U.S. $ 5 million investment into Russian eBook platform

January 21, 2014
U.S. $ 5 million investment into Russian eBook platform In October 2013 Russian leading eBook retailer LitRes secured a $ 5 million investment from the Investment Fund 'Russian Internet Technology' (RITF). The daily newspaper Kommersant reports that RITR received a “substantial stake in the company”, however the control over the company was retained by its owner, the Eksmo publisher.

Commenting on the deal, LitRes’s CEO Sergei Anurov said: "It has been the first time that LitRes has attracted outside funding. The deal is a sign of confidence in the prospects of the Russian eBook market, as well as an appreciation of the results that our team has achieved over the last three years. An independent investor among LitRes shareholders will help to increase the standard of the corporate management that undoubtedly will be reflected in the growth of the company’s value”.

Growth of the company’s value – that is what LitRes seeks especially now that Amazon and Kobo are ‘making advances’ to Russian publishers. LitRes has successfully kept ‘international sharks’ off the Russian shore spreading rumours (not totally untrue) about infamous Russian piracy. Now that Eksmo’s co-founder and CEO Oleg Novikov has acquired 95% of its former rival AST since the latter filed for bankruptcy in April 2012, two publishers together control about 25% of the Russian book market and 40% of the mass-market fiction. That alone has made LitRes a very notable player in the eBook market, whilst the new investment will further solidify LitRes’ position.

By the end of 2013 trade eBooks made up about 1% (500 million rubles or about $13.5 million) of the overall Russian book market, but the numbers are on the rise. Sales of eBooks and audiobooks by LitRes alone has grown tenfold in the past three years; only in the first half of 2013 has the company's turnover increased by 98.9 % compared to the same period a year before. It is estimated that by 2015-2017 market share of eBooks will grow to 5 % of the market value.

RITF fund with a capital of $ 50 million was set in 2013 by ‘Black River Ventures’ and ‘The Third Rome’ with a view to fund Internet-based startups. Eugene Kaltashev, Managing partner of ‘Black River Ventures’ confirmed that in the near future the Fund intended to acquire a minority stake of $ 1-5 million dollars in 5-6 projects with their target portfolio of 12 - 15 projects. "Our minimum target for returns is three times of the invested capital,” said Kaltashev.