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Russian Venture Company starts two new funds

0 29 January 2014

The Russian Venture Company’s seed fund has created two new funds based on a limited partnership agreement. The first, the Softline Seed Fund (SSF), is worth $981,000 while the second, the High Technology Fund is worth $964,000.

The Softline Seed Fund will invest in pre-seed and seed projects, with a particular focus on cloud services, digital marketing, data protection and mobile apps. The managing partner in this new fund will be Softline Venture Partners. The investment period of SSF is 3 years.

The High-Technology fund is oriented towards biotech, new materials and energy efficiency. The time period for this is set to be 5 years with the possibility of an extension.

The major sources of cash investment will be RVC and private investors.

Each of the micro-funds will invest in 5-8 projects in the pre-seed and seed stage. The projects will serve their own development, as well as emerging into the market soon after.

The distinguishing feature of the funds is existence of a Limited Liability Partnership (LLP) agreement. This agreement is a legal document based on the “Law Of Investment Partnerships” no. 335-F3, adopted in 2011, and it facilitates the bringing together of different actors’ financial and organisational resources.

Elena Alekseeva – Head of Softline Venture Partners

If we, together with the RVC Seed Fund, demonstrate good results, then there is reason to believe that new actors will start to invest in the venture sector.  State-owned companies, for example, have free money, but no experience in attracting, evaluating and developing hi-tech projects.

Andrei Vedenski – Director of Infrastructure Development and member of the RVC board

When we were launching of the Seed Fund in 2009-10, we planned that by 2014 some of our partners would have gained enough experience to create their own funds. In late 2013, several 

venture partners were approved to form pre-seed and seed micro-funds. The main tasks for the micro-fund program are developing competence in fund management, setting up a system to motivate venture partnerships and establishing a steady flow of projects that pass through pre-seed and seed stages. In 2014, we plan to not only continue with our “Venture Partner - Microfund Manager” program, but also to keep working on the LLP model as a new legal structure.

Oleg Seidak – Partner at Flint Management

Micro-funds that specialise in pre-seed and seed stages are urgently needed in the market. In my opinion, the creation of a group of small funds is a more sustainable strategy than huge players with millions of dollars’ worth of capital operating on the market with an average check of up to $150,000. Many of the smaller players are capable of creating the necessary internal competition to ensure that different points of view and processes are considered.

However, the RVC-backed funds may hinder the provision of pre-seed and seed funding, because the formal requirements are often out of proportion with the current volume of business.

With regards to the investment partnership agreement, it is the Russian equivalent of the investment structure of the classic English Limited Partnership law. In general, it is a good option for structuring an investment fund. The main problem that I see at this point in time is the lack of law enforcement with regards to protecting the rights of investors and entrepreneurs in Russia. 

 

Source: Rusbase.vc

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