Yandex, Russia’s most popular search engine and previously backed by Intel Capital, has started a corporate venturing programme to invest in start-ups as the country tries to encourage entrepreneurialism.
Yandex.Factory will invest up to hundreds of thousands US dollars in Russian and international projects at their seed or early investment stage.
Since June last year, Yandex, which is as an acronym for the phrase "Yet Another Indexer" and Russia’s most visited website with a monthly average of 21.5 million users, has hosted its Yandex.Start open-doors event for entrepreneurs three times. These Yandex.Start events have resulted in the purchase of technologies from WebVisor and Loginza.
Ksenia Yolkina, project manager of Yandex.Factory, said: "Yandex is growing fast. We are full of ideas, but it’s not always easy to do everything at once. If we spot a young, talented team of like-minded people doing interesting and relevant things on the market, we are eager to support them in all possible ways, including financing."
The launch of Yandex.Factory comes ahead of the company’s planned Nasdaq flotation to reportedly raise up to $1bn this summer, which is expected to be managed by investment banks Deutsche Bank, Morgan Stanley and Goldman Sachs, although no regulatory filing has been made. (Editor’s note, the filing was made a day later – see separate story.)
Intel Capital had indirectly backed Yandex from April 2000 by investing in the Ru-Net Holdings fund managed by private equity firm Baring Vostok and local bank UFG. Ru-Net invested $5.3m for a 35.7% stake. While Ru-Net’s other holdings, such as property website Ozon, were distributed to its limited partners, Yandex was maintained in the ongoing vehicle but Intel said it no longer had an interest in the portfolio company.
Russian Prime Minister Vladimir Putin last year called on the country’s corporations to invest more in entrepreneurs.
Last week, the Skolkovo Foundation, which is trying to build Russia’s equivalent to the US’s Silicon Valley, along with state-backed investment organisation Rusnano and the Russian Venture Company, invited the heads of 25 European venture funds and technology companies to Russia.
The Global Innovation Partnership forum held last week in Moscow and Kazan included corporate venturing partners of Germany-based industrial groups Siemens and BASF.
At the event, Nanostart, a German venture capital fund, partnered with Rusnano and the Perm region to create a $73m investment vehicle for nanotechnology entrepreneurs.
Igor Agamirzian, chief executive of Russian Venture Company, by email said: "A major task of Russian Venture Company is to encourage Russian’s own VC industry so we view globalization of Russian technological businesses as one of the necessary conditions to ensure successful innovative development of Russia. Global Innovation Partnership (GIP) was organized last year with a purpose to provide Russian venture capital market’s players with valuable information and networking opportunities on one hand and to deliver a comprehensive status on Russia’s technological market to the foreign VC representatives on the other hand.
"Russia and Europe have strong long-standing relationships in the traditional businesses. And I hope that this visit of European VC funds representatives will stimulate cooperation in the area of technological entrepreneurship and venture business.”