RB Partners Group, an international group of companies focusing on investment and banking services for Russian and international midcap companies, has prepared its venture market report for 2017.
Here are the key findings and trends made available to Marchmont News by the publisher and highlighted in the report:
A dead calm — this appears to be the best description of the year 2017. No segment showed any noteworthy departure from its prior trends.
At the very early stages (seed and start-up), in 2H 2017 we saw a resolute year-on-year growth in the number of deals, a pattern that can be referred to as tradition already; and an increase in the overall investment value and the average value per deal was nothing short of dramatic (from $6m to $70m and from $0.2m to $1.6m, respectively, for seed; from $10m to $48m and from $0.8m to $1.2m, respectively, for start-up). At the start-up stage, the number of deals shot up from 19 to 45, while at the seed stage it barely changed (from 43 to 47).
Seed and start-up have been the key drivers of yearly stats for the market for years, and the surge came as no news, owing to a certain extent to years of government investment in infrastructure and directly in the early stages, as well as cultivation of the growing angel segment.
At the growth stage, the picture looks bleak — and hardly surprising. There was a fall both in the number of deals and the overall investment value — from 43 to 35 and from $65m to $41m, respectively — and only the average value per deal ended up on a relative par with 2H 2016 results ($1.7m). It was a considerable nosedive, given the general weakness of the stage.
Expansion showed variance, which brings some hope. On the backdrop of a substantial $103m-to-$84m tumble in the overall investment value and an even more disheartening $8.3m-to-$3m (!) plunge in the average value per deal we saw the number of deals more than double (from 15 to 36). What does look alarming here is the “atomization” of deals, a trend that threatens to demote expansion to growth stage transactions.
The maturity stage was also ambivalent, going through the roof from 1 to 18 in the number of deals and sagging from $100m to $86m in the overall investment value. The average value per deal shriveled from a hefty $100m to just $9.5m, but it’s hardly the end of the world; at this stage in Russia, every new deal can alter the statistics dramatically.
Exits doubled from 5 to 11, a symbolic, yet noticeable growth. The deals shrank in value though (from $153m to $109m), but the decline should not be taken too seriously as some of the deal makers never disclosed their deals’ values.
To put the year in a nutshell: the number of deals grew from 126 to 184, the overall investment value increased from $283m to $330m, and the average value per deal withered a bit from $2.6m to $2.4m. It’s important to note that positive stats came only from the seed and start-up stages, and all the later stages were going from bad to worse. Such an asymmetrical pattern of market development is hardly the norm, especially given a next to negligible number of exits. That said, what we saw last year was nearly a replica of the 2016 developments.