The Untitled, a Russian venture firm established in 2013, is raising a new vehicle to invest across Eastern Europe with a focus on the former Soviet Union. With a €50 million target, the new fund will seek to invest at the seed and pre-Series A stages in such segments as B2B software, robotics, artificial intelligence, agritech, medtech, and data management.
“Russia and neighboring countries feature world-class programmers and high quality startups,” The Untitled co-founder Igor Lutz said in an exchange with East-West Digital News. “Our new fund will take them to new markets, facilitating the creation or development of a Western legal entity, helping them attract Western investors, and supporting their business development.”
The sole fact of their relocation will tend to increase the valuation of these startups, Lutz believes.
The fund will invest anything between €1 million and €3 million — “ideally, in companies that already have a legal entity in a Western jurisdiction, but no significant commercial traction yet.”
Lutz and his partner have engaged in a dialogue with international financial institutions which may consider backing the fund. Private limited partners also being approached.
Are these troubled times really the right period to raise a fund covering Eastern Europe? “If the customer base of a company is within the region, this is an issue. But technology in itself is transferable, so good tech startups are rather resilient to local crises,” answers Lutz.
The new The Untitled will be established in the UK. “This will strongly limit the risks for limited partners,” says Lutz.
The fund will operate in a little competitive field, as local startups have limited access to capital. The Russian venture market — the largest in the region — does not even reach $1 billion per year, relying heavily on the support of state-connected corporations. Many funds managed by Russians tend to invest more abroad than in their country of origin, as exemplified by Almaz Capital, Arctic Ventures, Runa Capital, Target Global, TMT Investments, and others.
In neighboring Ukraine, Belarus and Armenia, state support is weaker, but two dozens of local private funds operate locally, generally with limited means. International investors are virtually inactive in the region, with a few exceptions such as Acrobator Ventures and Mangrove Capital Partners.
However, several international public and private venture initiatives could be announced soon, targeting the region, East-West Digital News learned from industry insiders.
