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Media startups on top

0 May 2014

RUSBASE'S OPINION

Investment in Russian startups were down in May as the combination of a double national holiday and Russia’s increasingly isolated position in the world economy dampened investors’ enthusiasm to hand over their money. The majority of investments made this month came from ‘insiders’ - previous investors that invested further funds. At the same time, in May we saw Russian funds continue to actively seek out foreign startups for investment. 

The most popular category in May was ‘multimedia and games’, which includes any project whose business model is based on digital content/media. In second place was software - now a regular feature in the top-3 as foreign and local investors continue to back projects. For the first time ever e-commerce was the least popular category.



SIGNIFICANT DEALS


LitRes

$10 million

OZON.ru

OZON, one of Russia’s oldest and most famous online retailers, acquired popular e-books and audio books service LitRes. It was necessary for OZON to get permission from Russia’s anti-monopoly service in order to complete the deal, as LitRes holds more than 75% of the e-books market. The retail giant is known to have paid $10 million, and also paid off LitRes’s outstanding debts. In return, it acquired a controlling stake in the company. LitRes will now be integrated into OZON’s online store.


Dream Industries

$6.5 million

Ulmart

After DI’s shareholder conflict was brought to an end last month, Ulmart’s investment was a logical next step. Ulmart (which is co-owned by Dmitry Kostigin) bought out Koshigi (Kostigin’s investment fund) for $6.5 million. The money will go towards developing Zvooq, DI’s Spotify-esque music sharing service, and Bookmate, a multi-platform library for e-books. Both services are expected to be integrated into Ulmart’s platform by the end of the year.


CrowdSystems

$1 million

Inventure Partners

B2B startups offering advertising services might be some of the most under-valued projects in Russia. Services tend to be valued at 3-4 times their annual revenue with a 20-30% discount for seed investors. Inventure Partners investment in crowd-sourced retail analytics firm CrowdSystems fits squarely into that category.


FUND OF THE MONTH


FINAM

Investment holding company FINAM teamed up with Skagit investments to start work on a new venture fund - FinSight Ventures - which will focus on fintech projects. Within two years the partners hope that their combined resources, topped up with some money from Western investors, will add up to $50-100 million. FinSight is particularly interested in P2P-platforms, payment systems and disruptive technologies for the finance sector. While the fund’s reach is not limited by geography, it intends to focus particularly on North America, SE Asia and Africa.


PERSON OF THE MONTH


German Gref

In May Sberbank president German Gref joined Yandex’s board of directors. According to Rossiskaya Gazeta discussions about the appointment had been going on since the start of this year. The decision to add Gref to the board is undoubtedly connected with Sberbank’s “golden” share in Yandex, which gives it an exclusive right to hold a blocking share (more than 25%) in Russia’s leading internet company. Furthermore, Sberbank and Yandex have been cooperating on the Yandex.Money platform since December 2012.


FAIL OF THE MONTH 


Bloom.fm

Bloom.fm, a mobile music service funded by Gazprom-media owned TV channel TNT had to close after it failed to find additional investment. Bloom’s management explained that a change in TNT’s structure made it unable to continue to support the project, while other investors were deterred by the company’s failure to prove itself profitable.


DISCLAIMER



The data provided in the current document is gathered both from public and private sources. RusBase's analysts produce these reports based on current coverage of deals in the media, social networks and blogs. Some information is also obtained via tips from industry insiders.

These analytics (including open source data) should not be the sole source of information used for making investment decisions, securing rounds or dealing with any other issues without further clarification from the business owners or general managers. You may purchase verified data for deal-books and market insights, produced especially upon a client's request (see more details below). If you have any additional questions, comments or require any explanation, please feel free to contact us at analytics@rusbase.vc.

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