Russia recently became the largest internet market in Europe — but now it’s becoming a significant investment force too, with two of the country’s major online forces putting more money into startup investment.
Moscow-based VTB, the second largest bank in Russia, announced on Tuesday that it was putting $18 million into Fast Lane Ventures, a local startup incubator. Fast Lane is one of the rising stars of the region, founded just a couple of years ago to build — and already starting to make significant exits.
Seen by many as a clone factory in the same mold as Germany’s Rocket Internet — a characterization CEO Marina Treshchova bats away — Fast Lane has had a bumper 2012 so far, first selling online shoe store Sapato and then handing off TV and web retailer Shopping Live.
The investment comes through VTB Capital, an arm of the bank which has a $330 million fund to spend on “patriotic” internet companies. As a result, the bank has a seat on the Fast Lane board and an inside view on some of the area’s most aggressive businesses, as Bloomberg reports:
The investment gives VTB an undisclosed minority holding in Moscow-based Fast Lane, Aidar Kaliev, head of VTB Capital’s venture capital investments, said in an interview today. “It gives us a seat on the board and the first refusal to increase our stake,” Kaliev said. […]
VTB last month invested $10 million in Oktogo.ru, a Russian online hotel booking and travel company. The bank has invested $130 million of its $330 million venture fund in four deals in Russia and in four companies with “Russian components” in Germany, Los Angeles and London.
This approach is significant, not least because VTB is 85 percent state-owned (it was entirely owned by the Kremlin until 2007) — perhaps another example of governments stepping in Europe’s venture money gap.
Seedcamp gets Yandex boost
Meanwhile another Russian business, the search engine Yandex, is putting money into London-based incubator The Next Web.
The money will give Yandex a small, indirect investment in the companies that Seedcamp backs and nurtures. And although the organization has yet to really have a breakout company since it started in 2007, it has backed more than 50 names, including many we’ve written about including Erply and Transferwise.
Taking Yandex’s money is a little shift for Seedcamp, which has close ties with lots of corporates but has mainly taken money from angel investors and many — but not all — of Europe’s leading VCs. Although the undisclosed amount is most likely small, it could give the Russian firm a first look at businesses coming through Seedcamp’s doors, with a possible eye to acquisition.
What’s really interesting in all of this is that these are companies with deep pockets and investment plans, who are turning to incubators as a way of hedging their money. Neither VTB or Yandex are stopping their existing strategies (VTB with its direct funding, Yandex with programs like Factory, its own incubator) but they are starting to broaden their interests in order to try and latch on to future successes without quite so much involvement.
Could this be the start of a trend coming out of Moscow?