Government fund of funds
Development institute of the Russian Federation

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Venture Capital Market Participants Discuss Specifics of Working with State Capital.

19.10.2018

On October 16, at the Open Innovations Forum, RVC held a panel session on the topic: "Golden mean. The balance of state and private capital as a key factor in the development of the venture capital industry.” The discussion was devoted to the issues of synchronization of state programs for the development of the innovation sector with the business initiatives of the professional community, as well as relevant tools of state support for the venture industry in Russia and abroad.

Opening the discussion, Deputy General Director — RVC Investment Director Alexey Basov spoke about the emerging Strategy of the Russian venture capital market, the development of which is supervised by RVC, and taking into account the interests of the state and private capital in it.

“To prepare the strategy, we created a large group of state representatives, formed an Expert Council, which included representatives from foundations and business. This approach demonstrates our understanding of the balance — the desire to take into account the interests of all parties as much as possible both state and private market. As a result, the strategy should be a particular document, not a framework. We want to create a tool that could allow market participants and the state to measure the work of development institutions, the effectiveness of the development of the venture capital industry. Determine how it affects the economy in clear parameters.”

According to Vasily Belov, the general director of Skolkovo-Venture Investments, it is not so important what funds are invested in venture projects — public or private — how “correct” the organization of the fund’s work:

“Given the current investment climate in the country, if we believe that the venture capital industry requires active development, higher than GDP growth, then it is obvious that the state should invest money in it. The question is how to approach this. We must agree that the venture industry should remain independent. When we create state funds and the state intervenes in the venture capital industry, 95% of KPIs should be financially oriented. As far as we are not deviating from the market models, everything will be fine."

Leta Capital managing partner Alexander Chachava agrees with his opinion:

“Today, we cannot build and develop the venture capital industry at a faster pace without state support. Because the market is weak, there are many problems. Moreover, when the state enters the market with the best of intentions, we often see "an elephant in a china shop." My wish is for the state to resemble a market subject and trust market players to the maximum.”

Alexey Konov, the managing partner of RBV Capital, spoke about the need for public money for development and the parallel problem of their “toxicity”:

“When you take public money, you risk, by definition. Just because any mistake can be imputed with all the aggravating consequences. Of course, RVC, against the background of other development institutions, seems to be the sanest with the requirements for companies. At the same time, for example, a successful entrepreneur in America always mentions all of his failed start-ups in a resume. In Russia, such facts, unfortunately, usually tend to be hidden. As soon as this approach changes, it will become easier for market participants to live. Then we will have the golden mean.”

According to Artem Shadrin, Director of the Strategic Development and Innovations Department of the Ministry of Economic Development of the Russian Federation, the situation with the risk assessment of start-ups by government agencies has begun to change today:

“In March of this year, the Government of the Russian Federation adopted a resolution approving the rules for evaluating the effectiveness and reasonableness of determining the targeted nature of the use of budgetary funds aimed at state support for innovation. This was done in order to minimize the consequences of misinterpreting market risk and intentional abuse. So that all inspection bodies could be guided by this document and very clearly, share these risks. There is hope that the risks will decrease and the situation will change for the better. ”




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