Russian fintech fund Life.Sreda is seeking buyers for the greater part of its portfolio companies, both Russian and foreign, Russian business daily Vedomosti has learned from unnamed industry insiders. The fund intends to concentrate on the development of its most promising project, mobile acquiring startup LifePay.
In an exchange with the newspaper, Life.Sreda representative Anna Yanchevskaya conceded that, in the “turbulent conditions” of the domestic venture market, the fund has slowed its investment activity in Russia.
Life.Sreda has nevertheless allotted 100 million rubles (about $1.5 million at the current exchange rate) to support existing portfolio companies in Russia and help them survive the present market conditions.
Life.Sreda launched in 2012 as the venture arm of Russian financial group Life. Yanchevskaya indicated that the fund was “closed successfully” in December 2014, after having invested over $40 million in a number of fintech startups from Russia and other countries.
In March 2014, the Russian fund made its first exit with Spanish bank BBVA acquiring Simple, a US banking app startup, for $117 million. Life.Sreda claimed a 180% return on the investment it had made less than one year earlier.
However, raising a second, $100 million fund has turned out to be more difficult than expected, Yanchevskaya conceded. Life.Sreda II is to invest exclusively in foreign startups, following a growing trend among Russian venture capitalists.
Life.Sreda’s current problems are, to a large extent, a reflection of the current difficulties on the Russian venture market. InVenture Partners managing partner Anton Inshutin believes that the market volume could decrease by five to six times by the end of this year. “What is happening at Life.Sreda is one of the first signs of the crisis that is descending on the industry,” he told Vedomosti.
A slowdown in the venture market had already been noted recently after years of euphoria. According to a report by Rye, Man and Gor Securities, the volume of venture capital invested in Russia fell by 31% – from $732 million to $405 million – between 2012 and 2013, and the decline continued in 2014.