In an interview with, Skolkovo Foundation board member and renowned tech investor Alexander Galitsky says a virtual startup community is all well and good, but nothing can replace physical proximity among companies in seeking to replicate the success of Silicon Valley.

Alexander "Sasha" Galitsky is co-founder of Almaz Capital Partners and worked in the Soviet space industry prior to becoming an investor

The Skolkovo project, created by the Russian government in 2010 to reduce economic dependence on natural resources, reaches a significant milestone in October, when the managing Foundation moves into the Skolkovo Innovation Center currently under construction on Moscow’s outskirts.

By the time the “innovation city” is complete in 2020, hundreds of resident companies are to be based at the 400-hectare site. The aim is to create the hive of innovation required for a healthy and long-lasting startup community.

Some companies have already moved to the center's Hypercube, but for the most part the community exists online at “Virtual Skolkovo,” a forum on the website dedicated to residents.

How important is the physical location of all the companies in one area? Would you expect to see a boost in productivity when this happens with Skolkovo?

“I was a defender of the virtual start. But from the other side, we are all human. And from this point of view, physical contact is very important. All the success of Silicon Valley is based on the physical community and the ability to physically communicate. If you are speaking about the ability to see the physical connection between people, it’s not just that a person is standing in front of you, it’s the ability to communicate with people. If you look at the difference between Russian local culture and Silicon Valley culture, in Silicon Valley an entrepreneur would like to share his or her ideas with as many people as possible, to get as much feedback as possible, and to get the opinions or the involvement of peers in the project, etcetera. But in Russia people keep their ideas a secret. So the physical presence where people will be open to each other, like 100 or 200 companies sitting together, will bring for them the ability to exchange ideas, the ability to understand the world, and the ability to move in the right direction. That’s one. Secondly, any startup is a life organism. Some startups die, but their people are reborn again in other startups with other ideas. So again, the physical presence of these companies under one roof gives them this opportunity. All together it makes an ecosystem that is very important. The virtual (internet) dimension should remain, of course, but the combination of the virtual and physical is critical to Skolkovo’s success, in my point of view.”

Galitsky, left, has over 30 patents for numerous inventions, including parallel processing, WiFi and VPN security technologies.

Is Skolkovo producing the startup ecosystem that we need? Are we seeing enough promise turn into concrete success?

“The project is still in its infant stage. Just over three years. For the development of any reasonable startup community or startup movement, much more time is required. Just for a single company to develop you need approximately five to seven years. From this point of view, not as a member of the board but as a venture capitalist, I see the progress. I see the progress, I see that, taking the events that we are starting see at Skolkovo – the Startup Village or some other events like Robonight that we visit, we are starting to see more quality. More quality startups and a better quality community. Of course, it is not just Skolkovo’s efforts, these are broader efforts that are happening, a tuning of the economy and a reformation of the country, but definitely Skolkovo is leading this process. So I expect more, of course, but I think that in general, Skolkovo in all these political difficulties that we’ve had over the last few years – I mean around Skolkovo, not current political events – I see that Skolkovo is moving in the right direction. So the main idea of Skolkovo was to play the role to open Russia for the external community of the high-tech world. This has happened. So how it will be kept – this is the point. Secondly, since the success of Skolkovo is based on an infrastructure, which is an ecosystem, and this ecosystem is not just a building and nice living conditions but also how many international players will play a role in developing research and development. How this research and development will be integrated into Skoltech, how this research and development will interact will local industry players. The ecosystem comes after this. It needs a base of quality startups, not just any startups.”

Is there anything you’d like to see Skolkovo do more of?

“I think that Skolkovo needs to be a leader. It should be a leader – not only to organize the startup community events and everything. Skolkovo needs to become a party that runs a few important conferences related to industry, according to clusters. Important conferences that are very critical for the development of, let’s say, the IT cluster, the Space cluster, or the Biomed cluster. Not just on the startup level, but in particular, industry-focused conferences for broader audiences. Startups can get knowledge from these events – where the biggest problems are focusing their efforts. Secondly, companies that are already making a few million dollars, they are not considered completely startup, they are not necessarily participating in the Skolkovo ecosystem, but they are able to bring a lot through their participation in the conferences. So in this case, this is one of the missing parts from my point of view that Skolkovo needs to take seriously.”