Sistema_VC backs growth-stage startups

31/07/2019

Sistema_VC, a Sistema venture capital fund, is rapidly establishing a track record as a leading backer of deep tech startups. Established in 2016, the fund has invested approximately 90% of its funds in 17 projects, with about half of those in the Russia and CIS region and half in other markets, notably the UK, and Israel.

Dmitry Filatov, President of Sistema_VC, spoke about the fund’s investment philosophy, preferred verticals and success stories in an interview recently published on Russian media project snob.ru.

Filatov notes that Sistema_VC has a strong focus on the growth stage startups, what he calls pre-Round A. The fund invests in companies using artificial intelligence and processing of big data to disrupt traditional industries. Filatov notes that the digitalization of conservative industries like construction and agriculture has just begun and there is considerable potential there. Startups that are seeing success are offering inexpensive and efficient data processing solutions in these industries.

When looking at potential investments, key criteria are that the company has a product and there is some degree of market traction. In Russia and the CIS, the fund also invests at later stages, focusing on companies that have the potential to become a national leader in the emerging market niches. The fund can invest up to a total of $10 million in one startup.

Sistema_VC is known for making quick investment decisions. “Our timing record from the first incoming email to the transferred funds is three weeks,” Filatov notes.

 

Strong shareholders

Sistema owns an 80% stake in Sistema_VC. The fund is also backed by Sberbank, Russia’s largest financial institution and one of the largest banks in Europe and also Maginvest. Access to these companies provides Sistema_VC’s startups with immediate opportunities to pilot their solutions in a corporate setting.

The fund’s shareholder structure also ensures full transparency of the funding sources, the corporations listed in NYSE and LSE.

 

Picking winners

The fund has backed many startups that have gone on to achieve breakthrough performance following funding from Sistema_VC. One notable success story is VisionLabs with their world-leading face and object recognition algorithm for commercial sector. VisionLabs has launched Luna, a biometric data management system that offers great flexibility to create scenarios of varying complexity for integrated face recognition. Following Sistema_VC’s investment into VisionLabs, Sberbank backed the company with an additional investment.  

Another notable example is YouDo, an online marketplace in Russia that helps consumers find local professionals for home repairs and other household services. Following Sistema_VC’s investment, MTS acquired a stake in the company.

Another investment is DataSine, a UK startup operating at the intersection of machine learning and psychology. The company helps financial institutions and retailers better understand their customers by offering a client segmentation tool that combines Big Data and psychometrics. Following its investment, the Sistema_VC team worked with DataSine to establish relationships with a number of Russian banks.