Russia's most successful venture capitalist, Yuri Milner, spoke about his investment strategy.

Co-owner of Mail.ru Group and DST Global , Russia's most successful venture capitalist, Yuri Milner, began investing in Chinese companies 5 years ago. Since then, his fortune has doubled to $ 3.2 billion, and the investor took 32nd place on the Russian Forbes list. In July, there was a fall on the Chinese stock exchanges. Yuri Milner told Forbes about whether it will remain on the Chinese market, about investments in India, as well as about the investment climate in Russia.

"Megamind" leads the most interesting statements from the interview .

Differences in the US and China markets

Firstly, China itself is a big market. And it stands out against the background of other countries for its closeness. This reduces competition with global companies, but significantly increases competition within. Second, over the past three years, Chinese companies have been striving to become global companies. This is a repetition of the American model, when every successful company in the United States wants to become global, and at a rather early cycle of its development. In this sense, by investing in large Chinese companies, you are potentially investing in global business. This brings the US and Chinese markets together. An example is the same Xiaomi . It is largely Chinese, but with global views of development. They already operate in several countries - in India, in Brazil, in Southeast Asia. Investment is an attempt to look into the future. And if looking into the future, you see the global market, then the attractiveness of a company rises.

About investing in Xiaomi

It was going beyond the basic strategy. This is an isolated case, but we could not resist, because the team was very strong, and their early results were fairly unprecedented: this is one of the fastest growing companies in the world, probably in history. In three or four years they managed to achieve revenues of more than $ 10 billion. And this was not possible for very few people, if there were any such examples at all.

On the fall on the Chinese stock exchanges

Chinese stock exchanges are the domestic market, where various speculative phenomena take place. From a practical point of view, for me as an investor, this is a kind of parallel world. This market is largely closed to foreigners. We invest in China through another instrument called the VIE (Variable Interest Entity). This is a special legal structure that allows foreigners to invest in Chinese companies in foreign currency. If you look at those companies where we invested - Alibaba , JD.com , then they are traded on the NASDAQ, and their quotes were not subject to such fluctuations. Neither upward or downward. No company where we have invested is traded on the domestic market, and even in principle cannot bargain, because they are legally structured in a different way.
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We at this stage see no reason to significantly change our approach. But let's not forget that our approach still depends largely on other factors, namely, how fast the company is growing, how strong the founder is there, how innovative it is. If you look at the experience of 2008-2009, then companies such as Facebook , rather got an advantage and accelerated their development. In the event of a crisis, the flow of money to the Internet, according to our observations, may accelerate. Technology companies are actually optimizing. They allow you to do something faster, more convenient, cheaper. In a crisis situation, the demand for optimization increases, everyone is starting to think about saving costs, they are considering cheaper options. And those companies that provide such optimization may even win.

On investments in the overheated market

You look at hundreds and select units. You do not invest in the index, you invest in piece goods. Even in an overheated or underheated market, according to our observations, some interesting companies can be found. That is, neither we nor any other investor invest in the market as a whole. Of course, overheating of the market leads to the fact that the most interesting and promising companies find it easier to find investments, and the investment environment becomes more competitive. Here I agree with you. But at the same time the number of companies that do innovative things, it seems to me, does not depend on this cycle.

On investment in India and the rate on the founders

This is just an expansion of horizons for us. We continue to invest around the world. In Europe, we had several investments recently. We still adhere to a global strategy, because it allows you to quickly learn.
The strategy is universal not only for India or China, but for the whole world. I do not think that there can be significant differences. This characterizes technology companies, which, as we said, have no assets, but a vision of the founder. Rather, there is more specifics of investment in technology companies than country.

About copying western technology in China

You know, these are inevitable development cycles, and, I think, this is a global phenomenon. Now you can literally a day after starting a business to find out about it all over the world. For a long time there are no secrets, in a sense, everyone borrows from everyone. It is difficult to say who borrows. I will give one example - the company Zynga . She had a successful Farmville game that the company had risen to. But for the first time it was invented in China. In general, everything that concerns multiplayer games has been largely invented in China over the past 10 years.

I think there is already complete convergence. Tencent is constantly moving forward in terms of innovations in the field of instant messengers. They have WeChat , which paves the way for all the other messengers in the world. Alibaba is a rather unique project that does not exist on such a scale in any country in the world. The scale in which all this is realized is a Chinese invention.

On investments in Russian companies

The fact is that our investment strategy was aimed at investing in companies at the pre-IPO stage. We have never been a venture investor, have not invested in the angel or seed stage. Russia has a sufficient number of venture investors who see something earlier than they invest in earlier stages.