Sistema’s CVC vertical among strongest in Russia
Corporate VC activity is at an all-time high. Globally, the number of CVC funding deals, as well as deal volumes were up from 1,029 and USD 10.6 billion in 2013 to 2,740 and USD 53.0 billion in 2018 (The 2018 Global CVC Report). In 2017, CVC investments made up 26% of Global VC investments (PitchBook data), and have been growing at a CAGR of 24% in 2012-2017.
In Russia, the volume of CVC investments and acquisitions in IT exceeded USD 570 million in 2016-2018 (TAdviser data), with corporations now acting as the main players on the VC scene.
Sistema_VC, Sistema’s venture fund, is among the leaders in the vertical. The fund was recently voted Best Corporate Fund at the 7th Russia Venture Capital Awards held during the CBonds Venture Investors Forum in Moscow. Participants noted corporate funds’ eagerness to invest into promising startups in hopes to implement synergies with existing businesses, as well as the shrinking share of classic VC funds, while speakers predicted Russia would experience CVC boom in the next 3 to 5 years.
The Fund holds 16.3% in Ozon, Russia’s e-commerce giant where Sistema recently increased its direct ownership to 21.9%. In early 2019, Sistema_VC, alongside other investors, funded DataSine, a marketing personalization platform. The fund’s portfolio company VisionLabs, which specializes in machine learning-based facial recognition software, is testing its solutions with Moscow’s metro system.
Sistema Asia Fund (SAF), Sistema’s VC arm in Asia, founded in 2015, is primarily focused on the Indian startup scene. SAF’s portfolio currently includes 9 companies pertaining to different sectors, including Kissht (consumer lending FinTech platform), Faasos (online food on demand app), HealthifyMe (health and fitness mobile app), Netmeds (India’s largest online pharmacy), Lendingkart Techonologies (online financing company focusing on financing working capital for SMEs), and Licious (direct-to-consumer meat and seafood brand).
In 2019, SAF made its first exit having sold its stake in Qwikcilver, an Indian technology company that is the world’s first end-to-end gift card solution provider. Sistema Asia Fund first invested in Qwikcilver in 2016, and has exited the company with substantial returns within three years of its investment.
Sistema company MTS, Russia’s leading telecom operator/digital service provider, known for its investments into complimentary business, is following the CVC curve, having launched its own venture fund with focus on early-stage startups. Some of the deciding factors for MTS are rapid growth prospects and synergies with companies’ new business ventures. The fund will function as part of the MTS StartUp Hub, the company’s own corporate accelerator. Both companies piloted at the StartUp Hub and external startups are able to apply for funding.
Dmitry Filatov, Head of Sistema_VC, receives award at the 7th Russia Venture Capital Awards