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According to the results of Global Competitiveness Survey conducted by World Economic Forum in 2011, Russia is the only country from the CEE / CIS countries (collectively called here eastern Europe) which has moved up the development curve closer to its goal of becoming an innovation-driven economy. It is no wonder, as the country’s government policies push the innovation agenda high on the priority list. GoalEurope looks at what might have been the cause of Russia rising on the global innovation arena.
Venture capital industry in Russia is growing. According to Russian Venture Capital Association, by the end of 2010, there were 16.8 billion US dollars of venture funds raised which is almost 11% increase compared to the previous year of which 151 million US dollars were invested that year.
There are over 60 private and state-financed startup incubators, accelerators and technology parks while the Russian government continues to actively participate in the high technology industry.
Russian Venture Company, the government venture fund, invests in growing local venture capital industry and into the startups directly. It also supports various initiatives such as the Greenfield Project, the pre-seed startup community, business incubators like the Venture Invest or media projects such as the TV Technopark which cover the subject of innovation in Russia. So far, Russian Venture Company has invested 375 million Euros in 12 venture funds.
Rusnano, a government venture fund, run by Anatoly Chubais, has been set up in early 2011 to invest in the nanotechnology companies. Currently, Rusnano fund amounts to 3.25 billion Euros. As of the 5th of September 2011, the fund invested almost 2 billion Euros in 60 out of 127 pre-selected companies. Six investment projects have already been written off.
Then, there is Skolkovo foundation. a government initiative that develops Skolkovo R&D center and supports the process of technology commercialization. The center is built just outside of Moscow. To receive financial and administrative support as well as preferential tax treatment, innovative companies are required to move their R&D operations to Skolkovo.
To be successful as an innovator, the country needs not only financial resources but most importantly, good understanding of the pressing business problems which can be solved with the help of technology, a strong R&D capabilities as well as experienced managers with global ambitions to build and grow innovative companies.
As far as technology is concerned, Russia has already gained a commendable place in the global software development outsourcing industry. A big number of international technology companies such as Alcatel, Dell, Ericsson, Google, HP, Intel, LG, Motorola, Samsung, Sun Microsystems, Samsung, T-Systems and many others have established their R&D centers there, Russia’s scientific research institutions have began seeing more financial support for their projects while severely underfinanced during the early nineties.
The knowledge about building global companies continues to trickle in. It comes from the experience of the owners and managers of outsourcing companies gained by competing in the international marketplace. It is also contributed by the Russian professionals who worked abroad and then returned to Russia for better career and business opportunities. But more importantly, there are success stories of the first, truly global technology companies with Russian origins whose founders are the main contributors to the pool of knowledge in creating global businesses, as well as new investors in the technology ventures.
To name just a few examples, there are Kaspersky Labs, creator of the leading antivirus software, ABBYY, a data capture and character recognition software company, IPG Photonics, the leading fiber-optic lasers manufacturer, Parallels, a worldwide leader in virtualization software, Yandex, a Russian search engine listed on New York Stock Exchange.
While we could expand the list of examples much further, the future will show how the venture industry, still very young in Russia, will perform over the next few years. It is certainly a test of how well all the ingredients of innovation success will add up to fostering a new generation of global technology companies that come from Russia.
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