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I International Venture Summit held in Moscow

04.12.13

The State Secretary, Deputy Minister Oleg Fomichev attended the plenary session of I Moscow Venture Summit "Corporate venture funds as a tool for innovative development of Russian corporations."

The main purpose of the summit was to discuss the ability and willingness of Russian companies and their executives to take risks and to use high-risk instruments for funding innovation development.

According to the Deputy Minister, innovations now play an increasingly important role in the development of global markets and the success of certain corporations, and Russian companies are no exception. One of sources of funding of creation of new products, technologies, business models that provide additional competitive advantages in a highly competitive environment is corporate venture funds.

Companies financed by venture capital, mature faster than other startups, market their products faster as venture investors typically select the most promising companies.

Using the tools of venture financing allows companies, including large businesses, to use more efficiently the funds provided to achieve technological and innovation development, by increasing the number of facilities for potential investments that are studied during the investment activities of a venture fund, compared with independent research and development. Also, this tool allows you to share the investment risks with co-investors from the venture fund and delegate to a specialized management company having necessary experience and competence, authorities to manage the process of searching for the objects for investment, arrangement of investment process and operational activities of portfolio companies.

The Ministry of Economic Development of Russia recognizes a particularly important role of venture investment in the development of innovative economy. Russian state policy in the field of support for venture activities is primarily aimed at establishing appropriate institutional framework and various incentives that ensure the increased activity in the field of venture business at the level of business entities and gradual increase in private investments.

Among core implemented institutional measures the following may can be noted: creation of a basic tool for implementation of the state policy in the field of venture investment - Russian Venture Company, which acts as an institute for development of national innovation and venture environment and as one of the major players on the venture investment market (a fund of venture funds).

Since 2005, the Ministry of Economic Development of Russia has established a system of regional funds to promote venture investments in small enterprises in scientific and technical sphere, which is currently placed under the administration of RVC OJSC.

The infrastructure of innovation and venture activities is established, aimed at creation of self-developing innovation and venture environment and venture businesses, functioning of which is provided by created "innovation elevator”.

"In 2011 federal laws On Investment Partnership (defines the form of arrangement of collective investments convenient for venture investors, corresponding to the best global practice - investment partnership) and On Business Partnerships (determines the form of organization of project companies to do venture business). Currently amendments to the Federal Law On Investment Partnership are initiated, aimed at improving its provisions, reducing the effectiveness of implementation of mechanisms put in it and market interest to its use.

The strategy of innovative development of the Russian Federation is developed and adopted for the period up to 2020, providing in particular the action plan for its implementation, aimed at stimulating venture activities.

Efforts of the state to develop the market of venture investments gave some positive results. Over the past four years, the venture investments in Russia has grown by almost 10 times. At the beginning of 2013 the total amount of venture funds and venture sections of direct investment funds operating on the Russian market, according to the evaluation of RVC OJSC, exceeded 6.7 billion U.S. dollars, the total amount of venture investments on the Russian market in 2012 amounted to 910.6 million U.S. dollars, which allowed the Russian Federation on the basis of research of Dow Jones Venture Source go up to 4th place in Europe in terms of venture investments in high-tech industries.

According to Oleg Fomichev, companies with state participation in its innovative development evolve, gradually moving from a model when all R&D activities takes place within their own departments, to the model, when the external environment becomes more and more involved - through partnerships, mergers and acquisitions model. "In general, the readiness of our state-owned companies to corporate venture reflects at the present time the early stage of evolution of these processes," said the deputy minister.

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