Post on 13-Apr-2017
Venture Capital market trends
2016
MoscowJune 2016
CONTENT
2
1. Introduction
2. Global VC trends
3. Russian VC market
4. Discussion
RMG partners spun off from oldest Russian investment banks.
20+ years of experience on the financial market and a proven trackrecord in value creation solutions for Midcap private companies.
As a member of the global M&A Worldwide network provides with anaccess to the international markets and cross-sectorial expertise
As a Member of NAIMA promotes Private equity / Venture Capitaland other alternative investments
History Evolution
1993-2006Brokerage & stock market
2007-2009 Asset management
2010-2013 Strategy & M&A
2013-2015 Direct investments
2016 – nowValue management
VALUE CREATION
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FUNDRAISING
20+ YEARSEXPERIENCE
STRATEGY
LONG-TERM PARTNERSHIP
VC & PE INVESTMENTS
NETWORK IN 45
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VC|PE market research
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Volume: 20+ pages
Languages: EN, RU
Release: Each quarter / 4 issues per year
Formats: Electronic
Paper size: A4
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RMG client database East-West Digital News (EWDN) subscribers database RMG online resources, RMG mobile application (EN, RUS) Partnership with Marchmont Innovation News, Moscow Seed
Fund, Bargan News, NAIMA and others (EN, RUS). Media partners’ support offers active links on company web-site following the report location
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Russian Venture Capital Market Overview is focused on International and Russian target audience: Investors: investment funds, Venture & Private Equity funds, banks, financial groups, family offices & other Venture entrepreneurs, startups Governmental and market development institutes Consultants and service providers on financial market Non-profit organizations and associations, state institutions, state controlling entities, stakeholders
The primary goal of this report is to make Russia’s VC/PE sector more alluring for both foreign and domestic investors and increase the efficiency of contacts between investors and innovative companies seeking financing. The main barrier to growth of Russia’s venture capital market is the lack of objective information. Foreign and domestic investors do not have sufficient reliable data and analytical materials on innovative markets and projects in Russia. This slows down the search for investment targets, makes investment decisions more difficult, increases costs for project analysis and due diligence, and restricts the size of the pool of potential venture investors
KEY PARAMETERS MAIN MEDIA & DISTRIBUTION PARTNERS
TARGET AUDIENCE
VC|PE market research
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June 2016
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Hi-Tech Revolution is taking place
June 2016 8
Hi-Tech DISRUPTION
FINTECH AUTOTECH
REAL ESTATE TECH
CYBERSECURITY
AEROSPACE
NEUROTECH
ENERGYTECH
IOT / ROBOTICS
BIG / CLEVER DATA
FMCGSUBSCRIPTION
INDUSTRIALTECH BIOTECH
ADD TECH ED TECH
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wQ4’15 SAW A RESET IN FUNDING AND DEAL LEVELS AND THAT CONTINUED IN Q1’16
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2015 WAS THE HIGHEST SINCE 2000 AND ALTHOUGH 2016 ISSLOWER, IT IS STILL ON PACE TO BE A HUGE YEAR
June 2016
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MEDIAN EARLY-STAGE DEAL SIZE TICKED UPWARD TO 5-QUARTER HIGH
June 2016
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GLOBAL MEDIAN LATE-STAGE DEAL SIZES CONTINUEDTO FALL
June 2016
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THROUGH Q1’2016, THE PACE OF “PRIVATE IPOs” HASDECLINED…
June 2016
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BIRTHING UNICORNS HAS BECOME HARDER
June 2016
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NEW UNICORNS RARE ACROSS ALL MAJOR REGIONSIN Q1’16
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NEW UNICORNS RARE ACROSS ALL MAJOR REGIONSIN Q1’16
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NUMBER OF COMPANIES EXITING FOR LESS THAN THEYRAISED HAS INCREASED
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~80% OF TECH EXITS ARE < $200 MILLION. IRRATIONALVALUATIONS OF LAST 2 YEARS MAKE EXITS CHALLENGING
June 2016
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PERFORMANCE OF 17 TECH UNICORNS POST-IPO HASBEEN TERRIBLE
June 2016
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…AND WHILE TECH MEGA-ROUNDS ARE MUCH LOWERTHAN 2015, STILL WAY ABOVE HISTORICAL LEVELS
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STILL 12 NEW UNICORNS BIRTHED SINCE BEGINNING OFTHE YEAR (MOST IN ASIA AND NOT ALL ARE VC-BACKED)
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AND THERE WILL ALWAYS BE GREAT COMPANIESCREATED
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LPs ARE STILL BULLISH ON VC AS AN ASSET CLASS
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STILL LOTS OF MONEY OUT THERE ESPECIALLY AS CORPORATE PARTICIPATION CONTINUES TO GAIN STEAM
June 2016
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THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS
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THE MOST ACTIVE CORPORATE VENTURE CAPITAL GROUPS
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LOTS OF COMPANIES DISRUPTING MARKETS. EXAMPLE OF P&G.
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LOTS OF COMPANIES DISRUPTING MARKETS. EXAMPLE OF P&G.
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AND HERE’S STARWOOD SUFFERING A DEATH BY ATHOUSAND CUTS
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IOT IS ATTACKING LOTS OF SPACES - HEALTHCARE
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INDUSTRIAL IoT
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DAILY DEALS ALSO HAS LOST ITS LUSTER AS WE KNOW
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BIG DATA CONTINUES TO BE POPULAR
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DEAL ACTIVITY TO ARTIFICIAL INTELLIGENCECONTINUES TO CLIMB
Funding and deal activity has jumped. This is a very hot area. It’s the new Big Data.
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ARTIFICIAL INTELLIGENCE M&A ALREADY STEPPING UP
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THE BOT BUBBLE?
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REMEMBER WHEN ON-DEMAND WAS ‘THE’ THING?
This was small handful of companies (Uber, Airbnb) which drove up funding totals and a lot of investors jumped in driven by FOMO.
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A TREND THAT REALLY WASN’T
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MEDIA CHATTER ABOUT SPACE CONTINUES…
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…BUT HAS LOST STEAM RELATIVE TO NEWER HOT AREASSUCH AS AUTONOMOUS CARS
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AUTO TECH HEATS UP. CRUISE $1B ACQUISITION ISSPURRING MORE ACTIVITY.
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AUTO TECH HEATS UP. CRUISE $1B ACQUISITION IS SPURRING MORE ACTIVITY FROM VCs AND CORPORATES
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AUTO TECH HEATS UP. CRUISE $1B ACQUISITION IS SPURRING MORE ACTIVITY FROM VCs AND CORPORATES
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DIGITAL HEALTH IS HOT(ALTHOUGH EXIT ENVIRONMENT REMAINS LUKEWARM)
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MOMENTUM AROUND WEARABLES HAS FLATTENED
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CYBERSECURITY ALSO HOT (BUT OVERFUNDED)
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REAL ESTATE TECH GAINING STEAM
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“ASSET INTENSIVE”
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THE INTERNET OF THINGS REMAINS HOT
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HOW OLD FASHIONED?UNIT ECONOMICS ARE COOL AGAIN
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COLLAPSE DIDN’T HAPPEN IN Q1…
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BUT Q3 AND Q4 2016 IS D-DAY – THIS IS WHEN THE MOSTUNICORNS WILL NEED TO RAISE FUNDING
June 2016
Russian Venture Capital market overview 2015
June 2016
Russia’s VC* Market Snapshot 2015
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Investment value, $M
Average deal value, $M
Investor structureNumber of deals
Seed
Start-up
Growth
Expansion
Total
Exits
Maturity
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128 $32.4 M $0.3 M
101 $79.0 M $0.8 M
24 $67.0 M $2.9 M
22 $182.5 M $8.7 M
3 $4.0 M $2.0 M
$364.9 M $2.9 M278
4 $10.9 MSeed AB C+Exit
* - includes only VC Russian deals below $10Min of value
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Knocked-down VC market
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VC market resembles the Russian economy’s negative dynamics triggered by commodity prices drop, sanctions and media-wars.
As a results, VC funds moved to Asia, US and Europe.
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Startup Failure Post-Mortems
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907 652
890
365
374
356
461
278
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100
200
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400
500
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600
800
1 000
2012 2013 2014 2015
Investment Value Number of Deals
VC Market dynamics, 2012-2015$ M #
140
14
135
53
139
59
138 155
32 40
40
80
120
160
20142015 20142015 20142015 20142015 20142015
$ M
Funds activity by stage, 2015
Seed Start-up Growth Expansion Maturity
Investment value decreased by 58%
Number of deals dropped by 40%
Activity of Funds shrinkedacross all stages except the expansion stage
Structural crisis between Russia’s institutional investors and private business
Growth !
June 2016
Market structure: investors & segments
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- 50,00 100,00 150,00 200,00 250,00 300,00
PPP
Funds
State
Strategic
Business-angels BiotechIndust. techOther techComp. equipSoft & Internet B2BOther ITSoft & Internet B2C
Private funds dominated the market in 2015
Soft & Internet lead the market
Software & Internet B2B Software & Internet B2C
2014 2015
$122.5 M
$329.5M
Leaders by the fall
E-commerce Education Content providers
2014 2015
$148.4 M $ 131.9 M
-11% -63%
Leaders by the fall
PlatformEnterprise
management systemsMarketing / ads
$ M
June 2016
To Break the Wall
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June 2016
POSITIVE trends
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Activity in non-IT market is increasing
New local Funds and Angels appear in the market
Many Family Offices direct eyes on VC investments
Russian Government continues to support innovation sectors and links universities and corporations
VC-infrastructure has significantly improved in big cities
June 2016
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Angel investors and Corporations gain traction
3 8
99
10 137
174 9
2,68,5
1,5
14,0 8,11,5
60,0
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20
40
60
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120
2014 2015 2014 2015 2014 2015 2014 2015 2014 2015
Corporations Angel investors
Seed Start-up Growth Expansion Maturity
ANGELS!
CORPORATIONS!ANGELS!
June 2016
From 2015 to 2016: hopes for finding the oasis soon
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TRENDS & EXPECTATIONS
Foundation of new corporate VC funds
Exits & big rounds: New Russian unicorns has appeared
Angel investors’ number is expected to grow (from 250 to 10 000 in an early future)
Focus shifts towards Hardware due to strong government support
Export oriented development strategy
June 2016
Investors’ choice
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START-UPS
Later stage with visible exit path
Cash positive or close mid stage with ability to pay dividends
Early stage with disruptive technology & great entrepreneur
Hot techs & verticals:
- Fintech, AdTech, E-commerce, Security
- Big data, AI and B2B tools, P2P/ aggregators
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Arseniy Dabbakh
Managing Partner
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