Private Equity Russia

The FT published a piece today on technology venture capital in Russia, or the lack thereof. SQ7WHTXYZE6U

Several reasons were given for the current lack of activity in technology venture capital and private equity in the Russian market, including high risks, the lack of a technology focused exchange and the lack of stock options for managers.

Alexandra Johnson, of DFJ-VTB Aurora, specifically sited the lack of good managers.  Interestingly, Draper Fisher Jurveston‘s Russian JV partner VTB just announced a stock  option plan worth 1% of its shares for its own top managers.  It has yet to win the required state approval for the program, however.

Also name-checked were Web Media Group, which has invested $20 million in online properties, Digital Sky Technologies (of Russian social networking and Facebook fame) and Luxoft, Russia’s largest offshore programming outsourcer.

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Russian contextual advertising agency iConText estimates that the volume of the online contextual advertising market in Russia in 2009 was 9.61 billion rubles before VAT, a 13% growth in ruble terms over the previous year (8.5 billion rubles in 2008).

In dollar terms, the total market size was down about 7% to $320 million from $344 million in 2008.

According to its report, revenues of Yandex.Direct, were 7.5 billion rubles, or 78% of the total contextual advertising market.

Besides Yandex there are two other players on the Russian contextual advertising market - Google, with an estimated 10% market share and revenues  of 1.01 billion rubles (a 50% increase over 2008) and “Begun” («Бегун») with 11% market share and revenues of 1.10 billion rubles.

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