The volume of venture investments in Russia has reached a seven-year historical low - $118 million

The volume of venture investments in Russia has reached a seven-year historical low - $118 million

In 2023, the volume of venture investments in the Russian Federation reached a historical minimum over the past seven years - $118 million. As stated in a study by the Moscow Innovation Agency, compared to 2022, the value of this indicator decreased by more than ten times. Against the backdrop of a fall in risky investments, their objects are also becoming smaller: the number of transactions on the market increased by 10%, to 181. Globally, global funding for startups is also declining, but not as dramatically as in the Russian Federation. The market's return to growth is possible in 2024 if the geopolitical situation stabilizes, analysts believe.

The venture investment market in the Russian Federation continued to shrink in 2023, its volume amounted to $118.2 million - a drop of more than ten times compared to 2022 ($1.252 billion), to a historical low in seven years. At the same time, in 2023 the number of transactions increased slightly - to 181 from 165. Without taking into account large transactions in 2022 (by $840 million), the reduction in 2023 was 3.5 times. Analysts explain this by the increased activity of “business angels” (investing in small checks) - in 2023, due to market compression, they accounted for more than a quarter (27%) of investments for the first time (for comparison, in 2022 - 8%).

The volume of foreign venture investments (almost half of the market) in 2023 decreased even more: 15 times, to $55 million ($814 million in 2022), while 73% ($40 million) was invested in one company - a developer of ultra-thin smart contact lenses . Venture investments from state funds also shrank, falling by 99% in volume and only 8% in the number of transactions. The state began to invest more in the early stages, refocusing on supporting young companies: 90% of transactions are transactions at the seed and pre-seed stages, analysts explain. Private funds reduced investment by more than eight times, but at the same time formally remained leaders in the investment structure (they accounted for 60% of all investments).

At the same time, the share of transactions with undisclosed amounts is growing (almost a third of the total). “The market is becoming less transparent, and the actual volume of investment is higher than we can estimate from public data,” the authors of AIM suggest. Thus, the corporation's investment volumes were reduced tenfold, but they began to disclose investment amounts less frequently (data is missing for half of the transactions).

Medicine, education, transport and logistics hold stable leadership among market niches in terms of investment volume. At the same time, just like in the world, in the Russian Federation there is growing investor interest in manufacturing startups with physical products (equipment, new materials, medicines, etc.). In the Russian Federation, the volume of investments in such companies in 2023 increased by 68% compared to 2020, while in the world this growth was 6%. However, the authors of the report expect an increase in the number and volume of investments in the Russian venture market only when the geopolitical situation stabilizes.

Note that the decline in the global venture market looks less dramatic (see Kommersant on January 9). According to the report, global investment in startups in 2023 decreased by 38%, to $316 billion, and the number of transactions decreased by 27%, to 38.3 thousand units. At the same time, in Europe the volume of venture investments grew (by 18% compared to 2020). In 2024, the world's venture market is expected to recover to the level of 2020, as well as the emergence of a large number of new startups in need of financing, the study forecasts from foreign analytical companies.

Venera Petrova

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