In the venture business, much depends on people. A successful idea and promising business model still do not mean that a truly large company will grow from the project. It all depends on the founders, so Venture Investors always pay a lot of time to communicate with entrepreneurs. It is necessary to believe not only in the idea, but also in the founder. This year, investors had to learn to look for this faith by Zoom. The pandemic has greatly influenced the processes in the global wench, and it did not cost one remotely.
an old friend is better than two new onesGood news: the market is not dead, there was no less money. If you believe CRUNCHBASE analyst statistics, then in 11 months even more money was invested in venture projects around the world than a year earlier - $ 269 billion against $ 261 billion on the other hand, the situation has changed dramatically. In 2020, venture capital investors had a very strong appetite for risk, and they were extremely laid in new projects, especially in the first half of the year. And many areas, like traveling, and at all had to almost forget about venture money.
Most venture capital funds starting from spring, engaged in salvation and support for their portfolios. The new round has been planned for some projects, others had to urgently look for additional money due to the deteriorating situation in the market. Funds helped draw up anti-crisis plans and look for new investments. Somewhere since March our foundation has almost completely switched to remote work. Surprisingly, the effectiveness of fundraising even rose. In the same Zoom mode, the whole world worked, and everyone was part of each other's position. For three months of self-insulation managed to make the same transactions as for the whole of 2019
Holding and even a small increase in the global venture market may be associated with the fact that investors have become more investing in later stages. In this case, the number of transactions decreased, and the size of the checks has grown. Investors preferred less risky investments: the longer the startup lived, the greater the chance of success. According to CRUNCHBASE statistics, this year the second time in history most of the market is a transaction from $ 100 million.
Projects at the stage seed and pre-seed this year was not frankly lucky. The number of transactions at this stage fell almost twice. But recovery can be waited in the near future. Many major European accelerators in the first half of the year did not show their startups, and in the second - resumed this activity. For example, a major British accelerator EntrePreneur First managed to hold a demo day for European offices and in Singapore. The feeling that Seed died, no. Moreover, many funds did not stop looking for projects. Just not invested immediately, but postponed the transactions for later. At the same time, many remotely conducted Due Diligence, primary scoring. Relatively survive pandemic startups helped government support programs. In any case, in France and Great Britain, government launched business assistance programs. This assistance partially went to Venchur, which somehow balanced the decline in the appetite of investors to risk.
Startups of early stage, by the way, the Zoom communication of the Pandemic era will only benefit. Investors typked this tool and, it should be assumed to take it to work: meetings with the investor will be easier to achieve, albeit online. I do not think that this will displacing personal communication - it will be more likely to become an additional tool for the first acquaintance. Personal meeting will still remain a kind of filter.
In the spring and at the beginning of the summer there were a lot of conversations that startups were strongly asked to evaluate. In fact, many rounds were made by existing investors, which was reflected in the assessment. At the same time, in the second half of the year, rounds with external investors have already become much larger.
Get to BierAnother trend 2020 is a fairly large number of successful IPOs. Domestic Ozon, Airbnb, Doordash and still a number of companies entered the stock exchange. The fact is that in the stock market, especially American, Euphoria was observed almost all year. Part of the money obtained according to state support programs, people began to invest in stocks through services, like RobinHood, which allow you to invest in small checks from $ 5-10.
Unqualified investors rarely look at multipliers and trends, they are investing in familiar names. All this spurred growth and in the technological sector. Such a situation, as a result, leads investors of startups to the thought that now a good time to go on the stock exchange. Hence the large number of IPO. At the same time, many companies, like Airbnb or Doordash, capitalization on the stock exchange turned out to be much greater than the estimate of the last non-public round. This again is explained by the interest of unqualified investors: if someone invested in the conditional Tesla and earned, then I also need to invest there. But such an increase can lead to the fact that after a while, the capitalization of companies roll back. True, the United States adopted a new stimulating program. So at the beginning of next year you can expect a new wave of an IPO, of course, smaller.
Venchur is, but the problemIn Russia, the venture investment this year is not so good. According to the PWC and RVC report, in the first half of the year, the market fell by 9% to $ 240 million, the number of transactions decreased from 130 to 78. If we exclude Ozon transactions ($ 150 million before reaching the stock exchange and $ 119.3 million in the first half of 2019 ), the size of the market will be $ 143.5 million and $ 90 million, respectively, the fall by 37%. On the Russian market, one or two transactions can turn the statistics. According to the study Inc. Russia, for the entire year the market has grown almost twice - from 11.6 to 21.9 billion rubles. The main increase - at the expense of foreign investment in our startups. And here is a big question that is considered to be a Russian company.
Our venture market has never been particularly developed. Even if you look at the number of startups, then in Russia there are 2000-4000, and in the same Israel about 8,000. Our eternal problem is the commercialization of technologies: we have strong engineers, but they poorly pack their developments in the product and are looking for buyers. And it is not clear: more entrepreneurs should appear to have more investors, or, on the contrary, more investors who will develop entrepreneurs.
The situation in the Russian wanderer causes concerns. This year, six development institutions, including Skolkovo, united under the wing of VEB, RVCs were given under the control of the RFPE. In this market, as in other areas, consolidation occurs. And this may well lead to a decrease in competition and the speed of development of segments. We have few private funds and few corporations that buy startups. Invest with limited options for further release is not ready. Yes, there are players, such as Sberbank, who actively buy startups, but Sberbank will not be able to buy everyone.
What to do startups? Scalable to other markets. Many try to conquer the US market. But according to the experience of our projects, to engage and Russia, and the United States is almost impossible at the same time: you need to focus. But now, moving to the United States has become more difficult than 10 years ago. The Russian startup, even who moved through the whole team, does not become simultaneously in the eyes of investors by the American company. Anyway, there are concerns about Russian roots. Alternatively, you can try to work in the Russian market and at the same time to master the markets of Europe, the Middle East, Southeast Asia. On the last two, quite a little interested in the origin of the startup. In Europe, Russian roots can call questions, but at least ready to listen to the answers.
And still need to take into account the trend on deglobalization. In fact, countries cover their markets and protect their manufacturers, increase export potential. Take at least a US war with Tiktok, when the Chinese service owners are forced to sell the share of American companies. Pandemic only added the speeds of this trend. Against the background of quarantine and closure of borders, the mobility of the population has decreased, which is a key factor in the movement of labor and capital. Now it is noticeably more complicated. And it is unlikely that the situation will improve in the coming year even taking into account mass vaccination in the world. On the other hand, if in 2018 our foundation almost in every deal had to explain the origin of the money, now the money of Chinese funds fall under closer attention. But the situation can change again.
It cannot be said that in Russia everything is bad with venture capital investments and technological business. There were successful IPO Headhunter and Ozon. We have good high-quality startups with international technologies and products. In Russia, a new unicorn - a company with an estimate of $ 1 billion - on average is born once every 3-4 years. We see the demand for our technology abroad. True, the foreign commercial component pressed a pandemic, and the fully plan of international sales from our startups was not fulfilled. Nevertheless, sales were. Yes, in Russia it is difficult to look for good startups, and they need to help a lot with development.
State Venchur is not necessarily funds. There are many examples in the world when the state copes with the task of stimulating technology development through special programs, grants. The most famous, probably American Darpa. Agencies and ministries practicing such programs may not be a goal. They are more trying to support engineers, entrepreneurs in their projects. The organizers of such programs do not take the risk and responsibility for the selection and subsequent growth of companies, as well as their write-off in case of failure. Public venture capital funds were created in Russia, while at its essence the budget does not provide for the possibility of writing off asset. And this can lead to stagnation in the market. Private funds are difficult to compete with government funds in budget and benefit opportunities. State investment mechanisms in technology should not suppress market principles of competition.
The author's opinion may not coincide with the position of the VTIMES edition.