Government fund of funds
Development institute of the Russian Federation

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Igor Agamirzian Reported to the Presidential Commission for Modernisation and Technological Development of Russia’s Economy

27.07.2010

July 27, 2010—National University of Science and Technology MISIS hosted the 14th meeting of the Presidential Commission for Modernisation and Technological Development of Russia’s Economy, where Igor Agamirzian, RVC CEO, delivered a report entitled “Venture Capital Market: Global Trends and Russian Practice”.

Igor Agamirzian spoke about global venture capital market, its trends and key indices, and exposed the situation on Russia’s venture capital market, highlighting industry milestones and progress of Russian venture funds and backing his report with success stories of a few Russian innovation companies that got invested through venture capital tools.

Igor Agamirzian exposed the bottlenecks of Russian innovation and venture capital ecosystem, which, in his opinion, include the following:

— Russian law lacks an adequate form of incorporation of private equity and venture capital funds.
— Existing forms of incorporation for innovative start-ups are over-regulated and too rigid.
— Insufficient amount of grants for pre-seed innovators.
— Poor integration into the global innovation and venture capital ecosystem and considerable roadblocks impeding international transactions with innovative start-ups.

Special emphasis was placed on proposed efforts to develop the Russian VC market. Mr Agamirzian’s proposals to improve the institutional environment for venture funds and innovation companies included the following:

— To elaborate an appropriate form of incorporation for VC funds (or adjust the available form of simple partnership agreement) that would be as close as possible to the international standard employed by VC funds, i.e. Limited Partnership.
— To elaborate an appropriate form of incorporation for start-ups (or adjust the available ones, such as trust partnership) to enhance opportunities for efficient investment deal structuring.

Additionally, a new approach to joint stock companies was proposed. It involves amendments to the Federal Law “On Joint Stock Companies” with a view to:

— Lifting restrictions on shareholders’ freedom of contract;
— Improving protection of rights of investors of public companies;
— Allowing commitment-based equity financing.

Particular importance in RVC proposals was attached to increasing and improving support to small innovative companies. Finally, Mr Agamirzian proposed amendments to monetary regulations and control and customs legislation. These included: higher threshold to get a transaction ID for foreign trade transactions—USD 50—100 thousand against today’s USD 5 thousand, migration to e-form transaction IDs, review of competences of customs authorities as monetary control agents, favorable treatment to temporary import/export of specimens and amendments to monetary legislation allowing settlements with Russian citizens domiciled abroad in the currency of their country of domicile.

Today’s meeting of the Commission gave rise to a practical and indeed constructive discussion on the current situation and key avenues of development of Russian innovative and technology entrepreneurship and venture capital industry, noted Igor Agamirzian, RVC CEO. Venture investments is one of the most efficient tools to provide capital to innovation and technology start-ups with a globally proven reputation. That’s why the importance of today’s dialogue and decisions can scarcely be over-estimated. Efforts to create favorable environment for innovative and technology entrepreneurship are matched with pro-active support from Russian government, which has reiterated today that one of its priorities is to embark on an innovative way of development.

The meeting of the Commission also hosted an exhibition of portfolio companies of RVC backed funds, including: Russian Navigation Technologies, Seismoshelf, Innalabs, Spectralus, Competentum, Sonda Technology, MOBI.Money, Obninsk Pharmaceutical Company, Questora, Nanooptic Devices, Light Engines Corporation, Engo, TeraMAB, Incurion etc.

At our today’s exhibition, we presented over 15 innovative portfolio companies of RVC backed funds, said Jan Ryazantsev, Director of Investment and Expertise Department of RVC. Our portfolio includes more than 30 companies. We are positive that some of them will duplicate the recent success of Russian Navigation Technologies—a company fostered by RVC—VTB venture fund—that is, will follow all VC stages and go through IPO. Notably, RNT aroused much interest of the Commission members both as a technology commercialization model and a success story of public-private partnership.

RVC Seed Fund, that was launched late last year, closed its first deals in early June and has presented its portfolio company at today’s exhibition, noted Andery Vvedensky, Director of Programs and Projects Department, member of the Management Board of RVC. Our Seed Fund venture partner network includes more than 50 partners. Hopefully, our partners’ aggressive efforts will generate a good deal flow in the near future.

RVC as a development institute has proved it is in a position to play a pivotal role in developing Russian venture capital market and innovation ecosystem.



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