An Examination of the Success of US Venture Capital Funded Companies in the Russian Market.

Abstract

The US venture capital market is perceived to be one of the most successful in the world. Every year the US improves innovation through new creative start-ups which have been emerging for decades. The Russian venture capital market, on the other hand, has experienced difficulties in development for many reasons. Both markets are different from each other, but at the same time they share certain similarities, such as the role of government in the markets. The Russian market lacks development and innovation, letting foreign business fill the gap in the market. The study will show whether the US companies were able to enter the Russian market and offer their products or services, substituting the Russian innovative companies. The study will discuss the venture capital (VC) in general, which will include a consideration of the history of VC, types of investment rounds, business angels and crowdfunding. Then, the US and the Russian VC markets will be analysed in order to determine how they work. Further in the study, a case study will be conducted: eight companies, which began their activity as start-ups and became successful, will be identified. The companies’ annual reports will be used to calculate certain financial ratios to assess their financial and general success in the market. Two years will be compared: the year before and after the funding round. This will lead to a survey of the Russian people to determine how they perceive the chosen companies. All that will help see whether the US companies were able to fill the gap in the Russian market.