Frontier Ventures Launches New US$50m Investment Fund

Fund to invest in fast growing, early stage network effect companies predominantly in the US tech market
The Fund targets a return 3-5x invested capital over Fund lifetime

31 May 2018 – Moscow. Frontier Ventures, a Silicon Valley-based, specialist venture capital fund, today announced that it is launching a new fund, Frontier Ventures Global II (“the Fund”), for Russian and global investors to access investment opportunities in fast growing, early stage network effect investments, predominantly in the US Tech market.

The Fund will be Cayman registered and is aiming to raise US$50m of capital from Russian and global family offices and high net worth investors. The Fund targets a return 3-5x invested capital over the Fund’s lifetime.

The Fund’s investment thesis is to invest in network effect businesses with large existing or potential multi-billion dollar addressable markets and strong barriers to entry. It will avoid businesses with large capital requirements and other unattractive economic features such as traditional e-commerce (sales of physical goods), advertising technology, gaming, and hardware. Blockchain and Distributed Ledger Technology companies will be a key focus area for the Fund.

The Fund will be managed by Frontier Ventures, the specialist venture capital investment manager, and its investment team based in Silicon Valley (Cupertino, California).

Frontier Ventures has an experienced team with more than 30 years’ collective experience of technology investing and a track record of success both as investors and entrepreneurs. The team has backed or invested in over 30 companies since 1999 and been involved as investors, advisors or entrepreneurs in more than 50 completed transactions with companies whose total market capitalization is more than US$4 billion. Frontier Ventures team has been investing in US technology companies since 2008.

The team has a proven track record of investing and eight of their ten current investments are market leaders (largest by revenue in relevant market):

• IVI, the largest video streaming business in Russia and CIS with 45m monthly users, RUB 2.5bn revenues in 2017
• Profi.ru – The largest digital consumer services marketplace in Russia, Ukraine and Kazakhstan
• Frontier Car Group, the leading marketplace for the sale of used cars in six large emerging markets
• Chope.com – the leading restaurant booking service in Southeast Asia

The Managing Partner is Dmitry Alimov, a veteran Russian technology investor and entrepreneur, who has invested in some of the leading network effect companies in Russia and around the world. Prior to launching Frontier Ventures in 2011, he co-founded and played a key role in the launch, growth and financing of IVI, (“Netflix of Russia”). Dmitry was also the managing partner of ru-Net venture capital fund, which invested in Yandex and Ozon.ru.

Frontier Ventures previous fund, Frontier Ventures Partners, LP, has achieved strong investment performance with a similar investment strategy, with the fund’s international (non-Russian) portfolio generating a 38% gross annual IRR (in US$) and the Frontier Ventures proprietary seed investment portfolio generating an 115% gross annual IRR (in US$), both as of December 31, 2017. This compares with an MSCI World equity index total return (including dividends) of 10% and US VC-funded Internet Companies return of 17% for the same period¹.

The Fund’s Russian assets have also outperformed the relevant benchmarks, generating a gross annual IRR of 28% in the local currency (RUR) vs. MOEX (broad Russian rouble denominated Russian equity index) performance of 5% for the relevant period. In US$ terms, the fund’s Russian assets generated a 13% gross annual IRR, outperforming by a significant margin the (negative) -6% of the US$ denominated RTS Index (broad US$ Russian equity index) during the relevant period².

Commenting on the announcement, Dmitry Alimov said:

“We believe that we are the only Fund that offers Russian investors pure play access to network effect investments in the US technology market, the centre of the global industry. We believe that network effect businesses, where each additional user of the product or service increases the value of the product or service to other users, increasing user stickiness and barriers to entry for competitors, can be a very attractive investment opportunity. Based on our own as well as third party research, companies with network effects already represent the majority of the capitalization of listed and private technology companies in the United States. By being based in Cupertino, in the heart of Silicon Valley, we have access to opportunities to invest in global businesses with network effects that would be difficult to access anywhere else.”

“We believe that there is significant potential for attractive investment returns, including in Blockchain / Distributed Ledger Technology businesses. Over the next 15 years, we believe these technologies will be used by most Internet users, creating significant value for users and investors.”

Ends

For further information:
McDonnell & Partners
Viktoria Tsuran tsuranviktoria@mcdp.ru Tel: +7 916 270-25-68

^{¹ US VC-funded Internet Companies returns data based on Cambridge Associates LLC report as of September 30, 2017 (latest available data) gross annual IRR for e-business companies (excluding e-commerce).}
^{² Relevant measurement period for the Russian assets managed by Frontier Ventures and relevant Russian asset benchmarks from February 20, 2012 to December 31, 2017.}

Notes to editors

About Frontier Ventures

We are an experienced, Silicon Valley-based, specialist venture capital fund that offers unique access for Russian and global investors to fast growing, early stage network effect investments predominantly in the US Tech market. Our investment team is based in Cupertino, in the heart of Silicon Valley and have relationships with over 1,000 US and global tech investors giving access to robust pipeline and follow-on finance.

Frontier Ventures was founded in 2011, but the team has more than 30 years’ collective experience of tech investing and has backed/invested in over 30 companies since 1999. Frontier Ventures team has been investing in US tech companies since 2008. We have been involved as investors, advisors or entrepreneurs in more than 50 completed transactions with companies whose total market capitalization is more than $4 billion.

Examples of our investment track record includes:

• IVI – largest video streaming business in Russia and CIS – 45m monthly users, RUB 2.5bn revenues in 2017
• Profi.ru – The largest digital consumer services marketplace in Russia, Ukraine and Kazakhstan
• Frontier Car Group, the leading marketplace for the sale of used cars in 6 large emerging markets
• Chope.com – the leading restaurant booking service in Southeast Asia

Our Team

Dmitry Alimov, Founder and Managing Partner (Cupertino)

• Internet investor and entrepreneur – backed over 30 Internet companies since 1999
• Co-founder of IVI, “Netﬂix of Russia”
• Managing Partner of ru-Net Ltd
• Managing Director of Amedia
• Head of media investments for Access Industries for Russia and the CIS
• First Deputy General Director, TNT Network
• Sputnik Group Vice-President (PE/VC fund)
• MBA, Harvard Business School

Igor Gorsky, Partner, Chief Financial Officer (Cupertino, Moscow)

• Entrepreneur, investor, manager and Member of the Board of Directors of leading Russian high-tech and engineering companies
• Senior Vice-President of United Engine Corp
• Senior Executive Vice-President of OMZ
• Manager, audit, Deloitte
• Associate, the Sputnik Group
• Graduate of Moscow State University, Hong Kong University of Science and Technology
• МBA, Kellogg School of Management

Oleg Tumanov, Co-founder, Partner, Member of the Investment Committee (Moscow)

• Founder and CEO of IVI
• Over 8 years in the technology sector as an entrepreneur and as an investor CEO of Access Industries (Russia and CIS)
• Deputy CEO at Alfa Bank
• Deputy Chairman at Uneximbank and Head of Unexim Suisse bank (Geneva)
• Wharton Business School and Harvard Business School

Najam Kidwai, Venture Partner, Member of the Investment Committee (Dubai)

• Entrepreneur, investor and advisor at 23&Me, Boxed, Zingat, Equidate, Inmobi, Kokoon and Mio Global
• 18 years of venture capital investment experience – early stage and growth
• 25 years in the tech sector in the US, Europe, Middle East, India & China
• Former VC at Stanford Research International & Founder and CEO Real Time Content
• Prior exits include 2 IPOs and strategic acquisitions
• BSc, MSc and Hon. Doctorate

To find out more about Frontier Ventures please visit: https://frontier.ventures/
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Facebook: https://www.facebook.com/FrontierVentures/
Twitter: https://twitter.com/frontiervc

Certain information contained in this press release constitutes certain statements, estimates and forward-looking projections with respect to the past performance, current status and anticipated future performance of the Fund. Frontier Ventures believes that such estimates and other assumptions are reasonable under the circumstances but no representation, warranty or other assurance is given that such statements, estimates and projections are correct or will be realized. Past performance is not necessarily indicative of future results. Due to various risks and uncertainties, actual results or performance of the Fund may differ materially from the results or performance reflected or contemplated in such forward-looking statements.