DFJ-VTB Aurora, a Russian venture fund affiliated with Draper Fisher Jurvetson, is raising a second fund as it nears the end of investing the $150 million inaugural effort it launched a year ago.
The target size of the second fund and the expected close date are unknown. Alexandra Johnson, managing director of Aurora, which is a partnership between DFJ and Moscow-based VTB bank, declined to discuss whether the firm was in fund-raising mode.
“We’re not going to stop with the first fund, but I can’t comment on the status we’re in now,” she says.
Part of the first DFJ-VTB Aurora fund, about $58 million, comes from an award from the Russian Venture Co. (RVC), a public-private partnership designed to stimulate early stage technological investment in Russia. Other fund contributors include the European Bank for Reconstruction and Development.
Aurora has backed about a dozen companies with an average of $5 million to $10 million per company since it launched last October, Johnson says. Examples of portfolio investments include 3D mapping and software development company Beau Laboratories, automobile variator company Combar, remote transportation control system seller Russian Navigation Technology and specialized LED company Light Engines Corp.
Aurora doesn’t invest in typical information technology companies. Instead, it focuses on companies addressing local market needs associated with transportation and heavy equipment.
“Why do software deals in a Russia fund?” asks Johnson. “That can be done by just about any fund in the world. We wanted to see if we could be on the ground and work with entrepreneurs who came from industries that never had entrepreneurs before.”
Russia has been a difficult climate for venture investors during the past year. The country’s stock market is down more than 43% since the beginning of the year, due primarily to a drop in oil and natural gas commodity prices. Russia also sustained bad press for its response to Georgia’s incursion into South Ossetia in August. “I cannot say that it has been smooth sailing,” Johnson says.
The Georgia conflict caused many to reconsider their investments in the country. “We got a lot of calls asking if we were leaving Russia,” Johnson notes. “Eventually I realized they weren’t joking. Of course we weren’t [leaving Russia].”
We got a lot of calls asking if we were leaving Russia [because of the conflict with Georgia]. Eventually I realized they weren’t joking. Of course we weren’t.
But the talk scared Johnson, so she sat down with DFJ’s Tim Draper and Don Wood and the management team of VTB to ensure they were still on board with the partnership.
“We went through and reconsidered the situation and talked with the bank to be sure that both sides wanted to maintain the relationship,” Johnson says. “We talked with the CEO of VTB and he said he wanted to continue the partnership. It was reconfirmed again and again.”
Recently, Franklin “Pitch Johnson,” an early proponent of venture capital investing in Russia, withdrew his personal support for Bioprocess Capital, a biotech fund created by Johnson’s Asset Management Co. with help from Russia bank Vneshekonombank. Johnson said he withdrew his support because Bioprocess wasn’t doing traditional early stage venture deals, not because he had soured on the Russian market.—Alexander HaislipDEALWATCH: Four recent investments by DFJ-VTB Aurora
Beau Laboratories_3D mapping software.
Light Engines Corp._Specialized LEDs.
Russian Navigation Technology_Transportation control systems.
Source: DFJ-VTB Aurora