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Natural environment for unicorns

Source: Kommersant

The development institutes and investors discuss “road maps” of the digital economy.

The technology development investments actively discussed by both state institutions and private investors at SPIEF. JSC Russian Venture Company and Skolkovo prepared new financial instruments of the developments within the “road maps” on the “through technologies” of the digital economy, and VEB Ventures reported plans to increase the company's asset portfolio to RUB 35 billion by 2024. Private funds were interested in the prospects of "unicorns" and the possibility of their appearance on the Russian market.

The “road maps” on the so-called through digital technologies were presented two weeks before SPIEF, but the forum participants also discussed their implementation in practice and the participation of large business in this process. It will be remembered that at the last meeting of the supervisory board of the INPO Digital Economy, the projects of nine “road maps” were considered, but some of them were decided to combine — in particular, it affected the industrial Internet, new manufacturing technologies, robotics and sensorics. The artificial intelligence, in turn, will be combined with the big data and separated into a separate federal project, financing of which will amount to RUB 90 billion in six years. Maxim Akimov, Deputy Prime Minister, estimated the possible contribution to the GDP acceleration only from the implementation of the artificial intelligence technologies at 1.1–2% annual.

It is expected that all maps, including those sent for revision, must be approved before July 1, after which the development institutions will launch new financial support instruments. Thus, RVC will act as an operator for two instruments of the digital technology development — this is the support of leading research centers (LRC) and leading companies in the digital transformation of the economic and social industries. In both cases, the support volume for three years is currently planned at the level of RUB 10 billion.

“Actually, the LRC program request has already been formed — these are technological “road maps ”of the digital economy. Therefore, the projects that are associated with the “road map” implementation will be financed here — they will be given the project conditions and parameters, what technological solutions we want to get, and further development of these technologies will be financed, said Alexander Povalko, General Director of RVC to Kommersant. The “road maps” developed in the digital economy to be transformed into the technical task systems, as well as the contests to be held, the research teams to be selected and financed.”

The support program of the leading companies will support the technology transformation into specific products.

“For example, a consortium of 15–20 companies is currently assembling for 5G, Eltex manufactures the servers, Micran manufactures the arrays for new generation mobile cells. We will finance the development of just such specific solutions, ”explained Mr. Povalko, adding that it is more difficult to determine which other card solutions correspond to the world level: the criteria are being specified.

The National Technology Initiative, for seven markets of which the Centers for Competence were established, will not be integrated into the national program “Digital Economy”, which is supervised by the Ministry of Communications, it will remain part of the state program “Scientific and Technological Development of the Russian Federation” (the Ministry of Education and Science).

“We, as the operator of NTI of and several digital economy events, will assist two ministries to coordinate the overlapping digital technology development agenda. An important task is to prevent the activity duplication of the NTI and LRC Centers for Competence, the NTI Centers for Competence are mainly responsible for supporting the cooperation between the research and educational sector and the business,” explained General Director of RVC.

Skolkovo, in turn, will act as a government agent for deploying the pilot-controlled projects on the through technologies.

“The Fund took part in the development of almost all road maps on the through digital technologies. As the pilot-controlled program operator, our task is to assemble “couples” where there is a technology acceptor — industrial companies or integrators and there are technology donors — the startups that are involved in the Skolkovo ecosystem, reported Kirill Kaem, Senior Vice President of Innovations of Skolkovo Foundation to Kommersant.

As explained by Kirill Kaem, a mandatory condition of the pilot-controlled project is the further scaling feature in other companies. The program purpose is the financial and project support of the pilot-controlled projects on a par with the acquiring company of he technology. In this case the different operators within the “Digital Economy” will be responsible for different tracks: for example, RVC will be responsible for the technological project revision, Skolkovo Foundation will be responsible for piloting. Average cheque of such implementation amounted from RUB 200 million to 400 RUB million, the private investor co-financing is planned at the rate of 50%, specified Mr. Kaem.

VEB Innovations that is VEB investment “daughter”,changing its name to VEB Ventures, reported a sharp investment amount increase at the forum site. It is expected that the structure will function as a venture fund, development institute and management company. As part of the new strategy, the company's asset portfolio must reach RUB 34.8 billion by 2024 against the initial RUB 0.9 billion. The investment amount in one transaction will be from RUB 50 million to RUB 500 million, but in some cases a larger investment amount is possible, explained VEB Ventures fund to Kommersant. In 2019, six transactions are expected to be concluded, and in five years the accumulated total will reach 182.

Private funds, discussing the venture market prospects, were especially interested in the fast-growing company fate. Speakers at the Sberbank session on unicorns noted that more and more unprofitable companies are going into IPOs, however, the average period from the moment of company establishment to its public placement increased from seven to ten years — many companies sell the shares to the private investors at earlier stages that delays the need for IPO, thus also the startups avoid unnecessary burdens associated with the report preparation and the operation transparency , slowing down the decision-making process.

“In this case the platform-type companies are growing faster; they do not require large investments for high capitalization. But all low hanging fruits have already been torn down — new models will be more capital-intensive, since they suppose to use the artificial intelligence technologies, the costs are rising, in particular, due to the data specialist hiring, and the demand for them is already very high,” said Elena Ivashentseva, Senior partner at Baring Vostok Capital Partners.

And, Alexey Katkov, Managing partner of JSFC Sistema, predicted an "unicorn” assessment correction.

“At the global market, the hedge funds and pension funds with large liquidity reserves are looking for opportunities to invest money and when they find a suitable project, its price starts to grow very quickly,” he explained.

Among the potential Russian unicorns the investors called Skyeng, and Vkusvill, generally noting the edtech segment invalidity.

“The specificity of countries such as China and Russia is that the“ unicorns ”can be actually created in our country by the state decision, as was the case with CRPT company, which is responsible for the product labeling system. In China the image processing and facial recognition companies cost $ 5–7 billion,” said Alexey Katkov.

"It is difficult to attract the investors to a state participation company, but there is an example of VisionLabs, where JSFC Sistema and Sberbank are, but at the same time a large number of projects abroad and a foreign investor queue," he explained to Kommersant.

“Considering that the economy state role is only increasing, with sufficient funding, the startups approach with caution the state money acceptance and understand that it may be better to do there or do nothing than be held hostage by a terrible state fund,” added Mr. Katkov, noting that the situation can break at the expense of state funds "with a human face.”

Author: Tatyana Edovina

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