VENTUREINDUSTRY IN RUSSIAAlbina NikkonenRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)realities and perspectivesRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)$17,2 bll.$22,7 bll.$56,9 bll.$104,1bll.1997199819992000Источник: National Venture Capital Association (USA)Investment growth dynamics in international marketTotal annual investmentin Poland, Hungary, Czechia exceed $ 200 000 000Source: European Venture Capital AssociationRapid growth of venture capital market in USA€9,7 bll.€14,5 bll.€25,1 bll.€34,9bll.1997199819992000Источник: European Venture Capital AssociationEurope: exit to sustainable development pathCentral and Eastern Europe Countries:RUSIAN VENTURE CAPITAL ASSOCIATION(RVCA)The main sources of investment *Creditingas a source of investment predominant for projectes for export*Corporate bonds: limited opportunities for the biggestinvestors*IPO: the potential for the future*Strategic private equity: shallow partnership niche*Private equity-comprehensiveinvestment source of projects in new marketsRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)*Quality change of macroeconomic situation in Russia in 1999 –2000.*Dynamism of post-crisis growth makes offer of investment and demand for investmentmore attractiveèLong-term financial investors are interestedin investing to growthèStructural moves lead to appearance of new investment opportunitiesèGrowing demand of enterprises for investment for rapid growthand quality support*Institutional reforms and corporate management : noticeable progress promotes improvement of investment climatePrivate equity demand growthRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)Direct investment fund in Russia: formation of market*Total investment in 1994-1998*New fund formation*Market leader: *The best/more noticeable investment deals:$1.2 -1.5 billion Baring, Sun Group,Fleming, Framlington, Sputnik/Renaissance,Russia Partners, Agribusiness Partners, AIG-Brunswick, TUSRIF$1 billion to September, 1998Sun Brewing/Interbrew, Vympelkom, Svyazinvest, Gloria Jeans, Saint Spring,Irn Brew, Anopino, VolzhankaRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)*Lack of attractive projects*Prejudice of Russian management against shared investment*Insufficient knowledge of philosophy and principle of direct investment fund activity*Too high business evaluation by investment recipients*Grey financial and goods flows of enterprises of Russia and NIS*Toughening of criteria by funds in post-crisis conditions*Exit or business conservation by some fundsDirect investment fund: obstaclesfor businessRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)*Media*Telecommunications*Software*Pharmaceutical goods production*Food production*Packaging production*Retail *Production of goods with high export potential*Industrial infrastructure*Production of other goods and services, targeted to ultimate consumerDirect investment funds: sectorprioritiesVenture capital in Russia*The beginning of 90’s11RVCF EBRD5funds with IFC and EBRD capital3funds with US capital*The beginning of 1997 -RVCA was founded*The end of 1997 -26funds -$1.6billion*The end of 2000 -40funds -$ 3.7billionRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)RUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)Venture capital sourcesЕСRussiaOther8%Banks27%Pension Funds24%Insurance9%Private8%Reinvested Capital Gains9%Corporate10%Government Agencies5%EBRD72%Other1%US Government Agencies27%RUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)Private equity fundForeign offshore zoneRussian FederationInvestorsBusiness organizationManaging CompanyFund capital investmentRussian enterprisesRUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)RVCA missionTO PROMOTETHEFORMATION AND DEVELOPMENT OF THE VENTURE INDUSTRY IN RUSIARUSSIAN VENTURE CAPITAL ASSOCIATION(RVCA)The RVCA goals*Formation of favourable political and entrepreneural climatein Russia*Representing RVCA member’s interests inside of Russia and abroad*Information support of Russian venture market players*Preparation of the specialistfor venture business companiesРОССИЙСКАЯ АССОЦИАЦИЯ ВЕНЧУРНОГО ИНВЕСТИРОВАНИЯ(РАВИ)RVCA priorities*Collection and analysis of existing practice of venture funds in Russia*Promotionof venture industry*Construction of full-valueventure infrastructure*Participation in legislative activityRUSSIAN VENTURE CAPITAL ASSOCIATIONRussian VentureCapital AssociationRVCATel/fax +7 (812) 326 61 80E-mail: rvca@rfntr.neva.ruwww.rvca.ru