Runa Capital Sets Aside USD 50 Million to Back Cloud Computing and IT Companies
Moscow-based venture capital company Runa Capital decided to increase its funding program to USD 50 million aimed at backing technology and Cloud Computing companies in Russia and abroad. The goal of the venture capital fund is to invest in early-stage Russian IT companies and growing number of investors share the company’s vision that Russia’s technology market has huge potential, the company said in a press release.
Competing on a global level is often a problem for Russian IT companies although the government in Moscow announced a strategy to intensively develop country’s IT sector and Cloud Computing, in particular. Actually, without backing from angel investors and venture capital funds, Russian IT start-ups are destined to suffer from insufficient funding, many local analysts admit.
At present, Runa Capital includes partners like Edward Nicholson, former CEO of Brunswick-UBS in Russia and the CIS and Alexander Katalov, investor in Begun, Softkey, Alawar and ElcomSoft. Dmitry Chikhachev is one of the key figures in the venture capital fund – a serial entrepreneur and business executive who believes that Russia’s technology companies can compete on equal terms with Western competitors but must be supported by private capital flows since the state is not able to back each promising project. In an interview with Wall Street Journal he admits that local tech start-ups are well positioned in terms of technology and knowledge base but experience difficulties in finding institutional investors to support their efforts. Western investors tend to be cautious when pouring money in Russia and Runa Capital just fills an existing gap in backing promising tech start-ups.
“In 2010 we successfully invested in two projects – the voice-enabled social network OnAir3G and cloud-based application development platform Hivext.com. Today’s expansion of our fund to USD 50 million will ensure that we can continue to build upon our primary objective of elevating talented Russian technology teams to the world stage,” Chikhachev explains in a company press release.
Another eight to ten investments are expected in 2011, according to him. The company’s founders claim the venture capital fund is ready to invest in Russian projects abroad, which is a clear signal that new market players can expect backing no matter of their geographical location. Actually, this is good news for Russian tech professionals who experience difficulties to fund their promising projects overseas.
Traditionally, Russia’s economy is heavily dependent on energy exports while President Dimitry Medveded declared the country should develop advanced technologies if it is going to have a truly competitive and sustainable economy. As a matter of fact, Russian tech companies can offer more value for money compared to Chinese competitors, for example, but Beijing invests heavily in technology start-ups while Moscow bureaucrats tend to forget that technology is what will increase a country’s competitive advantage once mineral resources are depleted.
Alexander Galitsky, one of the angel investors in the team of Runa Capital and a former head of digital communications for several Soviet space programs, is obviously a man who has expertise in the field of technology. He is now part of a group of investors that change the way Russian tech companies are run, backed by private capital injections instead of relying on government funding. It is worth investing in Russian and East European tech start-ups for a number of reasons, Skype being developed by former Soviet software developers just one of them.
More importantly, a huge market is knocking at the door because Russia is not the country it used to be and Russians will make use of growing number of advanced hardware, hence their appetite for technology will also grow. One who is underestimating the growth potential of Russian tech and Cloud Computing start-ups is simply not well informed or fixed on the past.
In truth, technology has no country of origin and for various reasons North America still relies on European and Asian newcomers to keep its technological health in good form. Just take a look at the alumni and faculty list of the Massachusetts Institute of Technology and you will realize that investing in tech and Cloud Computing start-ups outside the United States is more than a wise move.
By Kiril Kirilov
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