The venture investments market in 2019

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Of course, I would like to see even more high speed changes. However, for large companies to move into venture capital market — a difficult story. We see how difficult it is conservative corporate culture with a negative attitude to financial failures combined with the culture of venture capital, where the risk and potential errors inherent in the very model of operation. On the other hand, the potential reward outweighs the difficulty of restructuring investment and product strategy, in many respects change of mentality.

Corporate venture capital investment — tested and almost mandatory tool for maintaining competitiveness, entering adjacent markets and ensure technological development.

Funds against “privateers”

Рынок венчурных инвестиций, в 2019 годуI guess in 2019 venture capital funds will further strengthen its position in the market. By 2018, this segment has marked an apparent increase in the number of investments increased by 13% (441 transaction against 391 in the previous year). Thus doubled the number of active funds (55 to 95). With regard to areas of investment, then, obviously, this year to continue the shift in investor focus to new industry. In 2018, investors have increasingly preferred the “classic” of the IT segment, sectors such as mining and heavy industry, energy, agriculture, transport, education, medicine and others.

For example, last year the savings Bank has invested in the payments system Plazius in the project in the field of accounting service of JSC “Intercomp”, automated restaurants iiko. “Yandex” has invested in the delivery of gasoline to the car’s “Fuel tank” and “Party food”. “Rukard” has acquired a network of parks virtual reality ARena Space. Holding MTV has invested in high-tech projects in the sphere of production of equipment for railway transport “Express industry.” “Sen” SERVIS has invested in the developer of 3D printers Unimatech.

Also in recent years there has been increasing interest among investors in such a narrow and high market, such as biotechnology: the volume of investments in them in 2017 rose 55% to $14.7 million In 2018, this trend continued. Investment in biotech in the first half of last year exceeded the total 2016 — $9.8 million, for example, in the past year, the Fund RBV Capital sold the developer of fast-acting neurotoxins Bonti pharmaceutical manufacturer Allergan, a biotech venture capital Fund Primer Capital invested in the development of a drug for patients with multiple myeloma company “Hemofarm”.

Now there is a kind of regrouping of forces, an important phase of the maturation of the venture capital market and the formation of the digital economy. Digitization, big data and artificial intelligence revolutionizing any industry, so the investment focus is shifted to where the competition is lower, and the chance to change the landscape of the market and to occupy a significant share — more. In this sense, the least digitized industries have the greatest potential, and they become mainstream. Such segments are targeted, in particular, and the majority of our planned new funds.

The angels will return

We find that many business angels of yesteryear ceased to invest in new startups and to expand the portfolio of supported companies. In comparison with the funds, private investors last year have considerably weakened — they accounted for 167 deals. This is largely due to the increasing competition for projects in the early stages, where professional funds are able to often act systematically. But if the law will be removed a number of barriers, as suggested by the Strategy of development of the venture capital market by 2030, the market for business angel investment will significantly expand and will keep the role holder’s primary risks of the national projects of the funnel.

Positive news for early-stage projects was launched in 2018, Sberbank and the American 500 Startups accelerator with an investment of 10 million rubles to the project. This will give the market, in terms of new deals, only time will tell, but the access to the ecosystem of the savings Bank and the global expertise of 500 Startups creates an exclusive offer for entrepreneurs.

NPF at the start

In the next two years we expect to see in the venture capital market of the player of a new type — non-state pension funds. Fundamentally, the Central Bank endorses the opportunity for NPF, but with a number of restrictive conditions that in fact are isolated venture market from pension money. This is very different situation in Russia from the picture in developed countries where pension funds are active investors in the market of innovation. RVC gave the government “Strategy of development of the venture capital market up to 2030”, which proposes legislation to allow pension funds to place a certain limit of money (up to 10% of the pension reserves formed from voluntary contributions and, possibly, up to 5% of pension savings) in venture capital. For venture investments of pension funds you can use the tool an investment partnership, which is successfully applied in the global venture capital practice. To participate in such agreements and partnerships are offered to individuals — business angels and private investors.

If the NPF will enter the market, the sector will receive an influx of “long money” and the funds themselves and their investors — higher rates of return in offsetting the limited impact of investments in conservative instruments. In this sense, the key tasks of the state and market participants to determine the principles governing the selection, controls the investment decisions and ensuring transparency. Already, some of the NPF are ready to act as pioneers and to begin development of a new class of investment in obtaining such a mandate.

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