November 2019 in Eastern Europe: Sberbank expands its empire, Baring Vostok cancels new fund, IT firms merge in Belarus and Ukraine

Crunchbase and East-West Digital News are teaming up to cover key tech and venture trends from Russia and other countries of the former Soviet Union. This monthly column by EWDN chief editor Adrien Henni highlights the most notable industry facts and trends from Eastern Europe and Central Asia, as well as promising tech innovations. Below is the review for November 2019.

Digital giants on the headlines

Witnessing the rapid transformation of the Russian digital scene, Sberbank, Group, and Yandex made the news again last month.

Sberbank is no longer just the savings bank created in the middle of the 19th century – and not even only the country’s largest financial institution. This state-controlled organization has become a tentacular tech group well beyond financial services, with activities and interests spanning from e-commerce, to food delivery and taxi services, to digital healthcare, to neuroscience and much more.

Sberbank confirmed its JV partnership with Group with an up to $1 billion co-investment in food delivery and taxi hailing activities. The two companies also announced a separate partnership to “boost the development of digital economy and AI powered products in Russia.”

Sberbank extended its grasp to the driverless vehicle market. Through a joint-venture with Cognitive Technologies – an established software corporation that develops AI-based driver assistance systems – Sberbank will soon be involved in digital economy projects in transport, agriculture, computer vision, and artificial intelligence. 

Besides, Sberbank announced last month the commercial launch of “Russia’s fastest supercomputer,” scheduled for mid-December. The capacities of this engine will be made available to organizations of all sizes, “even small startups,” said the bank.  

On its side, Yandex, the NASDAQ-listed Russian search giant, is preparing for a major overhaul of its governance and ownership structure. Under the plans announced in mid-November, Yandex will create a new “Public Interest Foundation” which will control a so-called golden share – owned so far by Sberbank – providing veto power over significant ownership transactions. 

Through this fragile compromise, the new ownership structure addresses the Russian government’s concerns that the company could be controlled one day by foreign shareholders.

Putting aside their rivalry, Group and Yandex joined a large consortium – along with Sberbank, mobile operator MTS, oil major GazpromNeft, and sovereign fund RDIF – to foster AI technologies in Russia. Pooling these partners’ resources, the consortium will implement or be involved in a variety of projects in public, private or combined forms. 

The agreement was inked just weeks after Vladimir Putin enacted Russia’s national AI strategy. The Russian president is famously known for having stated, two years ago, that “whoever becomes the leader in [artificial intelligence] will become the ruler of the world.”

Fund creations

RVC provided another illustration of the authorities’ commitment to support innovation. Teaming up with Russian Railways (RZD), the state fund of funds announced the preparation of two new tech funds to support the digital transformation of the transportation industry. Starting from 2021, these funds will support early-stage startups operating in the fields of equipment, new materials, robotics, quantum communications and green tech, among others.

Private funds are not inactive. Venture firm Altair Capital announced a third, $200 million fund to invest in Israel and Russian-speaking countries. Three quarters of this amount have already been committed by five unnamed investors, claims Altair’s founder Igor Ryabenkiy.

Bad news, meanwhile, came from Baring Vostok, whose founder Michael Calvey was arrested earlier this year. The private equity and venture firm cancelled plans to raise a new, $1.3 billion-worth fund. The firm explained its decision by institutional investors’ concerns about “contradictions in Russian and international arbitration law” and the uncertainty regarding the protection of their rights – a clear hint to the controversial legal procedure which has targeted Calvey.

Deals in Russia 

Last month was marked by a huge deal involving Andrey Andreev, the Russian-born online dating tycoon – but taking place out of Russia. Andreev’s London-based business MagicLab was sold to Blackstone, one of the world’s leading investment firms, at an approximate $3 billion valuation. 

MagicLab, whose brand portfolio includes Badoo, Bumble, Chappy and Lumen, claims to have connected over 500 million online dating aficionados around the world. It was considering an IPO when a Forbes investigation tarnished its image, associating the London office with such bad words as “tax avoidance,” “sex”, and “cocaine parties.” 

Andreev, now a UK citizen, is among the most successful Russian-born tech entrepreneurs. His first dating service, Mamba (also known as Wamba), was launched in 2004. It quickly became number one in Russia, but Badoo, which Andreev started in 2006, turned even more successful with over 453 million users across the world.

Only small venture deals took place in November in Russia itself. One of these deals, amounting to a few hundred thousand US dollars, involved ExpoCapital. This Moscow-based venture fund acquired a minority stake in Megapteka in a bid to enter the promising Russian online pharmacy market., an e-travel startup with Belarusian roots but operating in the USA, secured an undisclosed amount from Artem Lebedev, a famous Russian designer. This startup has launched an innovative multi-destination booking service that can combine, in a single order, different means of transportation (airplane, train and ferry) and accommodation. The algorithm also integrates such factors as airport-to-city distance, journey cost and duration, weather, etc., to optimize the trip.

In other countries of the region

The IT outsourcing sector in Eastern Europe experienced several acquistions:

  • Belarusian EPAM, a leading service provider in the region, announced the acquisition of Israeli NAYA Technologies, a specialist of data and cloud migration.
  • In Ukraine, InSoft Software increased its stake in Rozdoum (Kharkiv) and bought a controlling stake in Rademade (Kyiv). The two companies are already in the process of merging with a third one,, of which InSoft also owns a majority stake. Local tech blog AIN.UA estimated the value of the three assets at some $1.5 million. The new holding will operate under the name of ITernal Group, targeting clients from Western countries. 
  • Almost simultaneously Beetroot, a Swedish IT company with offices in five Ukrainian cities, acquired two other companies: Ukrainian Onlinico and Swedish Aducera. The details of the transaction were not disclosed.

A few small startup deals took place in Ukraine, Belarus and Central Asia, including these ones:

  • Animal ID, a Ukrainian startup that “brings together responsible pet owners,” raised $500,000 from undisclosed investors;
  • A Ukrainian venture fund, Genesis Investments, injected $1 million into IntellectoKids, a Russian-founded edtech startup now established in Cyprus;
  • In Kazakhstan, HR-messenger secured $400,000 from its existing investors, the local businessman Murat Abdrakhmanov and the Russo-Kazakhstani venture fund I2BF, and a new unnamed investor. Its valuation tripled from the last round, reaching $2 million – a sizable amount by local standards;
  • Chocofamily, one of Kazakhstan’s best startup success stories, took full control of two of its subsidiaries, and 

On Nov. 22 SeedStars, a major startup competition focusing on emerging markets, held its regional summit in NurSultan, previously known as Astana, the capital of Kazakhstan. The contest distinguished eight startups, including Biometric (Kazakhstan), FOM (Uzbekistan), Skyworker (Ukraine) and StudyFree (Russia).

Almost simultaneously in Almaty, Kazakhstan’s largest city and the economic center of the region, the city authorities held their annual investment forum. An array of VIPs from Asia, Western Europe, the USA and the Middle East heard the mayor’s ambitious plans in the field of technologies. These plans include a vast smart city program, an international tech hub for creative industries and a focus on artificial intelligence across local universities. 


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  • Originally published December 13, 2019