At present, venture capital funds are assigned a significant role in a fairly large-scale system of the corresponding business, as they are intermediaries between private type investors and MVTK - those who receive financial resources. What should be understood by the term presented? How wide is the list of venture capital funds for the Russian Federation? How fast is this category developing? You can find answers to these and other equally interesting questions in the process of familiarization with the materials of this article.
Venture venture
A venture fund is nothing more than a special type of investors who are ready to invest money exclusively in innovative projects (they are called startups in another way). It is important to note that they are fully aware that this event is risky and entails a minimum percentage of successful income. Why? According to statistics, about 90% of all Russian startups today are unprofitable. As a rule, such projects put an end to their own existence at the initial stage of experimental research. So, they do not even have time to enter the market.
Nevertheless, the remaining ten percent of innovative projects “shoot” so successfully that absolutely all investments are returned in multiple equivalents. It is important to know that it is such a game that serves as a vivid incentive for investors to invest money in unpromising and unprofitable (perhaps only at first glance) projects. One way or another, they have a hope that this particular project will become “thereby”, one of the majority.
Naturally, venture capital funds are funds that invest in young projects, but they invest far from the last money. In this case, rather, we are talking about some surplus money.
The essence of venture capital funds
In accordance with their essence, venture capital funds are quite successful companies that have reached the established “ceiling” in their own market niche. The business here is debugged. That is why in the case of another “dead” investment, the financial condition will not be critical. Most likely, the damage will not even be felt. In a general aspect, a venture fund is a combination of material and financial resources, as well as the intellectual capital of a number of legal entities (individuals), on a voluntary basis in order to qualitatively organize the process of investing in innovative venture projects.
It is important to note that the activities of the structures in question are different from the similar work of other investment institutions, including business incubators, venture companies, philanthropists and sponsors. Why? The fact is that venture investment promotion funds only perform a managerial function in relation to venture capital, but are not their owners. Thus, the fund in any case receives monetary rewards from the owner of the capital in accordance with the terms of the agreement between the founder of the fund and its manager directly.
World practice
It is important to note that in world practice, the institutions considered in the article can be closed and open (Russian venture funds exist exclusively in the form of closed structures). You need to know that in closed funds after they are formed, the amount of funds, as well as the list of shareholders (participants of the venture fund) is strictly recorded.It should be added that such funds exist from five to ten years. So, during the period presented, the funds that were invested by the fund in the MVTC, one way or another, must be fully reimbursed. In addition, some profit is expected.
Open-type venture investment development funds are distinguished by the fact that capital in them can be changed continuously due to the inclusion of new participants and the exclusion of other shareholders directly from the fund. Thus, the period of existence of open-end venture funds can be considered unlimited. It is important to note that today another classification of the institutions in question is known, which will be appropriate to consider in subsequent chapters.
Self-liquidating fund
Self-liquidating venture capital fund is a structure formed for a predetermined period for the investment of a project. After completion of the project and the return of funds to the participants of the fund (founders) with a specific amount of profit, such a fund, one way or another, ceases to exist. As noted above, this period varies from five to ten years. It is important to note that in this case, the profit that investors receive (participants in the investment venture fund) is not automatically reinvested. It is paid to them strictly at the end of the innovation project.
Evergreen foundation
The evergreen venture investment promotion fund assumes that the amount of profit received is reinvested in other innovative projects, and only the invested funds are returned to the founders of the fund (in society they are often called the “investment body”). In any case, such a situation eliminates the need to create a new fund in order to finance another venture project. Thus, financing of innovative projects continues within the same venture capital fund.
It is important to note that absolutely every founder of the institution in question is vested with the full right to withdraw from it at any time. To do this, he only needs to realize his own share in the venture capital fund. One way or another, the fund itself continues its activities, and hence its existence.
Club investment
The development of venture capital funds has led to the emergence of club investments. What is it? This category represents informal funds formed through the efforts of private investors without registration by the state. Typically, the funds of such funds are transferred in accordance with the trust agreement directly to the management structure of a legally established fund. The main goal here is the most profitable investment of money in venture projects.
It is important to note that the practice of Russian venture capital funds involves hiring a manager. His responsibilities include the organization of such a process as the accumulation of the fund’s funds, as well as the subsequent implementation of the management function in relation to the assets of the venture fund. It should be added that the amount of money in the institutions under consideration can fluctuate over a very wide range, namely from a couple of tens to hundreds of millions of dollars. By the way, the share of each founder, as a rule, does not exceed ten percent.
Benefits for Startups
The society has adopted the stereotype that startup companies can find financing for their own projects elsewhere, in addition to venture capital investors. In reality, the venture capital funds of Russia or another country are nothing but the only source of financing that is optimal in nature. As a rule, the authors of an idea (even the most amazing one) have no opportunity to finance their project independently.That is why they organize the search for financial assistance from investors. Indeed, as long as the structure is young, unknown to anyone and usually not registered as a legal entity, bank lending to such a business is impossible.
External and internal venture
Currently, there are two key types of venture capital funds that invest in innovative projects. Among them are the following items:
- Under the internal venture should be understood a situation where the funds of companies or the personal money of investors are attracted to finance an innovative project. This startup financing scheme is the most common not only in the Russian Federation, but throughout the world. It is important to note that 95% of new projects receive funding exclusively from private sources.
- External venture should be understood as a situation where state capital is attracted to finance innovative projects. As a rule, investment in this case is carried out through insurance structures or pension funds through raising funds from state or local budgets, receiving various kinds of grants, as well as receiving them from other state-owned institutions. It is important to note: in spite of the fact that financing of start-ups by the state is isolated cases, nevertheless they do occur. One way or another, the development of innovations today has a very serious impact on strengthening the state economy and GDP growth.
The emergence of venture capital funds in Russia
When did venture funds appear on the territory of the Russian Federation? It is important to know that the history related to the financing of start-ups at the state level set a starting point back in 1993. It was at this time at the meeting of G8 ministers that it was decided to allocate three hundred million dollars for the Russian Federation so that venture investment in companies of a national level would be well developed.
It should be noted that a year later the first venture funds were formed in Russia. One of the largest investors at the state level engaged in promoting small business in the field of innovative technologies is the open joint-stock company Russian Venture Company (a state-owned fund of all Russian venture funds). The OJSC was established in 2006 in order to become a source of very affordable financing for new projects, as well as to promote innovative areas of the economy in the Russian Federation.
Venture Funds in Russia: List
In the final chapter, it would be advisable to list the most effective venture funds that develop their activities in the Russian Federation. It is important to note that the items are listed in decreasing order in terms of the overall rating of structures:
- Runa Capital is almost the only fund founded through the efforts of Russian entrepreneur Sergei Belousov. It is interesting to know that he invests exclusively in domestic startups. The share of this fund is from twenty to forty percent, and he invests up to ten million dollars.
- IMI.VC is a structure organized by the former jeep trader Igor Matsanyuk from Murmansk. It should be noted that the focus of this fund is directed to media-social applications, games or consumer services. The fund takes up to forty percent in projects at an early stage, and the amount of investment in this case does not exceed a million dollars.
- Ru-Net Ventures is a structure founded by Leonid Boguslavsky. Usually he takes from thirty to thirty-five percent of the company. The average rate of return is forty-five percent per year.
- Kite ventures is a venture capital fund founded by Eduard Shenderovich.He is engaged in assistance with promotion, B2B connections and so on. It is important to note that the fund takes from three to thirty percent. In his favorite projects, he is ready to invest in the amount of ten thousand dollars.
- E.ventures is a German foundation that has existed since 1998, but has been actively and long working with the Russian Federation. It is important to note that he invests in the Teamo dating site; online sports hypermarket, Heverest.ru; Nginx server-oriented solution provider, and so on. The volume of the fund in this case is impressive ($ 750 million). Shares range from ten to forty-nine percent.
- ABRT is a foundation whose history began with entrepreneurs Ratmir Timashev and Andrei Baronov in 2006. Interestingly, the contribution at the initial stage in this case does not exceed four million dollars, while the share is 20-35 percent. However, at the “take-off” stage, capital increases to fifteen million dollars, and the share decreases to 15-30 percent.
- Mangrove is a Luxembourg-based foundation that has become famous for its Skype story. So, having invested $ 1.9 million in the project in 2003, in a couple of years he received $ 180 million. And this is all a startup! This situation, one way or another, confirms that not all innovative projects, both in the Russian Federation and in other countries, are hopeless and ineffective. Among them there is a considerable number of bright and worthwhile ideas.