5 Questions with Alexandra Johnson

Managing Director Alexandra Johnson is Draper Fisher Jurvetson’s point person for Russia and the U.S.-based representative of the newly formed DFJ-VTB Aurora fund, a $150 million investment partnership between DFJ and the large Russian bank VTB. It is the first fund to receive backing from the Russian Venture Co. (RVC), the Russian government’s fund of funds. Senior Writer Alexander Haislip recently chatted with Johnson about investing in Russia.

Q: What is going on in Russia?

I don’t think everyone will drop everything and go to Russia. But if you had told a Silicon Valley venture firm a couple years ago that they would be investing in India or China you would have gotten a look, like “what are you eating?” Similarly, until this year, there was very little professional activity in Russia and the competition for deal flow was essentially non-existent.

Q: When the RVC was created last year, it was designed to help the country develop startup technology and move away from commodities. Is it working?

It was really important to not just start this venture capital company, but also to invest in R&D. When RVC was first established, they didn’t know how many funds would want to participate and apply for the money. People were careful because they were concerned about what strings might be attached.

When it comes to investing, there are really very few deals that qualify for venture capital by Silicon Valley standards and there’s a lot of work that’s required. With the formation of the RVC, entrepreneurs now have an opportunity to access money. But creating more funds to chase the same number of deals is going to be interesting.

Q: What’s it like working with the RVC?

Since we’re the first fund to have raised dollars from RVC, we’re the only ones who have started the investment process. It’s obvious that the process existing now with RVC involves a lot of paperwork. Ideally, we would want it to function as a typical limited partner. Ideally, if all the partners like the deal, it could get done fast. They didn’t think of follow-on investment rounds. That is something we still need to figure out.

Q: You had to raise all of the cash for the fund up front rather than through the commitment process that most VCs use. Why?

Raising the money up front would discourage other entities that would just get the government money and not do anything on their own. Russia is a country where it’s really important to have the government on your side. The funds that are going to do it need to read all the fine print.

Q: Why did you want to invest in Russia?

A: Everybody was talking about this famous potential, but nobody had ever seen it. I grew up believing that we had all the best ideas and people in the world. At some point it became a personal challenge to tap into that potential.

Russia, and the Soviet Union, has always spent well on science and technology. As a result, if an engineer with entrepreneurial spirit taps into new markets, the world will take notice.