Corporate Investments in Venture Can Be Stimulated by Lower Income Taxes — RVC
The state can increase the attractiveness of corporate investments in supporting high-tech venture capital projects by introducing special conditions for calculating income taxes. This was announced to TASS on Monday by the CEO of Russian Venture Company, JSC Alexander Povalko, commenting on the possibility of creating a corporate fund of funds in the country.
The idea of creating a fund of funds with the participation of corporations was announced at the meeting of investors with Russian President Vladimir Putin last week. RVC is currently the only Russian fund of funds, which today has 29 funds with a total capitalization of about $1 billion.
“The opportunity to invest in the fund of funds, which, in turn, will participate in the role of LP in other venture funds, will become a fundamentally new format for the innovative development of large business. Such an instrument will also significantly increase the supply of venture capital in the country. <...> To increase the attractiveness of corporate investments in the venture, it is advisable to initiate work on tax incentives for corporate investors — a set of such measures was also proposed by RVC in the draft Strategy for the Development of the Venture Market, developed jointly with the Ministry of Economic Development. It implies a reduction in the tax base when calculating income taxes when creating corporate venture capital funds, corporations participating in funds as LPs and direct investments of large businesses in technological projects,” he said.
Speaking of the practice of other states, Povalko noted the role of funds of funds in developing the largest venture capital markets in Israel, Europe and Asia (among them — Yozma, European Investment Fund, SITRA, NZVIF), naming this category of funds an essential element in the landscape of venture capital markets. About 100 funds of funds are presented in the USA today, and the critical group of investors are NPF and insurance companies. Russia is still deprived of the opportunity to invest in high-tech projects due to legislative restrictions, the Head of Russian Venture Company said.
“RVC supports the idea of creating corporate funds of funds announced at the meeting with the President. In the next few years, the development of the venture capital industry in Russia will be associated with the growing role of corporate capital. Last year, corporations, including those involving state capital, actively created new investment tools. RVC created the New Industry Ventures together with Gazprom Neft and several other partners. GTLK and RZhD (Russian Railways) announced the plans for the creation of venture capital funds,” he concluded.