Russia has a long and glorious literary tradition, which LitRes is now helping to digitize.
The Russian e-book retailer has raised $5 million in its first round of funding. It offers over 380,000 e-books in Russian and has contacts with over 100 publishing houses.
The site looks a lot like Amazon’s e-book site, with titles, ratings, prices, and filters for genre, author, popularity, etc.
The company was founded in 2006 in an effort to combat the rampant piracy in the e-book market. The e-book market was entirely a black market, with sites sites like lib.ru offering thousands of books for free download, which, of course, makes things difficult for writers and publishers who strive to make money off those books.
Courts in Russia began to crack down on the situation, and LitRes saw an opportunity to provide a legal alternative.
E-books still make up a small portion of the overall Russian e-book market, but its numbers are on the rise. The Russian e-book market has grown tenfold in the past three years, according to LitRes. The new investment will solidify LitRes’ position as global players look to enter Russia — Amazon opened up its first office in Russia earlier this year.
The Russian online ecosystem is an interesting one. The country has an incredible amount of technical talent, and the online travel space is really taking off. The country has around 100 billionaires and is the world’s eighth largest economy. It has the largest Internet and mobile market in Europe, and its consumer market is growing fast. Furthermore, local companies dominate the Internet scene.
A number of venture capital firms are actively investing in Russian startups, and the Russian government recently announced it would spend $4 billion on Skolkovo, a science park outside of Moscow that aims to be the “Russian Silicon Valley.”
However, like any emerging market, the country faces some major challenges.
Russia is still plagued by a cultural legacy that doesn’t promote entrepreneurialism.
VentureBeat contributor Elmira Bayrasli wrote that the single greatest obstacle to economic growth in Russia is “the government’s crushing of the innovative spirit that is the essential prerequisite to entrepreneurship.”
Many talented people leave for other, more supportive environments. Corruption, piracy, and censorship are also major issues, as well as spam and security threats.
The companies that do succeed tend to be fairly straightforward Internet services, like e-commerce and online travel. Mobile is growing fast all around the world, and it won’t be long before e-books become the norm. LitRes and its investors want to ensure that it maintains its foothold in the market.
The Russian Internet Technology Fund led this round. The RITF was established in 2013 by Black River Ventures and Third Rome Group to fund growth-stage companies. It aims to make 12-15 investments of between $1 million and $5 million.
LitRes is based in Moscow.