Thu. Jul 7th, 2022


Call it one of the more offbeat byproducts of Russia’s war in Ukraine: New Yorkers may have to wait more than 15 minutes for a milk delivery.

Buyk and Fridge No More, part of the new wave of ultrafast grocers that sprang up across the city last year, both abruptly ceased operations this month. The start-ups were backed by Russian money. Western sanctions blew a hole in their capital-intensive business model.

Buyk was raising $ 250mn to fund its expansion when Russia invaded Ukraine. The war, according to its bankruptcy filing, presented an “existential and, ultimately, fatal crisis”. Overnight, interest in investing in the company evaporated. Attempts by its Russian founders to inject cash into the business were stymied by US sanctions on Russian banks as well as President Vladimir Putin’s curbs on funds leaving the country.

Fridge No More sought to find a buyer after failing to secure new funding. Its connections to Russian money made that attempt futile. The duo’s collapse may be the tip of the iceberg. Russian investors last year invested $ 9bn directly into start-ups across 232 deals, according to PitchBook. The bulk of these deals were in companies outside of Russia.

That comes on top of the $ 5.7bn that Russian investors put into venture capital funds last year. It is hard to untangle where these funds ended up. But gaming company 110 Industries, biotech start-up Genome Protection and Israeli battery start-up StoreDot are among those that have taken money from funds backed by Russian oligarch Roman Abramovich, PitchBook data showed.

For VCs and start-ups, unwinding ties with Russian-connected capital will be complicated. How do you return capital that has already been spent? Likewise, brokering the sale of the stake from a Russian investor looks tricky.

Russian immigrants and Russian-speaking scientists and entrepreneurs have played key roles in developing many of Silicon Valley’s best known start-ups. The challenge for tech start-ups and VCs will be to avoid sidelining these talents as they look to unwind Russian backing.



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