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Russian investors have turned to transactional startups

0 August 2013

Last month saw the increase in investments in startups that charge users for a specific type of service. The transactional business model, where revenue is earned on a commission, is an easy way of capturing investors’ attention: that is because  such projects start earning since their first operating day, and investors can thus easily evaluate their progress.

Foreign companies that reach a large market share are often quoted on the stock exchange or get sold to big strategic players for very high prices. Investors can see their investment value moltiply not by 2 or 3 times, but by 20 or 30.

E-Commerce projects that sells goods on the net are a particular type of transactional startups. Within this group, educational, multimedia and social media startups that are not just based on the advertising model, are becoming the preferred types of businesses.

The average investment size in August 2013 was similar to the previous month: investors have been pouring out between $ 100,000-500,000, more than enough to build and launch a transactional startup for about 3 months.

Below you can see an infographic analysis of the Russian venture market in August 2013, brought to life by GoVisual




SIGNIFICANT DEALS


Eruditor Group

$ 12 million

Frontier Ventures, Runa Capital, Intel Capital

Why: Eruditor Group, a set of companies owned by Egor Rudi, received a second investment round of $ 12 million from three big funds: Intel Capital, Frontier Ventures and Runa Capital. According to the RusBase data, this deal was preceded by talks and a six month company assessment. The funds will be used to develop the existing projects and strengthen Eruditor Group’s market position in professional services in medicine, education, beauty, show-business, sports, building and renovating. Specialists that worked with the holding’s companies such as "Your tutor", "Info Doctor», Treda.ru, «Kreis Masters", "Your Car Instructor" and others earned more than $ 200 million in 2012. Eruditor Group is also forecasted to increase its business two-fold in 2013. There are about 150,000 registered users for its services in Russia, the Ukraine and Kazakhstan. All projects of Eruditor are based on a traditional model: registered users pay a one-time percentage fee for the services used by a new client.

 

Travel.ru

$ 2 million (estimate)

Oktogo.ru

Why: Travel.ru, one of the original and longest standing online travel agencies on the Runet founded in 1998 by the Mail.ru Group, has sold a controlling stake of its shares to its business partner Oktogo.ru, a startup specialising in the booking of hotels and tickets. According to the data published by Liveinternet, Travel.ru has 1.5 million users each month and is part of the top 10 most used sites for travel services. Back in October 2012, Oktogo.ru already offered its clients the choice of 5,000 hotels in Russia and 250,000 hotels across the world. Clearly, there were additional motives behind this deal,  given that earlier  this year Oktogo’s competitor OneTwoTrip acquired the foreigh hotel rating service DealAngel for $ 15 million, thus expanding its user base.

 

Carbay

$ 1 mln (estimate)

QIWI Venture

Why: The fund QIWI Venture invested about $ 1 million in the startup Carbay, an aggregator of classified adverts for car vendors. The project is currently functioning as a web-service and as a mobile application, allowing users to create their advert by filling a form with the car details and pictures, and the system automatically posts it on the biggest suitable websites. It is currently affiliated with AUTO.AVITO.ru, Yandex.Auto, Autorambler, Auto@mail.ru, CARS.ru, and many others. It is also possible to post the adverts on the social networks Facebook, VKontakte, Twitter and Youtube. Each advert is accompanied by the contact details of the seller, and the service is preparing a personal cabinet for each user where interested buyers can write their messages. The startup has already worked with a few Moscow car salons, and its founders hope to expand to the Belorussian market in  a year’s time.



FUND OF THE MONTH


Rostelekom’s department for venture investments

Why: The national telecom-operator Rostelekom has announced its creation of an internal corporate venture fund. It has not yet been given an independent name, so for now it is addressed as Rostelekom’s department for venture investments. Aleksey Basov, a domestic investor in Begun, Roem.ru, Pruffi ,  will oversee the department’s work and Andrey Holodnyi,  formerly of Svyazinvest and Beeline, will be the immediate supervisor,.   The  fund’s size is unknown, but it will work to develop operators in new markets and to expand their product lines. 



PERSON OF THE MONTH


Victor Remsha

Why: Victor Remsha, born in  1970,  is a Russian entrepreneur, billionaire, owner of financial services Finam and one of the top-30 most influential investors.  This  summer he made his mark as a serial investor as FINAM’s  recent exits   were made under  very profitable terms. As an example, their  sale of a 3O% stake in the investment fund Banki.ru to Russian Partners was worth $ 6 million.



FAIL OF THE MONTH 


ColorPen

Almost $ 100,000

Why: Colorpen, the startup that was supported by  Microsoft and Yandex ColorPen, providi ng a service for upcoming graduates  of online virtual classes, was closed down. ColorPen had received a number of grants and seed rounds from the Moscow Seed Fund, but was not successful  in building a specialised communication platform for teachers and students of the basis of distance technologies. The founders wanted to use Skype as the medium to hold  video conferences, but this was rejected due to the market conditions. 



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@startupafisha.ru.

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