Directing public money to where the market is more difficult
Ten years ago, the state relied upon state corporations as the main engine of innovation development of the country. General Director of Russian Venture Company Evgeny Kuznetsov is telling our correspondent Natalia Timashova about the current state of Russia's technological entrepreneurship, how effective the state support of this sector is and in which public research sectors can we expect "breakthroughs" in the coming years.
— Evgeny, why support technological entrepreneurship? For example, in the Soviet Union, there were not any entrepreneurs, however, science evolved and we were ahead of the rest — we even sent a man into space ...
— The example of the cosmos is revealing: long before the flight of Yuri Gagarin, in 1931-1933, in the Soviet Union, at the Society of assistance to defence, aviation and chemical building there was a Group for the Study of Jet Propulsion (GSJP), which included our best engineers — Sergei Korolev, Friedrich Zander and others. They were engaged in the development of missiles and engines thereto, the participants of that group deciphered the name of their Group as "a group of engineers working for nothing", they had no salaries. But in fact, it was a technological enterprise group, which did not work based on commercial profit, "for the idea." In 1934, the GSJP became a Jet Research Institute; in other words, there was a "takeover" of the entrepreneurial team.
Quite frequently, entrepreneurial team may be absorbed precisely to bring into a stagnant corporate structure their start-up spirit, a willingness to take risks and the ability to be flexible. If we rely on large state-owned companies, as China did, it is important to simultaneously develop technological entrepreneurship, which would generate new independent ideas. And it needs state support for development.
— What measures of state support are the most effective? Tax incentives, direct financial support in the form of grants, educational programs, the creation of technology parks, support for business angels and business incubators?
— All of the above is needed. In addition, specialized regulation, taking into account the technological features of the market. Here we are talking about help for start-ups in the protection of their intellectual property and exclusive rights to profit for a certain period of time received from its unique design. Russian legislation does not like monopolies and is trying to prevent it, it turns out that start-ups immediately fall in unfavourable conditions in the market. In general, the government policy in Technopreneurship should be systematic.
— What must this system include?
— Culture and education should be in the basis. People should be properly prepared to be technology entrepreneurs in the most promising sectors. There must be an effective state regulation: when you create a start-up, it should spend a minimum of time and money on organizational issues — accounting, tax accounting, custom wiring, contributions to various funds. Everywhere in the world, in the areas of start-up there is lightweight legislation or services support of non-core functions. If a start-up has no such functions, it develops twice as fast.
A system of state support in the international market of companies is a very important area, unfortunately, poorly developed in Russia. China, Korea, India, and European Union develop state programs to support their export growth companies; however, Russia is a strong failure in that respect. However, the Ministry of Economic Development starts to help our companies to enter the international market.
— Is there enough demand for state support programs, which are now available for start-ups?
— The demand is high; the overall support system for start-ups at the early stage of development in the country has developed, as evidenced by the rapid growth of their number. Hence, the federal accelerator of technology GenerationS start-ups, which is held by RVC for the fourth year with the support of Russian companies, development institutions, representatives of venture infrastructure, at the entrance into 2016 was more than 4,200 applications, an increase in comparison with 2015 — by 60%. We have learned how to create start-ups, we must now enable them to effectively grow and overcome the barriers of growth domestically and internationally.
—What are the institutional barriers hindering the development of technological entrepreneurship?
— Fiscal system and customs regulations. Russia has good experience of creating preferences and tax incentives for the development of IT-industry, which helps it to grow effectively. Now we can expand the incentive regulation to other areas — to support biotech companies, start-ups working in the field of alternative energy and robotics.
Customs regulation remains a big problem, especially in terms of access to components, biomaterials — the existing rules are blocking the development of Technopreneurship. Unlike scientific evidence, when we bind hand and foot on the huge potential markets. For example, in the field of genetic modification (genomics), where the screws are firmly tightened: You can conduct research, but you cannot sell their results.
— Neuroscience will blow the tech market in just about 10-15 years. What other areas will be "breakthrough"?
— First and foremost, it is artificial intelligence development. Everything that is connected with digital technology, i.e. writing software, neural networks, robotics — this huge direction will remain promising for several more decades.
The second huge area where you can grow and develop indefinitely is medicine. It is also becoming digital; and inside medicine as a science there is a revolution going on. Aging is now considered as a disease that can be treated, there has appeared a whole class of new drugs — biologics that can save from cancer and other deadly diseases.
— What medical start-ups did RVC support in 2016?
— There are many such start-ups in our portfolio: a project to create a device for the correction of insomnia "Sonia", project "Brain Bit", which is developing a non-invasive blood glucose meter, the project "RTM Diagnostics", specializing in the development and commercialisation of deep radiometry technology — friendly method to diagnose the presence of malignant tumours in the early stages, which can be used for rapid diagnosis.
State support is now largely provided through the National Technology Initiative (NTI) mainly for such companies that are able to make a breakthrough on the international level and to work successfully on the global market — the information, pharmaceutical, energy and others. In this way, we are working with the company Tavrida Electric — one of the world's leaders in the field of "smart" power grids, which has large enough volume of sales in Brazil, India and the UK. And with Transas — a world leader in electronic cartography and development of simulators for navigation. In the future, it is navigation robotics and transfer to the "digital mode" the management of marine transportation.
— Is the priority in funding given to the areas where we are already strong enough?
— Yes, it is necessary to focus where we have some strengths, but there are some compulsory sectors that cannot be ignored. Such as medicine, again. It is a huge promising market, and it cannot be lost. Being a country of the XXI century and have no modern medicine is impossible, and for this, we need modern biology and infrastructure. But here we are lagging behind dramatically; let us say research centres, for example, where there are facilities for genome editing by CRISPR / Cas method — a simple, inexpensive method opened up new possibilities in the treatment of cancer, orphan diseases: in Russia, there are only five such centres, meanwhile in China, US, and UK — there are hundreds of them. If in the next five years in the field of gene correction there will not be any fundamental changes, then we will remain a medicine of last century.