For inspiration on how to manage Draper Fisher Jurvetson’s (DFJ) new Russian-oriented fund, all Alexei Andreev has to do is look at the firm’s lineage.
The grandfather of DFJ founder Tim Draper, William H. Draper Jr., is credited as being the first professional West-Coast venture capitalist. Tim Draper’s father, Bill Draper, was also a VC pioneer in Silicon Valley, having launched Draper Richards, which became the first firm to work with Indian entrepreneurs to fund U.S.-based companies that employed workers in India.
Andreev hopes to model DFJ’s new fund in a similar vein.
DFJ announced last month the formation of DFJ Nexus Fund I, which will invest in early-stage companies doing business in Russia or in the former Soviet Union.
Andreev, a native Russian, was unwilling to disclose how much funding the firm plans to raise or from whom, although the fund has been rumored to be targeted at $50 million, according to the Russian Business Monitor.
Andreev, the managing director of DFJ Nexus and a venture associate at DFJ since 2002, tells PE Week that the firm plans to partner with Mint Capital, a Moscow-based VC firm headed by Alastair Stoby.
Andreev, who worked in the nanotechnology industry in Russia before joining Sputnik Funds, a large Eastern European-focused private equity firm based in Bermuda and with operations in Moscow, says that there are presently a lot of good Russian technology deals available at good valuations.
Andreev says that after several fits and starts, the private equity industry in Russia appears set for a genuine start.
Like the beginnings of the VC industry in India, Russia will benefit from having tens of thousands of Russian emigres in Silicon Valley, who can provide the expertise and contacts for setting up companies in Russia, much like what Draper Richards did in setting up ties to India, Andreev says.
Joshua Larson, managing director of the Carlyle Group’s recently opened offices in Moscow and a longtime participant in public and private equity while working for both Goldman Sachs and Morgan Stanley in Russia, is a bit skeptical about venture capital in the country.
Larson says that there a lot of people involved with technology startups in the country and that he sees a lot of “wacky stuff” that he is not so confident about. Larson says that the real opportunities for private equity in Russia lie in providing capital to cash-starved businesses, so he is raising a substantial buyout fund.
Andreev, educated in the Soviet scientific establishment before obtaining an MBA at Stanford University, says that it is those non-mainstream technologies that arose out of the unique conditions of Soviet science and technology, that are one of the main attractions for forward looking venture investors in Russia.