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Russia doubles VC fund for entrepreneurs in 2008

Posted: 13 Nov 2007     Print Version  Bookmark and Share

Keywords:VC fund  tech startups  venture capital fund 

Russian Venture Co., a VC fund company of the Russian government, has said it plans to double the amount of money available for investment in startup companies in 2008, from about Rs.2,372.99 crore ($600 million) to about Rs.4,745.98 crore ($1.2 billion).

Russian Venture was established in August 2006 to boost technology investments and diversify the economy away from energy resources. When the fund was established, Moscow had said it aimed to attract additional monies to put the fund over Rs.4,745.98 crore ($1.2 billion) before the end of 2007. "We aim to attract more than Rs.4,745.98 crore ($1.12 billion) to the Russian high-tech sector by the end of 2007," German Gref, economic development and trade minister, was quoted as saying then.

That goal has slipped to 2008 apparently and the money is the result of an additional investment by the Russian government.

The second investment by the Russian government continues and extends its role as a limited partner in the fund by which it provides 49 per cent of invested capital and seeks to partner with fund managers to invest in early-stage companies.

"Russia has already established itself as a major customer market for the world's leading technology companies," said Yan Ryazantsev, investment director of the Russian Venture, in a statement. "Our next step?which starts with attracting talent and venture funding to Russia?is to dramatically expand Russia's share of the global high-tech sector by creating great technology companies of our own."

Attracting venture capital
Russian Venture has the mandate to create between 10 and 12 separate focused venture funds in partnership with private and non-public investors, and to attract venture capital to manage the investment of those funds.

In March 2007, the company announced its first call for proposals from management companies. As a result of the competition, three Russian venture funds will be ready to start operations by the end of the year in partnership with leading venture capital firms.

The three funds are:

1. The VTB Venture Fund: A Rs.474.60 crore ($120 million) joint venture between Russian commercial banking group VTB and Draper Fisher Jurvetson. The fund is also known as VTB-DJF Aurora.

2. BioProcess Capital Ventures: A Rs.474.60 crore ($120 million) joint venture fund between BioProcess Group and Asset Management Co.

3. Finans Trust: A Rs.316.40 crore ($80 million) venture between the Russian asset management company FinansTrust and Tamir Fishman, an Israeli full-service financial group. The fund will also be known as Tamir Fishman Russia.

The European Bank for Reconstruction and Development (EBRD) has agreed to co-invest in the VTB and Finans Trust venture funds.

Russian Venture also announced it is extending the mandate of its funds to include support for seed and pre-seed financing of technology startups, to provide education and training for entrepreneurs and investors, to conduct market research and marketing for the benefit of startups, and to develop international relations with overseas technology clusters such as Silicon Valley.

Peter Clarke
EE Times Europe

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