Cisco begins VC investing in Russia, announces deal: $18M in e-commerce site, Ozon

Cisco Systems has started a venture capital initiative in Russia, and the giant San Jose, Ca. networking company announced its first deal: Russian e-commerce site, Ozon.

Cisco hired a full-time investment manager, based in Moscow, the company said in a statement sent to VentureBeat yesterday.

It said it has made an investment in Russian e-commerce site, Ozon.ru, alongside Index Ventures, a venture firm which led the $18 million investment in the company. Index calls the site the Amazon.com of Russia. The site sells books and CDs for the Russian-speaking population globally, and is betting that the growth in adoption of broadband by Russian households will fuel Ozon’s rise. Holtzbrinck Ventures also invested.

Index said the investment will be one of many future investments in Russia and Eastern Europe.

From Ozon’s statement:

OZON.ru today offers more than 260,000 items for sale divided into 12 product categories from more than 400 suppliers. More than 3,000 orders per day are delivered to its Russian-speaking internet audience worldwide from OZON.ru’s proprietary distribution center in Tver (160km North of Moscow).

Headquartered in Moscow, OZON.ru was founded in St Petersburg in 1998 originally as an online book community and shop. Following a period of strong expansion and investment by Baring Vostok, the сompany has rapidly strengthened its branding as the first most popular e-commerce site in Russia with high-quality customer service and over 120,000 unique visitors per day. Led by Swiss-born CEO Bernard Lukey since 2005, OZON.ru is now well established as Russia’s leading online retailer.

From Cisco’s statement:

With tens of thousands of book, movie and music titles on offer, Ozon is helping to shape the future of consumer e-commerce in Russia. Ozon has over 100,000 users daily and the investment funds will be used to continue to drive adoption of Ozon’s site among Russian consumers.

Further details of the deal were not disclosed.

“While Russia has low Internet penetration in terms of percentage of its overall population, in absolute terms it has as many Internet users as some Western European countries,” said Bob Agee, vice president, Cisco Russia. “The amount of technical talent in Russia shows that the country is ready to become more technologically advanced. Increased investment in communications infrastructure can help improve productivity, diversify the economy and increase the standard of living across the country.”

“Our venture investment in Russia is a continuation of a global strategy that we’ve implemented in Europe, Israel, China and India, which is to invest in local start-ups and venture teams and help promote the growth of a local innovation economy,” said Hilton Romanski, director, global corporate business development. “Ozon is the first in what we hope will be an expanding venture relationship between Cisco and Russian entrepreneurs and investment partners.”