, has analysed investment deals involving startups founded over the past 10 years in Russia or by Russian entrepreneurs. The research covered the deals completed from December 2020 to November 2021. It was conducted jointly by The Untitled and Rusven, an influential Telegram channel covering industry news.

Startup investment volume apparently grew almost 3.5 times to RUB85.2bn ($1.1bn) in said period – up from RUB24.9bn (around $330mn) during the previous 12 months. This was due to an increase in the average ticket rather than in the number of transactions (221, up from 203). 

Foreign investment demonstrated the most significant growth, accounting for just over half of the total volume of transactions between December 2020 and November 2021.

However, one should not perceive the data too optimistically, says The Untitled.

“Early-stage [pre-seed + seed] investment in the Russian jurisdiction continues to decline. Most large transactions with startups of Russian origin are made in foreign jurisdictions,” notes Konstantin Sinyushin, managing partner at The Untitled – which itself is established in Luxembourg.

Deal analysis also indicates that a large portion of the venture capital market is comprised of several very large late-stage deals.

“The only really good news is that there has been an increase in early-stage deals in foreign jurisdictions with startups / investors of Russian origin,” the venture capitalist says.

The Untitled’s post highlights the following trends:

• International investors increasingly invest in Russian-founded startups;
• Russian private VC funds, corporate funds and corporations are increasingly active;
• Individual investors’ activity remains opaque;
• State funds are noticeably less active.

“It looks like the authorities’ interest in the venture capital market has weakened,” after a decade of active state involvement in startup funding. Virtually no new fund with state participation was launched in 2021, notes The Untitled.

 

This article first appeared in East-West Digital News (EWDN), a bne IntelliNews partner publication.