The past year was not entirely rosy for Yandex, however. Its alliance with Sberbank was obviously weakened after Yandex co-founder and main shareholder Arkady Volozh declined, in late 2018, the bank’s pressing offer to buy a major stake in the company. Sberbank’s friendly moves towards Mail.ru Group, Yandex’s archrival, all along 2019, were perceived as a potential alliance U-turn that could deprive Yandex from significant resources. 

Even though some industry observers saw in Sberbank’s moves an “informal declaration of war” on Yandex, the two companies are still tied through two joint ventures: Yandex.Money, a market leader in electronic payment services, and the Yandex.Market group of companies, which operates e-commerce marketplaces. One of these, the Bringly cross-border platform, ceased activities in December 2019 as a consequence of market slowdown (see EWDN’s e-commerce report).

In late 2019, facing a long-standing government pressure, Yandex went through a major overhaul of its governance structure. A new “Public Interest Foundation” will be given veto power over significant ownership transactions. Through this and other provisions, the new ownership structure seeks to address the Russian government’s concerns that the NASDAQ-listed company — seen as a critical piece of Russia’s national online infrastructure — could be controlled one day by foreign shareholders.

Playrix

Playrix – a company founded in Vologda, Russia, in 2004 – made the news several times in the course of the year, asserting itself as a global leader in free-to-play mobile games. In April 2019, its founders Igor and Dmitry Bukhman appeared in Bloomberg’s list of US dollar billionaires. In August, Playrix made an investment in Vizor, a major Belarusian publisher of multiplayer games for browser, social networks and mobile platforms. In November, the company announced the acquisition of Ukrainian game studio Zagrava Games. 

Wildberries 

With yearly turnover growth nearing 80%, this company is the superstar of the Russian e-commerce market. It confirmed its market leadership in H1 2019, generating 31% of the total number of e-commerce orders in the domestic market. In a rare example of international expansion of a Russian e-commerce company, Wildberries announced plans to invest €200 million for EU expansion and launched sales in Poland in early 2020.

Jiji 

In April 2019, this Ukrainian-owned classifieds platform became an African e-commerce leader by acquiring from Naspers the activities of OLX, its main competitor, on the continent. In December, this “combination of eBay and Craigslist” announced the completion of a $21 million round led by Abu Dhabi-based Knuru Capital. Headquartered in Lagos, Nigeria, Jiji is backed by Genesis, a Kyiv-based company which is behind a variety of Internet and mobile projects.

Deals of the year 

Venture deals

In Russia, where venture activity hardly reaches $1 billion per year (less than 0.5% of the global VC market), few venture deals reached or exceeded the $10 million mark.

The largest investment went to e-commerce major Ozon, which is engaged in a race for market leadership. In May 2019, a $150 million convertible loan was provided by two of its existing shareholders, private equity firm Baring Vostok and LSE-listed conglomerate Sistema, to help the company maintain its current growth rate (nearly 75% a year) and develop its logistic and IT infrastructure.

A month later ivi.ru, a major online video company, secured a $40 million capital injection from an international investor consortium. Russia’s sovereign fund RDIF, Mubadala Investment Company (UAE), Baring Vostok Private Equity Fund IV, Flashpoint VC, RTP Global and Winter Capital were involved. 

Two other deals also marked the year in Russia:

• In August, Dostavista raised $15 million from Swedish Vostok New Ventures and other investors to assert itself on the global crowdsourced delivery market;
• In December, online appointment platform YClients secured $10 million from Elbrus Capital and Guard Capital, two major Russian investors.

Several deals involved Russian-founded companies established abroad. One of these is Veeam Software, which raised $500 million in North America in early 2019 – one year before being acquired by US investor Insight Partners for $5 billion. In April, Ride-hailing service Wheely attracted $15 million from UK and Russian investors as it moved its headquarters to London. In December, Russian-founded and US-headquartered Voximplant raised $10 million from Baring Vostok and RTP Ventures, two investors with Russian roots.

Brilliant Ukrainian entrepreneurs also made their way in the US. In May 2019, for example, CRM software startup People.ai secured $60 million round of funding from prestigious Silicon Valley investors. In October, Grammarly, a San Francisco-based startup born in Ukraine, was valued at more than $1 billion as it secured $90 million in a round led by General Catalyst. Grammarly thus became the first-ever unicorn from Ukraine.