VALUE OF FUNDAMENTALS ANNUAL REPORT 2015 CONTENTS 1 RVC IN 2015 IN FIGURES P. 2 2 OPENING ADDRESS BY THE GENERAL DIRECTOR AND CHAIRMAN OF THE MANAGEMENT BOARD P. 4 3 RUSSIAN VENTURE CAPITAL MARKET P. 10 MACROECONOMIC CONDITIONS FOR THE VENTURE INDUSTRY IN THE RUSSIAN FEDERATION P. 11 MAIN RESULTS AND KEY TRENDS IN DEVELOPMENT OF THE RUSSIAN VENTURE CAPITAL MARKET IN 2015 4 PRIORITIES OF RVC'S ACTIVITY FOR 2015-2016 P. 14 5 CREATION OF THE NTI PROJECT OFFICE P. 20 6 INVESTMENT ACTIVITY P. 31 MAIN RESULTS OF RVC INVESTMENT ACTIVITIES P. 33 MAIN RESULTS OF RVC-BACKED FUNDS P. 36 SUBSIDIARY FUNDS P. 40 FUNDS WITH FOREIGN JURISDICTION P. 42 FUNDS ESTABLISHED IN THE FORM OF CLOSED-END FUNDS (CEF) P. 44 FUNDS ESTABLISHED IN THE FORM OF INVESTMENT PARTNERSHIP AGREEMENT 7 ACTIVITIES FOR THE DEVELOPMENT OF AN INNOVATION ECOSYSTEM P. 49 INVESTOR DEVELOPMENT PROGRAM P. 55 PROGRAM FOR THE GLOBALIZATION OF THE RUSSIAN INNOVATION INDUSTRY P. 59 PROGRAM FOR PROMOTING INNOVATION ACTIVITIES P. 65 PROGRAM FOR THE DEVELOPMENT OF THE INNOVATION ECOSYSTEM P. 73 INTERNATIONAL PROJECTS FOR DEVELOPING AN INNOVATION ECOSYSTEM 8 EXECUTION OF INSTRUCTIONS OF THE RUSSIAN FEDERATION GOVERNMENT REGARDING THE DEVELOPMENT OF INNOVATION P. 82 9 FINANCIAL RESULTS FOR 2015 P. 86 10 CORPORATE GOVERNANCE P. 90 11 SOCIAL RESPONSIBILITY AND SUSTAINABLE DEVELOPMENT P. 106 12 APPENDIXES P. 112 MAP OF RVC PARTNER INTERACTIONS IN 2015 P. 114 ANNOTATIONS OF ANALYTICAL MATERIALS P. 124 CONTACTS P. 126 GLOSSARY P. 128 FEEDBACK QUESTIONNAIRE P. 130 DISCLAIMER www.rusventure.ru/en RVC ANNUAL REPORT 2015 1 RVC IN 2015 IN FIGURES OPENING ADDRESS BY THE RUSSIAN VENTURE PRIORITIES OF RVC'S CREATION OF THE NTI INVESTMENT ACTIVITY ACTIVITIES FOR THE EXECUTION OF INSTRUCTIONS FINANCIAL RESULTS CORPORATE SOCIAL RESPONSIBILITY APPENDIXES GENERAL DIRECTOR CAPITAL MARKET ACTIVITY FOR 2015-2016 PROJECT OFFICE DEVELOPMENT OF AN OF THE GOVERNMENT FOR 2015 GOVERNANCE AND SUSTAINABLE INNOVATION ECOSYSTEM REGARDING THE DEVELOPMENT DEVELOPMENT OF INNOVATION RVC IN 2015 IN FIGURES 23 33.7 3 1.9 191 24 44.4 111 % RVC-BACKED FUNDS RUB BILLION NEW FUNDS RUB BILLION PROJECTS EXITS USD MILLION GROWTH IN REVENUE operating as of the is the total value of RVC-backed created with RVC is the total (declared) value of approved for investment from portfolio companies as at is the total value of RVC-backed of RVC-backed portfolio end of 2015 funds as of the end of 2015 capital in 2015 new RVC-backed funds in the during RVC’s operations as of the the end of 2015 portfolio company funds in 2015 company funds form of investment partnership end of 2015 agreement in 2015 (without withdrawn projects)* * Invested projects and the ones approved for investment and expecting financing are indicated. RVC IS THE GOVERNMENT FUND OF FUNDS AND THE DEVELOPMENT INSTITUTE OF THE TOTAL (DECLARED) VOLUME OF NEW RVC-BACKED FUNDS, ESTABLISHED IN 2015 IN THE FORM OF INVESTMENT RUSSIAN FEDERATION, ONE OF THE KEY TOOLS OF THE STATE IN BUILDING THE NATIONAL PARTNERSHIP AGREEMENTS (IPA), % INNOVATION SYSTEM. 1.77 Since its foundation, the activities of RVC have been focused on solving Federation for the period until 2020, RVC is also forming non-financial North Energy Fund I Seed IPA two main tasks: creation of favorable conditions for attracting private instruments, including: formation of innovation infrastructure, Phystech Ventures II IPA venture capital to develop innovative ventures in Russia and forming assistance in globalizing the Russian innovation industry, promoting Life Sciences Seed Fund IPA the necessary infrastructure. Today RVC provides various forms of and popularizing technological enterprises, and events enabling an 47.59 50.64 support to innovative technology companies that are in the early stages increase in the competencies of players in the Venture Capital market. of development, thus compensating the high risks and low activity of Thanks to several years of experience in VC investment and unique private capital in this sphere. expertise, RVC also has the role of a competence center. As such it DISTRIBUTION OF RVC’S INVESTMENTS IN PRIORITY AREAS aims to: create the necessary conditions for cooperation between OF THE MODERNIZATION AND TECHNOLOGICAL DEVELOPMENT RVC conducts its investment activity through venture capital funds different elements of the innovation ecosystem; accumulate and OF THE RUSSIAN ECONOMY FOR THE YEARS 2007–2015 created jointly with private investors. RVC acts as a Limited Partner in promote best investment practice; carry out optimization, integration (BASED ON THE AMOUNT OF APPROVED INVESTMENTS), % all the funds and does not influence investment decisions. and scaling-up of market mechanisms; and contribute to the 11.52 Medical equipment and emergence of new instruments for supporting innovation activities. pharmaceuticals The total number of funds created by RVC as of the end of 2015 13.25 reached 23 (including two funds in foreign jurisdictions), with a total In 2015 RVC was entrusted with the function of Project Office of Strategic computer value of RUB33.7 billion1. Through the RVC-backed funds created, the National Technology Initiative (NTI) Program in recognition of technology and software a total of 191 portfolio companies was approved for investment for its unique competencies. This program is aimed at forming new 31.41 Space and a total sum of over RUB17 billion. markets and creating conditions for Russia to become a global telecommunications leader in the field of technological innovation by 2035. Within the NTI, 17.20 Energy efficiency However, ensuring the sufficient inflow of money in the venture RVC provides technical, analytical and methodological expertise to Other capital market within the framework of public-private partnership support the activities of working teams, and the operations of the NTI’s DISTRIBUTION OF RVC-BACKED FUNDS INVESTMENT is a necessary, but not sufficient, condition for sustainable evolution Interdepartmental Working Team of the Presidium of the Presidential 26.62 BY REGION FOR 2007-2015 (CALCULATED BASED ON AMOUNT of the innovation ecosystem. Taking into account the aims and Council of the Russian Federation on Economic Modernization and OF APPROVED INVESTMENTS), % objectives of the Strategy for Innovative Development of the Russian Innovative Development of Russia. 0.99 5.83 1.67 1.75 Moscow and Moscow region 2.51 Foreign countries 5.94 St. Petersburg Perm Krai 62.55 Tula region Nizhny Novgorod region 18.76 Bryansk region 1 Calculated with account of the current fund closing. Other 2 VALUE OF FUNDAMENTALS www.rusventure.ru/en RVC ANNUAL REPORT 2015 3 OPENING ADDRESS BY THE GENERAL DIRECTOR AND CHAIRMAN OF THE MANAGEMENT BOARD In 2010-2012, the young Russian venture industry was able to achieve significant growth. Thus in 2012, Russia joined the leaders of the European venture capital market in the sector of high technology DEAR COLLEAGUES, PARTNERS AND FRIENDS! innovation, which was one of the most positive (albeit unfortunately still relatively rare) achievements on the road to move the The past year was not an easy one for our country. Natural resource markets and the domestic economy towards an innovative challenging foreign policy situation had a significant impact on the Russian economy, the rate development model. During the years since the birth of the venture industry, of GDP growth, and the rate of the national currency. As a result, a decrease in economic a number of foundational mechanisms activity was also observed in the sphere of technological innovation companies. All players and tools have been established in our country. It should be recognized however of the Russian venture capital market – investors, technological enterprises and, of course, that it has not yet been possible to build a RVC – had to apply substantial efforts in searching for appropriate solutions to the new completely sustainable system for creation challenges. However, although 2015 was a difficult year for RVC and our partners, it was also an of new capital. extremely rich one. We made significant achievements and built the foundation for productive Due to the current “disruptions” in the national innovation ecosystem, it has work in the coming years. not been possible to fully reveal the potential of the venture industry. The market environment remains excessively overregulated and non-transparent, and The continuation of foreign policy Another clear problem was the deepening Taking into account the depreciation Russian jurisdiction is still insufficiently challenges and dampened effects in the disproportions in both the industry and of the Russian ruble rate, the average attractive and convenient for foreign economy in 2015 exacerbated a series of stage structure of the Russian venture transaction volume in the Russian venture investors. There is a lack of substantial negative trends in the Russian venture capital market. Here the large proportion capital market in 2015 continued to decline money supplied by investment players industry. First, the level of trust in the of investments in the sphere of Internet in both relative and absolute terms. (including pension funds and insurance Russian innovation ecosystem was projects continued to increase, particularly companies) and domestic demand for significantly reduced among foreign and in projects with guaranteed share returns The significant contraction of the Russian innovation products by the real economy domestic sources of venture capital. on investment in the short term. Technology venture capital industry was particularly remains insufficient. Foreign investors adopted a conservative companies at a more mature stage drew noticeable against a backdrop of record position, significantly cutting or even increased interest among investors. rates of growth in the global venture Overall, the Russian venture capital market completely suspending their activity capital market. Results for 2015 show continues to demonstrate the ability in Russia. There was also a noticeable The investment horizon of venture funds that the total transaction volume to maintain business activities even in re-orientation of Russian venture capital was reduced significantly.