Fort Ross, which launched a new fund in December, already deliberately left Sberbank out of the fundraising in a bid to distance itself from the Russian bank, Orlovski said. Now, because Sberbank is not on the U.S. list of Specially Designated Nationals, which sees the most severe restrictions, Orlovski said the firm is still analyzing what steps it will be required to take. For now, the investor doesn’t believe there will be a meaningful impact to the firm. He said Fort Ross is not planning to return Sberbank’s capital and that brokering a sale of the stake would be a possibility, but the firm is not currently pursuing it.
In the event that the U.S. decides to hit Sberbank with a full blocking order, though, the bank’s capital in any fund would be completely frozen, said Brendan Hanifin a partner at Ropes & Gray LLP.
The morality of VC funding can be complex. Often, tech investment firms and startups believe that their first duty is to build great businesses, using whatever funds available — even though private funding has not been hard to come by in recent years. Patricia Cloherty, who pioneered post-Soviet Western investment in Russian companies via her roles at the U.S. Russia Investment Fund and Delta Private Equity Partners, said venture firms typically obeyed the letter of the law, but not more. Now, of course, obeying the law could get more complicated as sanctions proliferate.
“Most venture firms love anybody with money,” she said. “It really doesn’t matter what nationality you are.”
This article was provided by Bloomberg News.