Pandemic and the resulting crisis will slow the growth of Russia’s venture capital market, whose members are already working in conditions of high uncertainty. The real decline of investment in startups is still not observed. However, the negative effects of the reduction in the number of transactions and their volumes are expected in the following quarters. Investors predict a fall in the average size of investrend 20-30%, the hardest hit projects in the initial stages of development. If in the last time funds were fighting for the opportunity to invest in certain projects, but now companies will be competing for the attention of investors.An outbreak of coronavirus in the beginning of 2020, including the latest month of severe restrictions, has not prevented a number of Russian companies to close deals to attract venture capital investments. However, it is worth considering that most of them planned for months. In future the Russian venture market by the end of 2019 reached the transaction volume of nearly $870 million (est DSight) will not escape the negative impact of the crisis.Although the results of the first quarter, the volume of venture investments remained at the level comparable with the previous years, most likely, by the end of the year, the market will shrink in number and volume of transactions, confirms the venture investor, founder of A. Partners Alexey Soloviev. According to him, now continue to close deals on which negotiations were under way earlier, however, many funds to put new deals on hold.”If epidemiological crisis drags on and finally transformirovalsya in the economic crisis, we can expect a significant decline in the venture capital market in anticipation of the actions of financial regulators to support the economy”,— agrees the managing partner of FinSight Ventures Alex Garunov.In the markets of USA and Europe the number of large deals greater than $100 million — is now also comparable with the previous year, said President of the Foundation Sistema_VC Dmitry Filatov, however, for small transactions, “the recession is clearly visible”. “If you take Europe and the United States, was made about 5 thousand transactions, while last year during this period was about 9 thousand transactions. Seen a tightening of terms of transactions, evaluation of multiple start-UPS fell. Now a more risky time, investors take this into account, and that affects the company,” he explains.The Director of portfolio companies of Fund of development the Internet initiatives Sergey Villains evaluates the possible fall of the Russian venture capital market in 2020, 10-25% of investment in crop and rounds A (early stage investments). Evaluation companies will also be reduced as tied to revenue and a market multiplier, which look at public stock market. “The public market fell, respectively, fell multipliers. The evaluation of companies will be much lower: around three times, somewhere in the toeb. Money will give less, and the share will take more,” predicts Lord of Scoundrels. Some funds use the crisis to enter the company’s super low estimates, confirms the managing partner of AddVenture Maxim Medvedev. “We are some companies are considering the possibility to buy competitors on the cheap,” he admits. 35-50% of investors will reduce receipts in the investment rounds, predicts the team leader Deloitte Digital Maxim Shapirovskii.Change and role in the venture capital market. “Before the pandemic for a long time it was a seller’s market: funds actively compete between themselves for the bright, promising and strong team that often led to inflated estimates. Now the balance is leveled in favor of the more importance investors,” says the co— founder of the venture capital community Alta Club, the ex-CEO “MTS Ukraine” Ivan Zolochevsky. Investor money is king in the market, confirms Sergey Villains.The focus of many investment funds will shift to support current portfolio companies. Now it is necessary to reduce costs and adapt the business to new realities, the challenge funds — to help get through the crisis with minimal losses, says Maxim Medvedev. From 40% to 70% of venture capitalists are now planning to change the strategy in any form, evaluates Maxim Shapirovskii. According to him, this applies to both the lifetime of the Fund or its stages, and focuses on particular industries or stages of a project.State venture capital funds, which holds a prominent place in the Russian market, still feel better than others. According DSight on investments state funds last year accounted for 4% of the market in money, and 2020 promise to continue their role. “Against the background of reducing the activity of private foundations have become more active state Fund. Other money in the market is not enough”,— confirms Dmitry Filatov. The government is a reliable partner that you can’t always tell about corporate and private investors who are in crisis may experience difficulties with liquidity, assured the Deputy Director of the Russian venture company Alexey Basov.Time vozmozhnostyakh of the pandemic, wins everything related to remote lifestyle— whether it’s a software for remote work, food delivery services or startups in the online education sector. So, one of the most notable recent investment was the raising of $50 million start-up with a Perm the roots of Miro. The investor is a U.S.-based Iconiq Capital, managing capital, the founders of Facebook and Twitter respectively, Mark Zuckerberg, and Jack Dorsey, the deal was announced on April 23. Miro is a platform for remote collaboration that can integrate with other tools like Zoom, Jira and Google Docs.A major deal will be the purchase of 75.6% service Express delivery products, “Scooter” joint venture Mail.ru Group and Sberbank. Until signed binding documents. Assessment of Alexey Solovyov, 75.6% of “Scooter” could cost customers 1.5 billion rubles. Another notable investment is $5 million raised from the Russian direct investment Fund, Bonduelle and business angel for start-up Elementaree involved with the delivery of food packages.The latest deals on Russian EdTech market can be attributed to investment Leta Capital in the amount of $1 million in a startup with Russian roots note: the mybuddy.Ai. Also in April, $1 million from unnamed private investors, has attracted an interactive platform for teaching children the “Amnesia”, founded by immigrants from McKinsey Dmitry Plotnikov and G. Kahn, told “Kommersant” representative of the company.A pandemic will affect the investors ‘ interest in medicine and pharmacology. “Pharmacology, in particular, Express-diagnostics, universal vaccine, etc., will become a hot topic. Although in the venture capital world is quite a difficult industry for investment due to high capital intensity and long horizon return,”— said Maxim Shapirovskii.The experts ‘ opinions on the stages, which will now continue investment, differ. “Globally, now is the time of opportunity for startups in the early stages. Investment in technology at an early stage are characterized by high risk and a higher return on investment, but in times of crisis, such companies are relatively less risky,”— said Alexey Soloviev. Pre-seed and seed stage are low due to so inherent high risk objects Maxim Shapirovskii. The aim will be for startups with products”, ideally with some cash flow”, he waits.In General, the venture capital market participants hope for many of them the crisis will be a time of new possibilities. “The market will appear more and more interesting business opportunities for investors, young and Mature innovative companies. We also expect the emergence of new industry players, which will provide the industry additional inflow of long-term funds, such as insurance companies and pension funds”,— Alexey Basov optimistic.Risks crazy dragoncare funds rarely allow myself to get into a strategy of portfolio projects, at least for the founders to do the job is usually not recommended, says Ivan Zolochevskiy. But in the conditions of crisis, investors have paid greater attention to portfolio companies. For example, FinSight Ventures asked their companies operating plan based on various scenarios. “Not all are experiencing difficulties at the moment, but nobody knows will it turn the economic shock in a new cyclical crisis. Therefore, we advise our companies to begin optimizing the expenditure side of their budgets and shift some of the races��been performed on the third or fourth quarter,”- said Alexey Garyunov.AddVenture encourages companies to optimize the structure and to have a financial reserve at least a year, and use the moment to capture market share, while “the activity of competitors has been reduced.” However, many projects had to part with a large number of employees, recognizes Maksim Medvedev. Leta Capital has amounted to multi-page manual for survival in a crisis and sent it to their projects: they are encouraged to have a financial reserve at least six months, and in his absence to begin to cut spending. “We ask portfolio companies even with the financial reserves to actively rebuild. With companies whose products are in particular demand in the new environment, discuss the expansion and increasing market share,” says Alexey Basov.Similar advice investors give to the startups who are seeking investment. Maxim Shapirovskii sure by now they should focus on the key product details to paint the strategy, without losing sight of the focus of marketing component, and at the same time to save money, trying as early as possible to start negotiations on investment. “Try to reach any money,” categorical and Sergey Villains. According to him, startups should take funds of investors even rating below the previous one, and also to try to accelerate the receipt of funds from customers and delaying payments to contractors.Dmitry Filatov, by contrast, warns against “easy money”. According to him, now “questionable partners,” the market may try to enter into projects with minimum costs and on aggressive terms. “Now you can panic and take strange partners on Board. The economy will recover, the situation is normalized, and new partners will remain,” he explains. In this situation, said Mr. Filatov, it is better to develop a plan to overcome this phase on their own or with minimal help current shareholders.Dmitry Shestoperov
