Russian Venture CompanyFund of venture funds

Basic terms

Ministry of Economic Development and TradeRussian Federation

Russian Venture CompanyHow it operates

Russian Venture Company

Privately Managed Venture Funds

Venture fund

VC

FUND OFFUNDS LEVEL

VENTUREFUNDS LEVEL

STARTUPLEVEL

Å

Nanotechnologies

Alternativeenergy

Medicaltechnologies

BiotechnologiesTelecommunications

Information technologies

Microelectronics

Venture fund

VC Venture fund

VC

Venture fund

VC Venture fund

VC Venture fund

VC

Russian Venture Company Basic structure

Investment Fund of Russia

JSC Russian Venture Company

Venture funds(closed-end

mutual funds *)

Fund Managementcompanies

RUB 15billion

100%

RUB 0.6-1.5billion

51%

VentureCapitalists †

manage

Carried interest(20% max)

Management fee(2,5% max)

10 or more venture funds

Investments

Early stage innovative startups

manage

PrivateVC fund limited

partners

RUB 0.6-1.5billion

49%

Buyout price:Original RVC money +3-5% annual interest

Buyout rightfor RVC fund units

(5-year vesting option)

* tax transparent, licensed management company required, some regulatory requirements apply; in process of deregulation for qualified sophisticated investors similar to U.S. Reg D

Return on investment(~80%)

Buyout price:Original RVC money +3-5% annual interest

Buyout rightfor RVC fund units

† employees of the management company charged with managing the fund; must contribute at least 1% of capital to the fund as physical persons

RUB 27 ~ US $ 1RUB 15 billion ~ US $ 550 millionRUB 0.6 billion ~ US $ 22 millionRUB 1.5 billion ~ US $ 55 million

Russian Venture Company Decision process

Board of directors

State directors(public officials)

Venture directors

(external professionals)

General director

Official decisionmaker

Organizes competitionsSigns checks

Interfaces with bureaucracy

RVC Staff (5-6 people)

Criteria

External director =

• Venture fund executive experience or

• experience in venture promotion policies (national or international)

• Funding decisions = independent directors can jointly veto the government choice

All figures and terms are provisional and subject to further change

Russian Venture Company Independent Director Rights and Duties

Rights

Directors together can veto any investment decision as inappropriate based solely on their

judgment

Duties

Directors have to attend board sessions in person once a quarter to review the venture team

presentations

Directors receive monetary compensation and have all their trip related expenses fully paid

Directors enter into a contract with Russian federal agency to act as directors, agreement is construed

under Russian law

Expected time commitment – about 1-2 days and 5 to 15 presentations

(Normally end of quarter, weekends are possible)

Directors must review all proposals for funding; any associates help might be enlisted but director must

make a personal decision

Directors can meet the venture capitalist teams, ask questions and make inquiries

Directors do not have to participate in daily matters of the company; they will be asked to take part only

in investment decisions

Russian Venture CompanyLeverage

Government will cap its return from VC funds at 3% per annum!

RVC share 49%, IRR to RVC 3% Management fee and carried interest are not factored in

Extra IRRFor 5, 7 and 10 years of fund life

• RVC funds will be refundable but at a very low effective interest rate (starting from 3%)

• If a fund is successful, limited partners can buy out the government's share in the fund at a 3% effective annual yield to the government

• This way the government will out some of the investment risk

• Our goal is not to make money but to create Russian hi-tech sector

WE GIVE FUNDYOU GROW STARTUPSYOU KEEP NEARLY ALL NET INCOME

0%

5%

10%

15%

20%

25%

30%

35%

40%

10% 30% 50% 70% 90% 110% 130% 150%

Base venture fund IRR

Ext

ra v

entu

re fu

nd IR

R

5 years

7 years

10 years

All figures and terms are provisional and subject to further change

Russian Venture Company The Message

For limited partners and VCs:

• Hire the best teams • Seek most promising

startups • We want to work with

you

For mass media:

• Tell everyone who dreams of building a new Google или Intel, but does not dare –

Start founding startups now unless you want to be late for money. It's time. Money for new success stories is on the way.