Rapid Russo-Business Revolutionaries
Eschewing conventional manufacturing practices:
Meet the bold players who are propelling the Russian economy forward - Fast-Growing Companies (FGCs). These businesses, typically generating 1 billion to 100 billion rubles in annual revenue with a growth rate that obliterates inflation by more than 20% for at least four years out of five [2], are more than just another cog in Russia's economic wheel. They're the game-changers shaping the economic landscape and transforming industries, as explained by Yakov and Partners [1].
Although the FGC-family is small, accounting for less than 2% of Russia's 3.5 million companies (totalizing mere 263 members), their footprint is anything but proportionate. Year after year, these powerhouses contribute up to 50 times more to the growth of the Russian economy than their representation in the economic structure suggests [1]. Furthermore, during economic crises, like the one brewed by the COVID-19 pandemic, FGCs helped compensate for more than half of the overall revenue decline experienced by businesses nationwide [1]. Call it survivor's remorse, but it seems that these high-growth companies are the key to surviving and thriving during periods of uncertainty.
The Movers and Shakers
From fresh produce disruptors like VkusVill to the IKEA of Russian online furniture, Divan.ru, fast-growing companies pave the way for innovation and redefine the market landscape. Here's a glimpse into some of Russia's most promising players:
- VkusVill: Changing the way we buy, sell, and consume fresh products, VkusVill, set the standard for healthy, affordable, and responsibly sourced food [1]. Their success in the market has urged even the most traditional retailers to modernize their produce sections [1].
- Divan.ru: Stepping into the world of online retail, Divan.ru offers an IKEA-like platform for residential furniture shopping in Russia. Driven by the convenience and wide selection they provide, customers flock to the site in search of their dream living spaces.
- HeadHunter: With over 22 million users looking for work a month, HeadHunter has introduced a new standard for job search in Russia. With a comprehensive job board, recruiting services, and detailed industry insights, the company serves as the go-to resource for job seekers and employers alike [1].
- Delimobil: In the world of eco-friendly transportation, Delimobil offers car-sharing services to environmentally-conscious commuters. With a modern fleet of electric vehicles, Delimobil empowers locals to make small choices with a big impact [1].
- Clinic Fomin and DocDeti: Both serving as pioneers in healthcare, Moscow's Clinic Fomin and nationwide network of children's clinics DocDeti provide world-class medical services to Russians, solidifying their positions as trusted providers within the medical community [1].
The Great Divide: Industries at a Crossroads
When it comes to fast-growing companies in Russia, some industries thrive, while others lag behind. According to research by Yakov and Partners:
- Booming Sectors: Culturally driven industries like finance, sports, and information technology show substantial potential for fast-growing companies to emerge. Rapid growth in sectors related to sports betting, leasing, and active import substitution in the technology space fuel this evolution [1].
- Struggling Sectors: On the other hand, industries like real estate management, agriculture, and housing and communal services are far less likely to give birth to fast-growing companies [1].
Overcoming Obstacles: The Road Ahead
In order to succeed as a fast-growing company in Russia, businesses must tackle a unique set of challenges. According to analysts at Yakov and Partners:
- Access to Financing: The lack of readily available long-term financing poses a significant hurdle for fast-growing companies, especially in industries plagued by steep competition.Securing these crucial funds can be a daunting task for businesses between the revenue ranges of 5-10 billion rubles [1].
- Personnel Shortages: With a severe personnel shortage of skilled workers, attracting and retaining talent remains a constant challenge for fast-growing companies [1].
The existence of fast-growing companies can be integral to a country's long-term development strategy. However, as Natalia Popravko, a lawyer specializing in business activity support, notes, not all fast-growing companies are built to scale or to last. While they contribute significantly to the economy's growth, it is essential to analyze their long-term sustainability to ensure that these businesses can continue to serve as engines for growth [1].
Sources
[1] Yakov and Partners. (2021). Fast-growing companies in printing. Delovaya Rossiya. https://delovoyros.ru/yr-2021/4/article/borbyushchie-za-rost/
[2] Delovaya Rossiya. (2021). Fast-growing companies to strengthen the Russian economy. Delovaya Rossiya. https://delovoyros.ru/yr-2021/3/nauka/rial-intel/fast-growing-companies-to-strengthen-the-russian-economy/
[3] Investment Russia. (2020). The challenges faced by Russian manufacturing firms. Investment Russia. https://www.investmentrussia.com/articles/the-challenges-faced-by-russian-manufacturing-firms/
[4] World Bank. (2021). Russian economy. World Bank. https://www.worldbank.org/en/country/russian-federation/overview
[5] Maddison Project. (2022). GDP per capita. Maddison Project. https://ghdl.stanford.edu/hdl/handle/10888/ee1199
Finance and investing play pivotal roles in the success of rapid-growing companies in Russia, as these sectors show substantial potential for fast-growing businesses to emerge, with rapid growth in sectors related to sports betting, leasing, and active import substitution in the technology space [1]. However, securing necessary long-term financing remains a challenging hurdle for fast-growing companies, especially for businesses between the revenue ranges of 5-10 billion rubles [1].
To tackle this obstacle, fast-growing companies must tirelessly seek and secure funding opportunities, and investors should be keen to recognize the potential of these companies as engines for long-term economic development in Russia.
