Foreign Venture Capital Firms to Invest in Russian IT Market

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Aug. 23 – According to various estimations, more than 300 million euros (US$371 million) is expected to be invested into information technology companies in Russia in 2012. Foreign firms are also expected to take part.

There are three foreign firms among the top 10 venture capital companies investing in Russia – Luxembourg-based Mangrove Capital Partners, United States-based Insight Venture Partners from New York, and the global venture capital firm

Founded by Mark Tluszcz, Gerard Lopez and Hans-Jürgen Schmitz, Mangrove Capital Partners has made its first fortune by racking up US$200 million from a US$2 million investment in Skype. In 2006, Mangrove Capital made a foray into Russia, where it aimed to be the first institutional investor. The company’s investment strategy is set to pay off big for such companies as e-commerce group KupiVIP and Russian-language online hotel booking service

Based in New York, Insight Venture Partners has invested in Acronis, Parallels and Aelita Software. Insight also recently acquired stakes in online marketplace B2B-Center and financial services provider MICEX Group. The former managing director at Insight who was in charge of the Acronis and Aelita deals, Scott Maxwell (above), has launched OpenView Venture Partners in Boston. OpenView has yet to make an investment in Russia.

Earlier this year, Insight Venture Partners together with Da Vinci Capital, and including ALPHA Associates and Runa Capital, has acquired a significant minority stake in the B2B-Center, Russia’s leading online procurement platform for businesses to sell or acquire goods and services.

“B2B-Center is expected to grow at a significant rate triggered by technology improvements, the needs of businesses to improve efficiency and profitability, and open access to the Internet,” Oleg Jelezko, managing partner at Da Vinci said to Insight Press. “We are proud to have brought to it a group of first-class international investors and it demonstrates the interest from global institutional investors in high quality Russian companies.”

The Insight Venture Partners investment has made B2B-Center the only open JS Russian company in the field of electronic trading that includes foreign investors.

“The Russian economy is evolving rapidly to transacting and doing business with greater transparency and speed. B2B-Center is at the forefront of this trend, led by its strong and visionary founder,” commented Martin Angert, vice president at Insight Venture Partners.

Founded in 1998, invests out of dedicated funds in five geographies, namely the United States, Europe, Brazil and Latin America, China, Japan and Russia. The company started to invest in Russian e-commerce companies since 2008. The company financed local ventures with copycat business models such as Darberry (merged into Groupon) and the online shoes store Sapato.

The growth of the Internet in Russia to its current 60 million users, the strong technical background of Russian software engineers, and the sound entrepreneurial skills of local managers are the main reasons attracting major money to Russia’s IT market, according to experts.