🌱 Russian VC Space Is Yearning to Grow Up

While the Russian VC market has a lot of growth factors going for it, the state’s shadow looms large. 

Most recently, Russian Venture Company, which is a part of the Russian sovereign wealth fund RDIF, and Sber launched a $100 million fund targeting early-stage tech and science startups. 

This is fantastic news for the ecosystem and a blessing: the Russian government is doing more than a lot of Western countries to push domestic tech innovation with “digital sovereignty” laws supporting domestic tech companies and early adoption of new technologies by the public sector, from the digital ruble project to facial recognition.

And yet, when it comes to financing innovation and startups, the domestic VC market still seems to lag behind, with $700 million invested in 2020 according to Crunchbase, compared with $15 billion in the U.K.

Is the weight of the government’s involvement asphyxiating the private market?

At a recent VC event in Tatarstan, there was an interesting discussion about why a more robust startup space hasn’t materialized despite hundreds of promising startups and abundance of technical talent and interested investors.

“A liquid financial market hasn’t appeared,” said Arkady Dvorkovich, president of the Skolkovo Foundation. “In Russia, people are pegged more to banking financing, not risky venture funding. Most investments are quasi-public and banned in risky projects, while the financial market itself considers them unsafe.”

Dvorkovich also identified the state’s influence and hold on development of new markets like online education in deterring the growth and development of venture capital in Russia. 

So what is the path forward for the Russian VC market? How can innovation thrive in Russia without scaring off investors or founders from setting up operations in Russia?

Click the quick survey here to share your views.

- Daria

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BIOTECH

> Russia has authorised the one-shot Sputnik Light version of its COVID-19 vaccine for use last week. Last week the Gamaleya Center and Russia’s sovereign wealth fund RDIF unveiled the new and improved one-shot vaccine called Sputnik Light, which studies suggest is 79% effective against all new COVID-19 variants. The U.S. government is still conducting review of the new vaccine through the end of July, but governments in Mexico and other countries aren’t waiting and are already seeking emergency authorization for the latest Russian vaccine.

[Sources: Reuters, SputnikVaccine.com]

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BIG TECH

> Apple is fighting back, appealing the $12 million fine issued by Russia’s Federal Antimonopoly Service in April. The agency accused Apple of abusing its position in the mobile applications market. Apple filed the appeal on May 5 and preliminary hearings are set for June 21 in what is a landmark case for the Russian market.

[Source: RIA]

> Rostelecom, which is listed in Moscow and reports results on May 13, is considering international IPO. Rostelecom is also rolling out an electronic voting pilot ahead of September elections. 

[Source: Telecompaper, Interfax]

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FINTECH

> Tinkoff Bank’s results for the first quarter of 2021 show the lender is growing its client base faster than its closest competitor VTB, Russia’s second biggest bank after Sber. Tinkoff added one million users in the first three months of 2021 alone, the total amount of VTB’s growth last year. Analysts believe Tinkoff’s newly launched buy-now-pay-later service called Dolyame.ru will help them to maintain this growth.

[Source: Izvestia]

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CYBER WATCH

> Positive Technologies made the US sanctions list. The U.S. accused the $1 billion Russian cyber company of “developing offensive hacking capabilities” for cyber campaigns.

[Source: MIT Technology Review]

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SPACE TECH

> Deep space, Northern Sea Route ambitions for the new Russian space station. The plan is for the new Russian Orbital Service Station to be located in a polar orbit, where a remote sensing spacecraft can monitor the Northern Sea Route as well as better prepare cosmonauts for deep space missions. 

[Sources: N+1, NASA Space Flight]

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GAMING

> Let the SberGames begin. Sber is entering the gaming market, planning to acquire existing players as well as launch its own games.

[Source: Sber, Vedomosti] 

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SOCIAL MEDIA

> Experts expect an increase of fraudulent activities on Telegram. With the messaging service introducing payment options, experts are anticipating an uptick in fraud cases on the platform since Telegram doesn’t allow for account verification.

[Source: The Bell] 

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ENVIRONMENT

> Disposable plates and q tips may be banned in Russia in an environmental push. If the government’s proposed initiative is implemented and a lot of plastic goods are banned, it will foster demand for environmentally conscious alternatives.  

[Source: Ura.ru]