Almaz venture capital fund

By Richard Wallis

The EBRD has agreed to invest up to $30 million in Almaz Capital Russia Fund I (the Fund) as part of its strategy to support the growth of Russia’s high-technology sector and thus contribute to the country’s economic diversification, as well as foster innovation.

The Bank has played a crucial role in mobilising funds for the Russian private equity sector, having since 1993 committed over $1 billion to 30 Russia-focused funds.

Almaz Capital, which first closed in July 2008 with Cisco Systems, aims to be among the first venture capital funds to bridge the gap between Russia, the Commonwealth of Independent States (CIS) and Silicon Valley.

The fund will have senior staff based in Moscow, as well as in Silicon Valley in California where several of its top executives have worked in the past.

A well-functioning venture capital industry can contribute significantly both to raising the level of innovation as well as increasing the productivity of the Russian economy and the EBRD investment is particularly important at a time when the crisis has limited funding for early-stage companies, said the EBRD’s First Vice President, Varel Freeman.

The EBRD’s new three-year strategy for Russia stresses the importance of equity investments in the current crisis and pledges that the Bank will actively seek opportunities to provide risk capital to Russian companies and banks.

The EBRD commitment to Almaz Capital is part of a second round of capital-raising by the Fund whose investments will target companies in Russia and the CIS delivering more sophisticated technology-driven products to consumers in the region and globally.

“More often than not, fundable technology companies with Russian DNA possess two very attractive characteristics; they are highly innovative and very capital efficient,” said Peter Loukianoff, managing partner of Almaz Capital Partners.

“Our job is to assist our entrepreneurs and companies in building upon these important start-up characteristics and achieving significant scale by leveraging our global relationships and the best practices learned from our experience in Silicon Valley,” he added.

The Fund’s main focus will be on the Telecommunications, Digital Media and Communications industries where it will address a broad spectrum of sectors ranging from software and internet services to semi-conductors, clean-technology and alternative energy.

In forming the Fund Almaz Capital Partners established a strategic alliance with United Financial Group Asset Management (UFGAM). The EBRD last June committed up to $50 million to a private equity fund targeted at Russian markets launched by UFGAM.