Russia's Financial Group Life is creating a $10m venture fund which will invest in mobile and internet finance-related projects, part of a domestic IT sector expected to absorb over $350m of investments this year alone.
Russia’s Financial Group Life is creating a $10m venture fund which will invest in mobile and internet finance-related projects, part of a domestic IT sector expected to absorb over $350m of investments this year alone.
Russian news source Finparty reports the group expects to invest $1m into each project, allocating to 10 projects in total in the course of the year. The fund will be headed up by Vladislav Solodky, Life’s vice-president for public relations and advertisement.
Internet usage in Russia is growing rapidly and has already reached 60 million users. Yakov Sadchikov, CEO at Quintura, a search engine, writes: “According to estimates, more than €300m is expected to be invested in information technology companies in Russia this year.”
He points to a number of funds that are already investing in the growth of internet in Russia in an effort to profit from “double digit growth in Russian internet.” Among them are existing well-known names such as Mangrove Capital Partners, Baring Vostok Capital Partners and Insight Venture Partners.
Sadchikov said: “The investors who cashed out their shares at IPOs and secondary share offerings of Mail.ru and Yandex have begun putting money into new, small venture capital funds. We can expect that Western funds will enter the market in the near future.”
A number of funds investing in internet projects have recently been created by Russian entrepreneurs and investment companies. Two examples are Tinkoff Digital, a company created by Russian businessman Oleg Tinkov this summer to invest in internet projects, and a venture fund formed by Sberbank Ventures back in February to invest in technology projects.
But Solodky said Life’s new fund is the only one on the market investing specifically in the launch of financial projects.
“We are also making a bet on mobiles, while most people are still concentrating on the internet. We believe mobiles are the industry of tomorrow,” he said.
Examples of these projects would be online-exchanges for trading non-listed equities, virtual banks, p2p-banking services, personal financial planning and platforms for consumer behaviour forecasting.
The internal rate of return of Life Group’s existing business is 40% and Solodky does not expect this figure to be reduced.