Crunchbase and East-West Digital News are teaming up to cover key tech and venture trends from Russia and neighboring countries in Eastern Europe and Central Asia. This monthly column by EWDN chief editor Adrien Henni highlights the most notable industry facts and trends from these regions, as well as promising tech innovations. Here is the review for March.
Happy American ending for Russian technology
Last month’s most important deal concerned a US company with Russian origins: Nginx (pronounce “engine-x”), the developer of an open source web server currently used by hundreds of millions of websites across the world. The company was acquired for $670 million by F5, a global, US-based leader in multi-cloud application services.
Nginx is one of the most successful Russian Internet technologies of the past twenty years. Its founder, Igor Sysoev, previously served as a system administrator at Rambler, a pioneer Russian web company. He initially released his server software in 2004 and formally incorporated his company in 2011. Founded in Moscow, the startup is now headquartered in San Francisco.
The company completed several funding rounds involving Western and Russian funds. These included e.ventures, MDS Capital, Runa Capital, Russia Partners and ultimately Goldman Sachs Growth Equity, which injected $43 million in Nginx last year.
Main deals in Eastern Europe and Central Asia
In contrast with the beginning of the year, which saw the completion of M&A deals of up to $2 billion and the creation of funds of up to $200 million in the region, few significant deals took place in March.
The most notable ones last month were:
- the acquisition of Q&A service TheQuestion by Yandex, the NASDAQ-listed Russian search giant;
- the purchase of $10 million worth shares of Ajax Systems, a Ukrainian security solution developer, by local PE/VC firm Horizon Capital;
- a $7.6 million equity round for Moscow-based Instamart – a copycat of Californian unicorn Instacart, – involving Mail.Ru Group and prominent Russian businessmen;
- a $3 million investment deal for Sidorin Lab and Reputation Lab, two Moscow-based online reputation agencies, involving individual investors;
- a $2 million capital injection into Dasha.ai, a Russian AI call-center automation technology, from Russian-US fund RTP Global;
- a $1.5 million investment in AllRight.io, an e-learning startup with Ukrainian and Russian roots, provided by Eastern European fund Buran Venture Capital
Also worth noting was the acquisition of Ukrainian software developer Acceptic by Israeli Yael Group. This acquisition showed the appeal of the IT outsourcing sector in this country. Thus, earlier this year, Core Value was acquired by Polish IT Kontrakt while Ciklum secured an investment from Dragon Capital and AVentures Capital. Last year saw Horizon Capital invest in Intellias and a Swiss investor buys massive amonts of GlobalLogic stock. In April 2017 Grossum was acquired by The App Solutions.
The local media also reported that Blackstone, a leading global investment firm based in New York City, intends to acquire Murka Ltd and Murka Entertainment Ltd. Founded in 2009, this developer and publisher of online games and social casinos employ 100 people in its three Ukrainian offices.
Only small deals took place in other countries of the region. In Belarus, Blinger.io – which offers multichannel chat solutions to communicate with customers – raised $500,000 from Admitad Invest, the venture arm of a Russo-German affiliate network.
Meanwhile, in Kazakhstan, a tech-friendly country of Central Asia, pickup point network Tastamat secured $466,000 from local fund BeInTech Ventures. Last month also saw the launch of a Visa-backed fintech startup acceleration program as part of the corporation’s ‘Visa Everywhere Initiative.’
New arrests in Moscow
Following an unsurprising court decision in Moscow, Michael Calvey – the prominent US private equity investor who was arrested in February in Moscow – was maintained in pre-trial detention. As Calvey and other arrested Baring Vostok top managers claim their innocence, the case is likely to overshadow US participation in the June St. Petersburg International Economic Forum (SPIEF), the Kremlin’s annual investor showcase.
In late March, two new arrests shocked the business community. The first one targeted former Open Government minister Mikhail Abyzov, who is accused of having embezzled and hidden abroad around $62 million.
After amassing a fortune in the energy industry in the 1990s and 2000s, Abyzov made several incursions into the tech business. In 2011, notably, he backed Digital October, a tech event venue in central Moscow, as well as Bright Capital, a venture fund which has made since then a series of investments in Silicon Valley and Western Europe.
Former Bright Capital Managing Partner Mikhail Chuchkevich and RVC top manager Yan Ryazantsev were also arrested in Moscow last year in a separate matter. They were accused of embezzlement through a 2012 investment deal involving US startup Alion Energy, of which Abyzov was a director.
Just days after Abyzov’s arrest, Vsevolod Opanasenko, director general and founder of the Russian supercomputer company T-Platforms, was also sent to jail in pre-trial detention. He is facing 10 years of jail for abuse of office, a charge which he denies “categorically.”
