In 2011 Russian Venture Company (OJSC) carried out systematic activities as a governmental fund of venture capital funds and also as a development institute for the national innovation system.
The Investments of the Russian Venture Company
In its investment activities RVC took into consideration the general economic situation in the domestic and global markets in 2011. Special emphasis was put on increase in quality of potential investment projects, especially in their earlier stages and thorough preparation of all business deals characteristics.
The total amount of RVC’s investments since its establishment in 2006 has reached 9.1 billion rubles (i.e. about US$ 300 mln) — with 2.4 billion (i.e. about US$ 80 mln) or over 25% of the total invested in 2011. In December 2011 the overall number of RVC’s portfolio companies reached 101.
Figure 1. The investments of RVC’s funds by economic sectors in 2007-2011 (billion rubles)
Figure 2. The investments of RVC’s funds (%) into prioritized directions of modernization and technological development of the Russian economy in 2007-2011
In 2011 the funds with RVC’s share invested 2.4 billion rubles into 44 innovative companies — which makes up to 44% of the companies that have entered the RVC funds’ portfolio since the company’s establishment. Thus the total number of RVC’s portfolio companies has almost doubled.
To increase investment activities within prioritized economy branches and to develop the infrastructure for technological businesses, in the beginning of 2011 the concepts of the following funds have been developed and implemented:
These funds have started operations in projects’ analysis as well as in search of infrastructural businesses. As of December 2011 RVC InfraFund has already approved investments into 8 companies, and BioFund RVC has chosen 6 potential investees for consideration.
Most visible growth in both the amount of investments and number of portfolio companies of RVC’s funds can be observed among the IT/Telecom sector — 16 projects have been approved for investments totaling 1.4 billion rubles (i.e. about US$ 46 mln). In 2012 we expect growth in the sectors of intellectual systems, mechatronics, robotechnics and life science technologies as well.
Figure 3. The investments of RVC’s funds in 2011 according to economic sectors (million rubles)
Noticeable international activities that began in 2010 were further developing in 2011 with the help of two international funds established by RVC — Russian Venture Capital I LP и Russian Venture Capital II LP. These funds grant access Russian participants of the innovative processes to the best practices and technologies on the global innovative market.
In order to further develop investment activities in the state prioritized sectors of economy and to take the infrastructure of the Russian technological business to the next level, in 2011 concepts for several new cluster funds were developed and will soon be brought to life:
RVC’s activity aimed at the venturing ecosystem development
In 2011 RVC has implemented a number of infrastructural and marketing activities in the regions and on the federal level. The above activities were aimed at popularizing the ideas of innovation-oriented businesses, generating new technological projects and increasing the quality and accessibility of professional expertise for regional participants of the innovative ecosystem (i.e. representatives of regional technoparks and business-incubators, investors, entrepreneurs, mentors and consultants).
To the above mentioned activities refer the following:
1. BIT contest: a national contest of innovative business plans — “The Business of Innovative Technologies”, based on the principles of the successful MIT $100k competition. In 2011 over 3000 innovators from all over Russia and neighboring countries took part in BIT and registered over 700 projects.
2. Practical consulting sessions in the regions: three-day educational seminars for regional entrepreneurs with participants from regional venture funds and representatives of local business angel associations. 40 sessions were conducted in 2011 (which exceeds 2009 and 2010 combined). Over 500 projects were analyzed during the individual consulting sessions and several were picked out for further consideration by investors.
3. In 2011 corporate R&D related activities have been promoted ((including those involving Open Innovation tools) which RVC considers to be an important exit mechanism for technological start-ups and a way to reduce costs for venture investors. In cooperation with several partners RVC carried out research and issued a national paper on corporate R&D management. The first conference for R&D directors was organized together with an exhibition of innovative development road maps of Russian corporations; an R&D directors’ club was established. In order to train highly qualified human resources RVC and Moscow Institute of Physics and Technology (MIPT) launched a Masters’ program on corporate R&D management.
4. Specialized workshops on venture investment and technological entrepreneurship organizedas a part of youth – oriented innovative platforms and regional forums. In 2011 about 30,000 people participated in over 40 events. It is worth mentioning a special series of events organized in Moscow, Saint Petersburg and several regions in which the gurus of venture investment such as Richard Keywell (MIT), David Swinbacks (the Nature Magazine), Guy Kawasaki, Stephen Blank, Jerry Angel and other famous entrepreneurs took part.
5. The launch of “business-catalysts” i. e. “Venture-Expert” and “Glavstart”. The “Venture-Expert” helped select an investment attractive portfolio of 15 companies from two technological Universities.
6. Popularization of success stories in the media: in 2011 several special projects were launched in the media with the purpose to spread the word about the successes of Russian entrepreneurs. Among those are: “Technopark” TV-show broadcast on “Rossiya-24”, “Dialogue. Innovation” on RBC-TV, special guides on technological entrepreneurship and venture investment in “Business journal”, “RBC Daily”, “Kommersant” and other business media. RVC also supported the launch of a new magazine “Kommersant. Science” dedicated to scientific research and technological entrepreneurship. Also with the purpose to popularize success stories several “innovative” nominations were introduced by RVC and its partners into prestigious professional awards. Especially worth noticing is the annual contest - “Innovations in Russia through the eyes of Journalists” - first held in 2011. The overall reach of the above activities exceeded 15 million people.
RVC in the regions
As of December 2011 the Russian Venture Company has prepared and signed 26 cooperation agreements with the regional administrations in the sphere of both venture business and technological entrepreneurship development.
Starting from 2010 all the functions on monitoring, managing and controlling the regional venture funds have been delegated to RVC by the Ministry of Economic Development. Total capitalization of the 22 regional investment funds is over 9,2 billion rubles (i.e. about US$ 300 mln) with investments totaling 4 billion rubles (i.e. about US$ 133 mln). Within 2010 -2011 increase in the investments reached 27% and the number of portfolio companies has increased up to 50%.
Cooperation with other development institutes
In 2011 the Russian Venture Company has successfully collaborated with other development institutes. In particular RVC InfraFund was founded together with the public corporation MSP Bank (previous name — «RosBR»), RVC BioFund is a joint venture with RAVI investment fund.
Moreover, the following 6 venture capital funds with RVC’s share have been accredited with the Foundation for Development of the Center of Research and Commercializing of New Technologies (Skolkovo Foundation):
An agreement to accredit RVC’s Seed Fund with Skolkovo Foundation was also signed. A number of portfolio companies of the funds with RVC share became Skolkovo residents.
“In 2011 RVC has been operating in compliance with our business plan, — says CEO RVC Igor Agamirzian. — The quantity and quality of deals between RVC invested funds and Russian innovative companies corresponded with the current situation on the market and met our expectations. Constant monitoring of the venture ecosystem in the country was carried out in order to point out any “weak spots”, also measures for bridging the market gaps and breaking the barriers for technological business development were taken.”
“In 2012 the RVC’s team and the innovative ecosystem we are supporting has a lot of challenges to meet. Thus we plan to increase the amount of investments to be made by existing funds, create a whole range of new funds and also implement complex programs on globalizing the Russian innovative industry, heat up interest for innovative companies and the products they offer to the market, develop infrastructure of the innovative venture ecosystem, to increase the professionalism of all participants of the process and promote innovative activities as well”, Igor Agamirzian concludes.