The international entertainment broadcasting Group MTG (Modern Times Group) of Sweden has acquired 50% of DTH satellite pay-TV platform Raduga TV operated by DaoGeoCom in Russia from Continental Media S.A., a company representing Raduga TV founders and management. The Russian startup Raduga TV was acquired in a year from launch. According to newspaper Kommersant, the deal could be valued at $10 million. In September 2009, Gazprom Media agreed to acquire leading Russian pay-TV operator Tricolor TV.

Raduga TV will be folded into MTG-owned DTH satellite pay-TV platform Viasat Broadcasting that has 1 million subscribers in Sweden, Norway, Denmark, Finland, Estonia, Latvia, Lithuania, and Ukraine.

Launched in February 2009, Raduga TV reported 70,000 subscribers at the end of 2009. Raduga TV offers a package of more than 50 TV channels including Viasat channels for RUB 300 ($10) per month on a 3 or 6-month pre-paid contract basis. The run-rate annual revenues of Raduga TV can be estimaired at $10 million.

The Raduga TV channels, which are encrypted with the Irdeto conditional access system, are made available through the Asian Broadcasting Satellite ABS-1 (75° East) Northern beam. It covers more than 90% of the Russian territory and is operated by Russian satellite operator Geotelecommunications.

In Russia, MTG owns 39.4% of CTC Media, which broadcasts free-to-air TV channels CTC, Domashny and DTV.

The leading Internet group in Eastern Europe, Naspers/MIH Group, which together with DST (Digital Sky Technology) own the largest Russian online portal, Mail.ru is doing due diligence of assets of DST-owned holding Forticom, reported newspapers Vedomosti and Kommersant.

As a result, Naspers/MIH and DST could merger their Polish internet assets, instant messaging service Gadu-Gadu and social network Nasza-Klasa.pl into a single entity that shall reach over a half of Polish internet users.

In addition to social networks Odnoklassniki.ru in Russia and One.lv & One.lt in the Baltic countries, Forticom owns 70% of Nasza-Klasa.pl, the leading social network in Poland with over 23 million registered users. Forticom acquired majority of Nasza-Klasa in 2008.

Naspers/MIH Group owns 100% in Gadu-Gadu, the leading Polish instant messaging service with 15 million registered users. Naspers acquired Gadu-Gadu for $155 million in 2007.

Poland has over 20 million internet users, which is 52% of 38 million population. The internet advertising market in Poland was valued at $370 million in 2009.

The leading early-stage European venture capital firm, Mangrove Capital Partners of Luxembourg has confirmed its association with the Renault F1 Team. The firm said in its latest quarterly newsletter: “We are proud to announce our association with the Renault F1 racing team. This association will undoubtedly lead to new business development opportunities and play a role in helping us create the best business relationship network in the industry.”

Gerard Lopez, Managing Partner at Mangrove Capital Partners, is also director at Genii Capital of Luxembourg. In December 2009, Genii agreed to acquire a majority stake in Renault F1 Team.

Renault F1 Team just signed Russian driver Vitaly Petrov, the first Russian to compete in Formula One. Today, Vitaly Petrov made his debut for the team at winter car testing in Valencia. “This driver has the talent and we think that at some time that will help open up an interesting market. That’s someting that also appeals,” said Gerard Lopez about Vitaly Petrov to AP.

Mangrove Capital Managing Partner, Mark Tluszcz, Forbes Midas List #30 who’s speaking at Troika Russia forum in the Russian capital Moscow this week, twitted from there that “Russia is the largest Internet market in Europe – how can you not want to invest in this great country?” and “Entrepreneurs in this country are hungry“.

“Russia has proven to be a fast growing and dynamic market for social networks and gaming characterized by high levels of users engagement and strong monetization history. Mangrove [is] being in love with Russia”, said David Waroquier, Principal at Mangrove Capital Partners who leads the firm’s investments in Russian market. 

Mangrove Capital has invested in four Internet and technology ventures from Russia such as social games company Drimmi, online shopping club KupiVIP.ru, in-game advertising company Entermedia and visual search engine Quintura. The venture capital firm intends to make several investments per year in the country.

Drimmi just launched its first social game. KupiVIP.ru raised $20 million, the largest Internet venture capital round in Russia. Entermedia owns one of the most compelling technologies for in-game advertising. Quintura was awarded its 8th U.S. patent; licenses its search technology to online information providers.

Moscow and Silicon Valley-based Almaz Capital Russia Fund I, which is sponsored by Cisco, UFG and EBRD, has invested about $3 million for a 23% stake in the leading Eastern European casual games company, Alawar Entertainment. The 15% stake was purchased from Finam Capital Partners and the other 8% was purchased from business angel investor, Elcomsoft President, Alexander Katalov. This is the 2nd venture capital investment in Russian online games company over the past month after Mangrove Capital and ABRT Fund invested in Drimmi.

Finam invested about $1 million in Alawar in several stages in 2007. The valuation of Alawar increased several times to more than $12 million since that time, reported Vedomosti. Alexey Basov, Director of IT Investments at Finam and CEO at Begun, negotiated Finam’s investment and exit from Alawar.

Founded in 1999 by Alexander Lyskovsky and Sergey Zanin, Alawar Entertainment specializes in the development, publication and distribution of casual games. It is based in Novosibirsk, Russia with five development studios in different cities. Alawar distributes games to audiences in 60 countries worldwide through its own web-sites and online portals as well as offers a ‘white label’ solution for web-site owners to launch their own casual games sections. In 2009, the Russian casual games market was valued at more than $30 million. Alawar holds some 70% of the Russian market. More than a half of Alawar revenues come from USA and Europe.

Alawar published 24 casual games for PC last year, including Farm Frenzy 3, Vampire Saga: Pandora’s Box and The Treasures of Montezuma 2. The company also released 8 games for iPhone, 2 games for PlayStation 3 and several games for Android & Ovi platforms. In 2010, Alawar plans to enter the social games and MMO markets as well as expand onto other platforms.

Almaz Capital Russia Fund I previously invested in web-based ERP and financial software company Acumatica, mobile social network provider Apollo Project, virtualization and automatization software vendor Parallels, and search engine Yandex. The fund is managed by Almaz Capital Partners.

The leading Russian search engine and contextual advertising provider, Yandex reported that its 2009 revenues were up 14% year-on-year to 8.7 billion Rubles. Due to Ruble devaluation in 2009, the Yandex revenues in USD decreased 9% year-on-year from $300 million in 2008 to $274 million in 2009. Being the leader in Internet advertising in Russia, Yandex managed to increase its revenues in Rubles while the Russian advertising market shrank about 30% in 2009.

The contextual advertising accounted for 86% of Yandex revenues. The display (banner) advertising accounted for 11% of its annual revenues. The remaining 3% of revenues came from Yandex.Money, software sales, and others. The number of Yandex advertisers was up 55% year-on-year to 120,000. Yandex holds 78% share of Russian contextual advertising market valued at $9.6 billion Rubles ($302 million) in 2009.

According to TNS Russia, Yandex increased monthly audience 29% year-on-year to 22.7 million users. Yandex is the 7th largest search property globally with 1.9 billion searches in December 2009.

The Russian online display advertising market was up 10% year-on-year to 8.3 billion Rubles ($261 million) in 2009. The car manufacturers and dealers accounted for 30% of the market spending last year, ahead of telecoms operators with 12%, according to AdWatch/Isobar. The Russian contextual advertising market was up 13% year-on-year to 9.61 billion Rubles ($302 million) in 2009. The Internet advertising market in Russia was the only advertising market segment in Russia that increased in 2009.

The leading online display advertisers in Russia included Ford Motor, Honda, MTS, Megafon, and Peugeot Citroen.

The 25-year-old Vitaly Petrov (Виталий Петров), who was runner up in the GP2 series in 2009 and known as “the Vyborg rocket”, has become the first Russian driver to compete in Formula One (F1). Vitaly Petrov will race for the Renault F1 Team alongside Robert Kubica of Poland, the team announced. Vitaly Petrov’s debut in Grand Prix is expected in Bahrain in March.

The Renault F1 Team made a presentation of the R30 car for 2010 season at the Valencia circuit in Spain today. Vitaly Petrov said that he always dreamed of racing in Formula One. Renault F1 Team Principal Eric Boullier, who was previously CEO of Gravity Sport Management added that Vitaly’s performmances in GP2 last year were outstanding and confirmed that he is ready to make the step up to Formula One.

The Renault F1 Team’s 3rd driver in 2010 will be Ho-Pin Tung of China and team’s reserve driver will be Jérôme d’Ambrosio of Belgium, both of Gravity Sport Management.

According to Eurosport, the Russian drivers Sergey Zlobin and Roman Rusinov were both reserve drivers in Minardi and Midland teams, respectively, but did not make it to the top two team drivers because of lack of sponsor support.

According to Oxana Kosachenko (via auto.lenta.ru), manager of Vitaly Petrov, the Russian driver has yet to get any major sponsor. Vitaly Petrov’s career is supported by the funds from his family and friends. Vitaly Petrov will also likely sell the 50% rights to his “career” to the Renault F1 Team in case he does not find any major sponsor.

In December 2009, Genni Capital of Luxembourg agreed to acquire a majority stake in Renault F1 Team.

The Russian social network application on Vkontakte.ru when a user can send a virtual cocktail to a friend called “Cocktail to a Friend” (Cocktail2Friend) has become the most popular social network application in Russia. Vkontakte is Russia’s #1 social network with over 59 million registered users. It released API for social games and other applications last year.

Launched in May 2009, Cocktail to a Friend (или Коктейль Другу in Russian) has over 8 million registered users with over 2 million daily users.

In December 2009, Mars’ candy bar Twix was promoted online in Russia using the Cocktail to a Friend application. Over 20 million virtual cocktails with Twix and Twix flavors were sent out by the users of Vkontakte social network in first two days after start of the promotion. The Cocktail to a Friend social network application is developed by Catalyst Apps.

The Russian contextual advertising market was up 13% year-on-year to 9.61 billion Rubles ($302 million) in 2009. Yandex holds 78% of the market, ahead of Begun with 11% share and Google with 10% share. Due to Ruble devaluation, the contextual advertising spending in USD were actually down from $344 million in 2008 to $302 million in 2009, according to iConText.

Google increased its revenues in Russia by 50% year-on-year to 1.01 billion Rubles ($32 million) and reached 10% share of the Russian contextual advertising market. Google’s market share is just 1% less than the share of Begun of 11%. Begun revenues dropped 29% to 1.1 billion Rubles ($34 million), reported iConText. The drop can be explained by a decline of Rambler’s share of searches in Russia from 11% to 4% over the past year. Begun provides Rambler with its search contextual advertisements.

Yandex is the leader of the Russian contextual advertising market with 7.5 billion Rubles ($236 million) or 78% market share in 2009. Yandex is the 7th largest search property globally with 1.9 billion searches in December 2009.

The Russian social games market has grown to $30 million in 2009 from almost zero in 2008. The half of the market is currently taken by Vesely Fermer (Cheerful Farmer), the most popular game on Russia’s leading social network VKontakte. On one hand, such a game generates about $1 million per month. On the other hand, it costs $30K-$50K to create content for the social  game (or even less). No wonder, some 3,000 game developers in Russia and neighboring countries started making social games. Both Russian venture capital investors and Western venture capital funds, who expect the Russian social games market to explode, have started fueling the growth with fresh funds. Last December, Nival Network said it’s closing $5 million round.

Drimmi, social games developer founded in 2009 by Nikita Sherman, former chairman of Odnoklassniki.ru, has raised an undisclosed funding from Mangrove Capital Partners and ABRT Fund. David Waroquier, partner at Mangrove Capital Partners, led the round on behalf of the Luxembourg-based venture capital firm. David Waroquier pointed to the Russian social gaming market’s “high levels of users engagement and strong monetization history” in Drimmi’s official deal announcement. The funds agreed to invest several million into Drimmi in exchange for over a twenty percent stake in the company.  Mangrove Capital is also an investor in online trivia game maker Amuso.

Founded in September 2009, Drimmi has a team of twenty game developers and marketers in Moscow. Drimmi, which is headed by CEO Nikita Sherman and COO Viktor Zakharchenko, aims to become #1 Russian social games developer.

The investment will be used for games development and launch on Russian social networks Vkontakte, Odnoklassniki.ru and MoiMir@Mail.ru. The first game will be released in a few weeks with more than ten games to follow in 2010. Drimmi CEO Nikita Sherman also worked as CEO of Russia’s leading online dating platform Mamba, where he introduced micro-payments for premium services.

Mangrove Capital and ABRT previously teamed up in Russia to invest in visual-based search engine Quintura, in-game advertising company EnterMedia and online shopping club KupiVIP.ru (which just raised $20 million from Accel, Mangrove and the others.)

The Russian social network users shall expect a lot of new social games in 2010. For example, the game Vesely Fermer (Веселый Фермер) was developed by i-Jet, an Yekaterinburg-based company with studios in Nizhniy Tagil and Chelyabinsk.

The leading Russian search engine Yandex, which holds over a half of Russian searches, has released a list of top searches (Zeitgeist Russia) in 2009. The searches for GTA 4 and The Sims 3, which are the names of the computer games GTA 4 released by Rockstar Games and The Sims 3 released by Electronic Arts became the 5th and 7th most popular searches in Russia in 2009 with more than 6 million and 4 million searches at Yandex, respectively.

The holidays celebrated in Russia such as New Year, International Women’s Day, Valentine’s Day and the others made 9 out of top 20 searches in Russia last year. The Yandex top searches (Zeitgeist Russia) and their respective numbers in 2009 were as follows:

1. Новый год (New Year)	20 900 600
2. Готовые домашние задания (ГДЗ) (Ready-made homework assignments)	9 086 600
3. Eвровидение 2009 (Eurovision 2009)	7 805 700
4. ЕГЭ 2009 (USE or Unified State Examinations)	6 319 700
5. GTA 4	6 038 900
6. Международный женский день (International Women’s Day – 8th March)	4 066 200
7. The Sims 3	4 061 600
8. Свиной грипп (Swine flu)	3 784 000
9. День защитника Отечества (Defender of the Fatherland Day – February 23)	3 543 700
10. День Святого Валентина (Valentine’s Day – February 14)	2 875 100
11. Рождество (Christmas – Russian Orthodox Christmas on January 7)	2 436 000
12. Ночь музеев (Museums at Night)	2 141 600
13. День Победы (Victory Day – May 9)	2 113 900
14. “Ледниковый период 3” (Ice Age 3)	2 001 400
15. Пасха (Easter)	1 873 700
16. “Каникулы строгого режима” (High Security Vacation)	1 229 100
17. Майкл Джексон (Michael Jackson)	1 218 300
18. “Аватар” (Avatar)	1 185 200
19. День знаний (Knowledge Day – September 1)	1 167 100
20. День России (Russia Day – June 12)	1 089 100

Allianz Rosno Asset Management venture capital fund New Technologies has invested $5 million in sea seismic survey technology company Seismo-Shelf, the asset management company reported.

Based in St. Petersburg, Seismo-Shelf (Сейсмо-Шельф) offers integrated software and hardware complex for seismic survey of the sea shelf called “dense seismic on sea floor“. The technology was developed in sea seismic survey company EMMET and spun-off into Seismo-Shelf in 2009.

Seismo-Shelf uses four autonomic self-surfacing sea floor stations: a hydrophone and three geophones. Compared to traditional sea seismic technology that measures for-and-aft waves, Seismo-Shelf also measures crosscut waves and thus increase amount of seismic information. The Seismo-Shelf technology is expected to be used by oil and gas companies to develop sea shelf deposits in Russia.

New Technologies (Новые Технологии) is 3,061 million ($100 million) Moscow-based venture capital fund that was formed in January 2009 with the investments from the Russian Venture Company (RVK) and MBRR. The fund is managed by Allianz Rosno Asset Management (Альянс РОСНО Управление Активами).

In 2008, Allianz Rosno invested $8 million in online video company Tvigle Media.

The online shopping club KupiVIP.ru, which is operated in Moscow by Privat Trade Ltd and organizes designer brand online sales in fashion and fashion accessories with large discounts off boutique prices, has raised $20 million in the third round of funding, KupiVIP.ru CEO Oskar Hartmann reported. The round was led by Accel Partners. Previous investors Mangrove Capital Partners, Arlan, Direct Group, and Oliver Jung also participated. KupiVIP.ru, which previously raised $11 million, has attracted the largest amount of venture capital in ecommerce venture in Russia, the company said.

KupiVIP.ru has reached over 1.3 million registered users in January 2010. The company, which organized more than 1,200 sales events with 500 brands in 2009, has over 150 employees.

KupiVIP.ru was named top Russian web startup of 2009.

Mangrove Capital is also investor in visual search engine Quintura and in-game advertising company EnterMedia.

Forbes Media and Axel Springer Russia, the Russian wholly-owned subsidiary of Axel Springer of Germany that publishes the Forbes magazine and Forbes Online in Russia under license from Forbes Media, have won a law suit for the Forbes.ru domain name. The current holder of the domain name will have to pay $300,000 to the suitors, they announced today. It’s the highest compensation ever awarded for the illegal use of a domain name in Russia.

The Forbes.ru domain name was registered in 2003 by the Russian tourism firm Landmark VIP Services.

Axel Springer launched Forbes Russia online at Forbesrussia.ru last September. FORBES is a leading Russian business magazine with an average circulation of 110,000 copies and more than 830,000 monthly readers. Axel Springer, which also publishes Newsweek and ComputerBild magazines in Russia, extended publishing cooperation with Forbes in Russia until 2020.

In November 2009, Axel Springer acquired the Russian business of German publisher G+J (Gruner+Jahr).

The entertainment magazine publisher C-Media is completing acquisition of online news aggregation service Newsland.ru from founder Mark Fedin. The deal was first announced by C-Media last November.

Founded in 2006, C-Media publishes both own magazine titles iVAN and  “Папарацци” (Paparazzi) and licensed titles EMPIRE and CAR as well as web-sites i-Worker.ru, Paparazzi.ru and Hi-Fi.ru. The latter was acquired by C-Media in September 2009.

C-Media is part of media holding that includes retail chain of multimedia stores Nastroenie, music record company Style Records, movie production company NewOne Production, and others.

Launched in late 2005, Newsland has over 2 million monthly unique visitors. The site aggregates news from Russian online media.

Newsland founder Mark Fedin recently launched a new social network, Gidepark (Гайдпарк).

Russian venture capital fund Bioprocess Capital Ventures has agreed to invest $18 million for a 50% stake in the Incuron joint venture with Cleveland BioLabs, the companies announced on December 30, 2009. The joint venture, Incuron is going to develop the Curaxin compounds for cancer applications. Cleveland BioLabs agreed to transfer rights to its pipeline of Curaxin anti-cancer molecules to the new joint venture.

Cleveland BioLabs, Inc. (CBLI) is a Nasdaq-listed drug discovery and development company that is headed by CEO Michael Fonstein, COO Yakov Kogan and Chief Scientific Officer Andrei Gudkov. The company was formed as a spin-out of the Cleveland Clinic in 2003. CBLI is now also partnered with Roswell Park Cancer Institute in Buffalo, NY.

Cleveland BioLabs is going to receive $18 million in three separate payments for the development of Curaxin cancer treatment drug: $5.8 million after the formation of Incurion joint venture; $6.4 million after beginning of clinical trials of selected Curaxin compound on cancer patients; and $5.2 million after completion of one Phase I/ II trial.

Bioprocess Capital Ventures is a 3 billion Rubles ($100 million) fund that is based in Moscow, Russia and managed by Bioprocess Capital Partners. The fund was formed in December 2007 with investments from the Russian Venture Company (RVK) and Vnesheconombank (VEB). The fund focuses on investments in innovative technologies in life sciences, biotechnology and fine chemistry sectors.

Since release of Avatar in Russia last December, I have watched the movie twice, both in 3D. I shall also go to IMAX movie theater in Moscow to watch it again. According to industry sources, Avatar has broken Russia box office records.

Avatar Russia box office reached over $62 million in the beginning of January. The Avatar in Russia was watched by more than 5.2 million people. The Avatar box office in Russia exceeded the Avatar box office in the U.K. with $58 million and was only less than in the U.S. with $394 million, France with $90 million, and Germany with $63 million. The Avatar box office totaled $1,131 million worldwide.

Distributed in Russia by News Corp.’s 20th Century Fox CIS, Avatar opened on more than 1,320 cinema screens in Russia including some 350 screens with 3D. 

In 2009, the Russia’s box office reached over $700 million.

Russian private equity firm UFG Private Equity together with Shari Redstone has bought out Rising Star Media that operates Kinostar De Lux chain of movie theaters in Russia from National Amusements, Inc and Soquel Ventures of Paul Heth.

KinoStar De Lux cinema chain includes six multiplex movie theaters with a total of 74 screens in Moscow and St. Petersburg. According to newspaper Kommersant, the Kinostar movie theaters generate annual revenues of almost $50 million. The chain could be valued at about $30 million.

Rising Star Media was launched in Moscow in 2002 by American entrepreneur Paul Heth as a joint venture with National Amusements, Inc. President of National Amusements, Shari Redstone helped to launch the cinema chain at the time.

In early 2008, A1 Group of Russia acquired Turkish cinema chain AFM Cinemas.

Top 10 Russian venture capital internet deals in 2009:

1. Digital Sky Technologies (DST) invested $400 million for a 5 percent stake in the largest global social network compay Facebook over the year.

2. Leading Russian online portal Mail.ru acquired online games group Astrum Online in cash and share deal in December 2009.

3. Digital Sky Technologies (DST) invested more than $90 million in world’s leading social games company Zynga in December 2009.

4. Private equity firms UFG, BVCP and Tiger acquired a 9 percent stake in search engine Yandex for $100 million in September 2009.

5. Amdocs acquired telecom service delivery platform provider jNetX for $50 million from Mint Capital and the management in October 2009.

6. Leading Russian media and entertainment group ProfMedia invested ca. $40 million to acquire the remaining shares in Rambler Media and agreed to de-list Rambler from London Stock Exchange’s AIM in December 2009.

7. Online note service, Evernote raised a total of $12 million from Morgenthaler Ventures and DOCOMO Capital over the year.

8. Russia’s leading online shopping club, KupiVIP.ru raised $10 million from Mangrove Capital Partners, ABRT Fund, Arlan and Direct Group over the year.

9. Leading Russian women-centric online portals WomanJournal.ru and Passion.ru agreed to merge in November 2009.

10. World’s 2nd largest B2C e-commerce group Otto acquired the Russian e-commerce and mail order business of Quelle for EUR 65 million in November 2009.

Top 10 Russian Venture Capital internet investors:

1. Yuri Milner, CEO, Digital Sky Technologies (DST) – Facebook, Zynga, Mail.ru, Astrum Online, Odnoklassniki.ru, Vkontakte, KinoPoisk.ru, HeadHunter (hh.ru), etc.

2. Viktor Remsha, CEO, Finam – Alawar, Begun, Buka, Mamba, MoneyMail, AstroStar.ru, MirTesen, MarketGid, AuKa.ru, Badoo, etc.

3. Artem Yukhin, Venture Capital Investments Director, Troika Venture Funds/ Troika Capital Partners – Evernote, VidiMAX, SafenSoft, iZ3D, Cortona3D (ParallelGraphics).

4. Ratmir Timashev, Managing Partner, ABRT Venture Fund – KupiVIP.ru, Entermedia, Quintura, AutomatedQA, StarWind Software, iCore Software.

5. David Waroquier, Principal, Mangrove Capital Partners – KupiVIP.ru, Entermedia, Quintura.

6. Sasha Galitsky, Managing Partner, Almaz Capital Partners – Acumatica, Apollo Project.

7. Pascal Clement, CEO, Direct Group - Ozon.ru, WomanJournal.ru, KupiVIP.ru.

8. Andrey Morozov, Managing Director, DFJ VTB Venture Funds – MOBI.Money, Returnil, Questora Software.

9. Dmitry Alimov, Managing Director, ru-Net II - Digital Access, MobileDirect, iConText.

10. Anatoly Karachinsky, President, IBS Group; Oradell Capital - NewsPaperDirect, Parter.ru, Podberi.ru/Yandex, Mediaologia, VR Ocean/LAVA-Online.

Runners-up:

Igor Chekun, Director, Softline Venture Partners – Actio, bookee.