Index Ventures halts Russian investments as global tech response grows

8 Mar 2022

Image: © Алексей Игнатов/Stock.adobe.com

Pressure continues to mount for Russia as companies such as Apple, Coinbase and Prosus take action.

While the global tech sector continues to respond to the invasion of Ukraine, VC firm Index Ventures is one of the latest to cut ties with Russia.

The firm announced yesterday (7 March) that it is halting any investment in Russia “until further notice” and will support portfolio companies that move their teams out of the country.

Future Human

Index Ventures said it is taking steps “beyond” complying with international sanctions against Russia.

“We believe it is necessary to cut off resources that would in any way support Russian state institutions, its regime-controlled media and its financial system,” the firm said in a blog post. “We are therefore committing not to make any investments in Russia until further notice. We will not co-invest with entities and individuals with links to the Russian regime.”

Index Ventures said none of its current funds have any limited partners from Russia and “none will be included” in any future funds created.

“We stand in solidarity with Ukrainians, and with Russians who are equally appalled by the actions of their government in a senseless war that was not of their choosing,” it added.

Prosus

Dutch tech investor Prosus also expects to write off its entire stake in Russian social network VK. The stake is worth more than $700m, Reuters reports.

The company asked its directors on the VK board to resign. The decision comes after VK Group’s CEO, Vladimir Kirienko, was added to a US sanctions list.

Apple

Tech giant Apple has continued its actions against Russia, suspending search ads on the Russian App Store “until further notice”.

The company added that no new campaigns will be able to run on the country’s App Store while the suspension continues, preventing developers from placing ads on the digital store’s search results.

The App Store is still available to Russian citizens, despite calls from Ukrainian vice prime minister Mykhailo Fedorov to block it.

Apple’s decision follows its move last week to stop the sales of its products in Russia, while removing the RT and Sputnik apps from its App Store globally.

The decision could cost Apple significantly due to the loss of product sales. According to data from phone accessory retailer Burga, Apple accounts for 15pc of Russian smartphone sales, ranking third overall. Based on Burga’s calculations, the company could lose $3m a day in iPhone sales revenue, or $1.14bn a year.

Surge in Russian VPN demand

Following the decision of Russian regulators to block access to Facebook and Twitter, new research has detected a spike in VPN demand in the country.

According to SafetyDetectives, VPN demand doubled when the decision to ban Facebook was announced. The research team found that since 24 February, demand for VPNs in Russia has increased by 462pc.

“We looked at the figures for both paid VPNs and free VPNs to calculate this average,” SafetyDetectives said in a post. “If we were looking at free VPNs only, it’s possible the number would be much higher.”

Russia has suffered a major blow to its online traffic as US company Cogent Communications – reportedly the second-largest internet carrier out of Russia – terminated services for clients in the country.

Coinbase

Cryptocurrency exchange Coinbase announced yesterday that it has blocked more than 25,000 addresses related to Russian individuals or entities that the platform believes is engaged in “illicit activity”.

With Russia facing financial sanctions from the EU, US and other nations, there have been concerns that individuals and organisations in the country would turn to crypto to bypass restrictions. Last week, it was reported that the US government was adding crypto rules to its sanctions guidance.

Coinbase said that it shared the details of these blocked entities with the US government “to further support sanctions enforcement”. However, the platform said this figure is not specific to the time period since the invasion of Ukraine began, as “most” of these addresses were identified prior to the invasion.

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Leigh Mc Gowran is a journalist with Silicon Republic

editorial@siliconrepublic.com