“There were concerns about reputational risk,” says Patel. “What if we have problems raising funds from other donors.”
As Britain’s list of sanctioned people grows, entrepreneurs across the UK are nervously checking their list of investors, fearing they will be dragged into confusion.
“Most of the companies right now who are worried are those who knew they were taking a risk,” said Dom Hallas of the Digital Economy Coalition.
“The 20 or so individuals around Putin are not necessarily those most deeply involved in British technology. But, if it goes further, well, that’s where there could be a problem.
Huge sums of Russian money have flowed into the UK in recent years. Figures compiled by PitchBook for the Telegraph show Russian investors were involved in deals worth £261m last year, a major jump from £180m a year earlier and to £50 million in 2019.
Insiders say this is part of a concerted effort by Russia to gain a foothold in Britain’s tech sector.
A decade ago, leading British tech figures were invited to lunch with the Russian ambassador, one of those on the list saying: “It was clear they were trying to forge these links”.
Yet this has only recently become a concern. Last week, government departments reportedly rang around their VC-backed suppliers to verify that they had no Russian or Belarusian investors.
There are concerns about what a crackdown could mean for the startup ecosystem — and whether it has the potential to squeeze out some of the brightest companies.
This is a delicate situation for start-ups to manage.
Serial entrepreneur Brent Hoberman, best known for starting Lastminute.com, says there’s anxiety as entrepreneurs grapple with ‘how you deal with people who are Russian but not sanctioned’ .
“What people are saying is they have to make sure they’re not dealing with any [Russian businesses] who did not condemn the invasion in the strongest terms,” adds Hoberman, who now runs the startup network Founders Forum.
Beneath the surface, however, there are fears of getting into tricky territory.
Owen Nicholson, head of London-based artificial intelligence firm SLAMcore, said he “would not seek to speak to any funds with links to Russian oligarchs”. [if he was raising funds] and we will not pursue customers with similar links.
Speculation has begun over which investors, individuals and companies, may come under scrutiny.
Among them is venture capital firm Target Global, co-founded by Alex Frolov, the son of former Evraz CEO Aleksandr Frolov.
Another is Russian-Israeli billionaire Yuri Milner, the head of venture capital firm DST Global, a backer of Facebook, Twitter and Spotify.
Sanctioned Russian steel tycoon Alisher Usmanov was DST’s first limited partner (LP). It claims to have raised no capital from Russian limited partners since 2011, and that less than 3% of its total capital raised since its creation in 2009 comes from a Russian institution. All this capital was returned in 2014.