Russia, the new financial tiger – online business

I always liked to discover Russia or China as healthy growth alternatives for new business. Last October  I was blogging about Russia’s online market in 2008 and right now I have only positive thoughts about this part of the world since they decided to invest more in new media.

I like the new country and the achievements made in the last years: Russia is now a healthy democracy with an emerging market and a healthy appetite for new business. I know that in Romania, politicians are not very keen to maintain business relationships with Russian entities but the opportunities cannot be ignored as we entered a new era of doing business.

The financial crisis had a different impact but the fact that Digital Sky Technologies, a Russian investment group, decided to $200 million investment in Facebook was a great signal for entrepreneurs all over the world. Facebook said the investment represents a 1.96% equity stake at a $10 billion valuation and it seems that DST has indicated that it will offer to buy at least $100 million of Facebook common stock from existing common stockholders.

The man behind DST is a visionary, Russian businessman and Internet investor Yuri Milner, owns majority of two of the biggest Russian online sites: portal Mail.ru and social site Odnoklassniki.ru. Yuri Milner also owns stakes in other online portals in Eastern Europe. A very interesting fact is that Tiger Global Management (hedge fund also operating in Romania with stakes in Neogen and EJobs) has sold 27 percent of the leading Russian online portal, Mail.ru to the company’s shareholders, Digital Sky Technologies and Naspers (for a total of approx $400 million) meaning that the Russian online market is doing very good.

Another interesting fact is that Google has been refused an acquisition of contextual ad firm Begun so they decided to follow a strategic partnership with Odnoklassniki.ru.

Romanian Internet entrepreneurs had no experiences with Russian online businesses and probably they’re missing lots of know-how and opportunities. For example, the Hungarian online auction site Vatera.hu has been acquired by a principal shareholder of the leading Russian web portal Mail.ru. I remember meeting a few years ago with a few friends that founded IWIW.hu, the biggest social network in Hungary and they had a very positive experience regarding South African and Russian investment funds operating in Hungary.

During the last months the interest for Romanian online investments diminished although we have a 20 mil. people in this country and the potential is still very high. Russian investments can be a winning bet for Romanian entrepreneurs but the local online industry has poor contacts with this part of the world. Maybe thigs are about to change, of course that politics has its role and politicians and old mentalities are not helping very much but the opportunity is still there.

After all, it’s just a matter of time and I hope to see a Russian investment group like Digital Sky Technologies investing not only in Facebook but also in local Romanian websites like Trilulilu, Neogen or Ejobs.