Russia’s DST Looking for Companies to Disrupt the Status Quo

An unusual payer has been making waves buying stakes in hot Internet companies at hefty valuations, as everyone took notice of. Digital Sky Technologies is a Russian company with deep pockets and a clear drive. It bought a $200-million stake in Facebook last year, raising more than a few eyebrows, and continued the trend by investing in Zynga, the hottest social-gaming company in town, and by having recently acquired the ICQ IM service. Headed by Yuri Milner, a man determined not to miss any opportunity in the market, DST is still looking to make some big investments even outside its regular interest zone.

"There are a few dozen companies globally that we are following. When you do late-stage investment focused on the internet your universe shrinks dramatically," Milner told the Telegraph. DST has already invested more than $1 billion in Internet companies so far and it’s not done yet. It’s looking at several others actively and isn’t excluding any opportunity at this moment. Its interests are in Internet companies exclusively, which Milner says are set to change many of today’s businesses and markets, irreversibly so.

"Every single industry will get disrupted by the internet. This is permanent, not cyclical. Music will never be the same again, the newspaper business will never be the same again. No matter what happens macro-economically, the internet will continue to change the world. I am investing in disruptive companies, that just happen to be internet companies," he said.

About a year ago, DST bought a two-percent stake in Facebook for $200 million, which would put the social network’s worth at $10 billion at the time. It continued to buy stock from employees and is estimated to own about five percent of the company now. Plenty felt it was exaggerated, but several estimates since then have put the company at much higher valuations, despite not having become profitable yet.

Later in the year, DST invested $180 million in Zynga at an unspecified valuation, estimated to have been at between $1.5 and $3 billion. A couple of months back, it also bought ICQ from AOL for $188 million. The IM service has been particularly popular in Russia, a country where DST owns several large Internet companies.