Western Investors Pile Into Russian E-Commerce ?

Russians love their social media so much that over the last decade many set up a social network profile before an email address. Unfortunately for Western investors, many missed out on the rise of social networks like Vkontakte (25 million users) and Odnoklassniki.ru (15 million users), leaving local investors like Yuri Milner to pick up the spoils. But they are starting to take notice of another source of growth: Russian e-commerce.

London-based venture capital firm Balderton Capital is investing in Russia for the first time with its backing ofKupiVIP, a Russian e-commerce business that sells designer clothes, (appealing to local love for Dolce & Gabbana handbags and such) with huge discounts.

The site, which operates almost like a private members club, just closed a $55 million funding round with Balderton, Bessemer Venture Partners and Russia Partners, representing the largest ever investment in a Russian e-commerce business, according to a press release from KupiVIP.ru.

The site was launched in October 2008 and hosts 20 private online flash sales each day of goods from designers like Dolce & Gabbana and Roberto Cavalli. KupiVIP is already well known in Russia, boasting more than 7 million members across all its clubs and revenues that increased at an annual rate of 600% in 2010. Based in Moscow, the company was founded by 28-year-old German entrepreneur Oskar Hartmann.

Russia is “currently number two in Europe in terms of users and soon to overtake Germany,” said Balderton partner Dharmash Mistry, who added that the Russian e-commerce market was growing by 35% year on year.

Source: forbes.com

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