VTB Capital, partners to invest $18 mln in internet start ups
MOSCOW. April 24 (Interfax) - VTB Capital, the investment arm of VTB Group , will act as lead investor in an $18 million investment into Fast Lane Ventures (FLV), Aidar Kaliev, the head of VTB Capital's venture business department, told the press in Moscow.
"The Russian internet market is No.1 in Europe, but competition in many areas is still very weak and there are huge opportunities for opening new directions and becoming a leader," kaliev said. "For us FLV is a window to the consumer segment of the internet. We see great potential for this market and with the high growth any slowdown could mean lost opportunities," he said.
Former FLV shareholders are the co-investors in this deal.
FLV will use the money to develop the expertise in the company and strengthen its team and to finance portfolio companies and establish new ones. VTB Capital is also considering direct investment into FLV portfolio companies.
VTB Capital will invest a total of around $330 million, Kaliev told Interfax. Of this around $100 million has been invested in different funds over the past 4 years. VTB Capital plans to invest in three main directors - consumer internet projects, software development and complex projects, including in nanotechnologies.
FLV CEO Marina Treschova said Fast Lane Ventures was currently promoting 18 companies, for which around $60 million was raised. The company has already sold two companies - Sapato (an online footwear retailer) and Shoping Live (telemarketing).
Treschova told Interfax that most of the FLV projects were thought up and started by the company itself and that just 4 out of 18 came from outside the company. All FLV internet projects work in the B2C segment.
The company plans to keep its previous rate for launching new projects - 1 new start up per month, she said. "Demand for quality services and goods is much higher than supply. Now is just the time to develop business on the Russian internet," she said.
Investment in the Russian internet business was about $1.3 billion in 2010, she said. Around $250 million was invested in start ups - 59 public deals. Investment in the internet business climbed to $2.15 billion in 2011, of which around $500 million went into start ups. Treschova said this was public deals. Taking into account non-public deals investment in start ups can be doubled, she said.
VTB Capital sees investment in FLV not just as an investment project but as a strategic partnership, Kaliev said. VTB Capital could increase its stake in Fast Lane Ventures in another round of financing or if it makes an IPO, which is a possibility in the next 3 to 7 years.
The Russian internet business has three major quality teams involved in developing the internet business, Kaliev said. Two of them are Yandex and Mail.ru, but these "are closed." The third is Fast Lane Ventures.
As a result of the digital revolution behaviour is changing and the economic landscape is changing, enabling new young entrepreneurs, who will create a new economy, he said. This process has begun in Russia and in the next few years the rate of growth in the country's internet business will be expressed in 2-digit and 3-digit figures.
"This is the best time to invest in the internet business," VTB Capital Senior Investment Manager Viktor Belogub said. "Russian companies are not widely represented on the internet and we cannot see a large number of quality teams able to develop internet projects."