For Russian Startups, Opportunity Trumps Political Risk

When it came to convincing investors to bet on the Russian e-commerce leader Ozon Holdings, CEO Maelle Gavet faced two daunting impediments: Investors were wary about putting their money into Vladimir Putin’s Russia and circumspect about the e-commerce business altogether.

Wrong place, wrong business.

The challenges of doing business in Russia have grown even more daunting since the invasion of Crimea. The White House created a blacklist of Russian oligarchs and has pulled banking-industry levers to put pressure on Mr. Putin, and more severe sanctions could yet be in the offing. That’s a grim prospect for venture investors aiming for a big payout years down the line.

Meanwhile, Ms. Gavet, a French citizen and former principal at the Boston Consulting Group, runs an e-commerce business that sells and delivers everything from shoes to ebooks. The company is split into several divisions, including Ozon.ru (an Amazon-like shopping site), Ozon.travel (online travel booking) and O-Courier (a package-delivery business).

Despite the obstacles, Ms. Gavet has persuaded some big investors of the potential: the company recently raised $150 million from two Russian companies, Sistema and MTS, at a valuation of about $750 million. Previous investors include Baring Vostok Private Equity Fund, Index Ventures, Rakuten, Intel Capital and Cisco.

The Information caught up with Ms. Gavet over Skype. “Hey sorry, it’s Russia,” she offered after the Skype call was disconnected—an inadvertent commentary, perhaps, on the special challenges she faces running a Silicon Valley-style business in the former Soviet Union.