Rusian book, music and game retailer Ozon.ru has landed £9.1m in an investment round led by Index Ventures, and also involving Holtzbrinck Ventures and Cisco Systems.
Ozon.ru intends to use the capital to develop its logistics, expand product lines and establish new distribution centres across Russia.
Giuseppe Zocco of Index believes Russian etailing is ripe for investment:
“The OZON.ru team has done a terrific job in building the leading e-commerce site in Russia, and we believe it has the assets to become one of the most important European companies in this space.
“This investment in OZON.ru demonstrates our strong belief that Russia has the market, technology and entrepreneurs to create world-class startups and we aim to continue investing in this geography.”
Internet use and broadband penetration is growing fast in Eastern Europe and Russia.
According to a recent Point Topic survey, broadband connections in the region grew by 14.2% in Q4 2006, the highest increase of anywhere in the world.
Russia, Poland and Romania added a combined 2.8m new broadband subscribers in the three months.
The Russian e-commerce market is also growing fast – a recent report by Russian search portal Yandex showed that the market grew by 42% last year - a much higher growth rate than the EU's overall 25%.
Founded in 1998, Ozon.ru is the most popular e-commerce site in Russia, with over 120,000 unique visitors daily.
The investment also follows the launch of Index Ventures' fourth technology fund, which we interviewed venture partner Saul Klein about in February.