I had the pleasure to spent two weeks in Russia last year that has resulted in a dramatic change in my attitude towards the country. It has changed how I see the future of the country and how I see myself in that process by thinking about doing business in/with Russia.
I was attended to the Saint Petersburg International Economic Forum in June and Open Innovations Forum in Moscow therefore I have had first hand insight to what is going on in terms of reinventing Russian economy.
Russia is the ninth largest economy in the world by nominal value and the sixth largest by purchasing power parity (PPP). Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy to a more market-based and globally integrated economy.
Economic reforms in the 1990s privatized many sectors of the industry and agriculture, with notable exceptions in the energy and defense-related sectors. Nonetheless, the rapid privatization process, including a much criticized “loans-for-shares” scheme that turned over major state-owned firms to politically connected “oligarchs”, has left equity ownership highly concentrated.
As of 2011, Russia’s capital, Moscow, now has the highest billionaire population of any city in the world. (Source: Wikipedia)
In the last few years Russia has decided to change their focus from the oil and minerals based economy to the knowledge driven economic development. The goal is to reinvent the Russian economy by giving a boost to knowledge driven sectors.
What does it mean in terms of innovation?
One governmental supported initiative definitely have to be highlighted that is called Skolkovo. The goal behind establishing the innovation park called Skolkovo is to build up the next Silicon Valley in Russia.
Russia has a growing IT market that could be the engine behind Skolkovo’s initiative. The IT market is one of the most dynamic sectors of the Russian economy. Russian software exports have risen from just $120 million in 2000 to $3.3 billion in 2010. Since the year 2000 the IT market has demonstrated growth rates of 30–40 percent a year, growing by 54% in 2006 alone. Despite the dynamic growth, the fastest growing segment of the IT market is offshore programming. Currently Russia controls 3% of the offshore software development market and is the third leading country (after India and China) among software exporters.
The goal of Skolkovo is to support companies with high added value products and services in IT, Biotech, Space, Nuclar and Cleantech innovations. In order to do that Skolkovo was announced on 12 November 2009 by then Russian president Dmitry Medvedev.The complex is headed by Russian oligarch Viktor Vekselberg and co-chaired by former Intel CEO Craig Barrett. The initiative is governmental funded that will costs appr. 1432,688 million USD by the end of 2013 (Source: Wikipedia)
Skolkovo as an innovation center, business incubator and management school occupies around 400 hectares not so far from Moscow (it is twice the size of London’s Olympic Park). A research university was founded in order to educate 1,800 students, establish 40 corporate research and development (R&D) centres and a “Technopark” housing up to 1,000 start-ups.
According to the The Economist:
Skolkovo will be a special economic zone, a bit like Shenzhen in China. Companies based there will receive whacking great tax breaks. They will also get special treatment when it comes to visas and imports. The aim is for Skolkovo to become the basis for a vast ecosystem that spans all of Russia and brings together researchers, entrepreneurs and investors in five “clusters”: IT, of course, but also biomedical, energy-efficiency, space and nuclear technologies, all of which have deep roots in Russia. This new ecosystem, its champions hope, will help Russia modernise.
Skolkovo will be a special economic zone, a bit like Shenzhen in China. Companies based there will receive whacking great tax breaks. They will also get special treatment when it comes to visas and imports.
The aim is for Skolkovo to become the basis for a vast ecosystem that spans all of Russia and brings together researchers, entrepreneurs and investors in five “clusters”: IT, of course, but also biomedical, energy-efficiency, space and nuclear technologies, all of which have deep roots in Russia. This new ecosystem, its champions hope, will help Russia modernise.
Till 2012 more than 20 companies have signed up at Skolkovo, including Cisco, IBM and SAP. Each of them will open a sizeable R&D laboratory and co-operate with SkTech.
Corporate partners of Skolkovo Source: http://www.sk.ru
In order to emphasize credibility and expertise for the tech education leg the Massachusetts Institute of Technology (MIT) has agreed to set up the Skolkovo Institute of Science and Technology (SkTech).
Skolkovo is having visible efforts on startup development. The Skolkovo Foundation is allocating some $1 billion over five years to give a boost to the startup culture.
What does that mean practically?
They are building a long pipeline of startups within the organization.
Startups apply for “resident status” and they are evaluated by some of the hundreds of experts who work with the Skolkovo Foundation. If the get admission , they are eligible for the city’s tax and other preferences and can apply for grants, approximately $150,000. If they want more money, they have to find a matching investment from a venture capitalist.
There are more than 790 firms have obtained resident status and around 22% of them (176 companies) that have already received grant from the Foundation till 2013 February. At the end of the “tube” half of the granted startups have received regional VC investment from Russian VC firms like Russian Venture Company.
All in all, I am curious how could Russia eliminate the cultural barriers of bureaucracy, grey economy and the cultural differences but these initiative could have stunning effects of transforming the old economy into a knowledge based one that could help Russia to be one of the most important knowledge based economy and society.
Source: cee-startups.com