Government fund of funds
Development institute of the Russian Federation

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RVC presented Strategy of development of the venture market by 2030.

18.12.2018

RVC together with the Ministry of economic development of Russia presented a project of the Strategy of development of venture market and direct investments for the period till 2025 and further perspective until 2030. Strategy initiatives are aimed at extension of the number of active investors on the venture market, attraction of the foreign capital in Russia and stimulation of launch of the Russian projects on the international markets, development of infrastructure of support of technological entrepreneurship and perfection of legal base.

Strategy development is contemplated by the roadmap related to stimulation of innovation development of Russia approved by the order of the Government of Russian Federation in June 2017. On order of the Ministry of economic development of Russia, the strategy project was developed by RVC together with the international consulting company PWC.

Strategy target is to create in Russia mature venture investment industry, that implies increase of the annual volume of deals on the national venture capital market by 30 times by 2030 up to 410 billion rubles per year. Achievement of this indicator implies growth of the total capital offer on the venture market by 10 times up to 2.7 trillion rubles, increase of the number of annually created high technology projects by 2-2.5 timed up to 40 thousands, double extension of the market area for innovation products up to 10 trillion rubles, and increase of attractiveness of the Russian jurisdiction.

The strategy includes more than 40 initiatives aimed at elimination of the key barriers for development of the venture industry in Russia. They include removing of legal restrictions and creation of the economic incentives for launching new investor classes on new markets including non-governmental pension funds and insurance companies that take significant share on the global venture capital market.

According to the suggestions of the strategy, NPF will be able to get an opportunity to invest some definite limited funds in venture funds in the form of agreement of investment partnership selected during certification procedure. And the necessary corrections to the approaches used to estimate investment risks and stress-testing methodologies will be made. To launch the first NPFs on the Russian venture market, it is expected to implement pilot project aimed at participation of NPF in the funds with state capital. Principle of unsymmetrical distribution of profit will be used in such funds, thanks to it, NPF will be able to receive higher profit margins. Implementation of the strategy measures will allow the increase of NPF share in the venture capital funds in Russia by 2030 up to 10%.

In order to involve in the venture market the other important investors category — corporations — tax stimulation measures complex is included in the strategy. It implies reduction of tax base when calculating income tax when a corporate venture fund is created, a corporation participates in venture funds as LP and big business invests in technological projects. Target indicator of the volume of corporate capital on the venture market is 960 billion rubles by 2030.

Privileges in a part of the personal income tax and increase of limit of tax deduction should stimulate investments in venture projects from the private investors and business-angels. Besides, the strategy implies making amendments to legislation that will allow the participation of private individuals in investment partnership agreements that used to structure the most part of venture funds. In the field of tax regulation, it is offered to consider an initiative to reduce tariffs for deductions to the social insurance funds for small innovation companies to 14%.

In order to get access to the advanced international expertise, the strategy offers a possibility of tax privileges for foreign companies if their R&D centers are located in Russia and requirements of R&D localization are complied with. Launch of the program related to system investment of the funds with the state capital in the global venture funds and foreign innovation companies is planned as well. For accelerated launch of the Russian companies on the foreign markets, the creation of acceleration centers is expected; they will provide the complex of services related to search of the international partners and promotion of the products on the target markets.

Independent initiative block is devoted to increase of accessibility of the exchange market venues as a main instrument for attraction of the investments for the late stage companies. The documents offers measures to revise the rules of floatation for the fast growing innovation companies, creation of the special methodology used to prepare for securities listing and providing subsidies for the corresponding expenses. Besides, the strategy suggests provision of subsidies for bonds rates to increase attractiveness of the innovation companies for investors and launch of the program aimed at creation of pre-IPO funds. To make the work with debt financing easier for mature companies, it is expected to integrate crediting mechanisms secured against intellectual property.

Strategy measures related to development of infrastructure for support of the technological business are aimed at increase of the flow and quality of the projects. In particular, by 2030, launch of not less than 30 centers of shared use of the services for small innovation companies is planned (including customs services, registration of intellectual property rights, cooperative buying and other), as well as not less than 30 centers of testing and prototyping where the projects will be able to use R&D infrastructure, get mentors support etc. Initiatives related to development of competences of the venture community provides launch of the educational programs for technological entrepreneurs and venture funds specialists together with the global educational centers.

"The strategy sets an ambitious purpose to revolutionary transform landscape of the Russian venture industry, increase of attractiveness and comfort of our market for all categories of participants, achieve its competitive ability in global scale. Complex of the strategy initiative is developed by RVC in tight interaction and live dialog with the representatives of private funds and investors, development institutions, authorities, corporations. As a result, we received an application instrument for system and all-sided development of the venture market infrastructure on the horizon of nearest 5-10 years", Aleksey Basov, deputy general director — investment director of RVC commented.

"Venture investment market is a necessary finance instrument for scientific and technological development of Russia, which priority is fixed on the level of the key state strategic documents. The ministry implements a complex of measures aimed at development of venture market in Russia. In 2018, within the framework of execution of the order of the President of the Russian Federation creation of the corporate venture funds in the biggest state corporations and companies with state participation is ensured, amendments to the industry laws related to organization of the collective venture investments are prepared, a project related to support of the initial public offering, which will significantly extend opportunities of "exit" of the venture investors from the projects. Great attention is paid by the Ministry to the tax stimulation of the venture investments. Thus, in 2018, the decree of the Government of the Russian Federation No. 356 providing increase of the requirements to the maximum amount of market capitalization for innovation companies issuers of the shares and maximum amount of revenue for innovation companies issuers of the bonds, that make it possible to increase the number of such companies which investors can be released from capital gains tax. The developed strategy will also allow the implementation of systematic approach to development of the venture investment market in Russia considering the state priorities of the innovation and technological development", Artyom Shadrin, director of the Department of the strategic development and innovation of the Ministry of economic development of the Russian Federation.

"In the process of the strategy creation, we analysed experience of the state support provided to the venture market of more than twenty leading countries — from USA and Israel to China and South Korea. In virtually all examples, the state played the leading role in "launch" of the venture market mechanism, further actively participating in development of the comfortable legal environment. Strategy initiative are developed supported by the best foreign cases that brought definite and measurable economic effect. Target indicators are calculated based on the finance model considering current state of the Russian market and global benchmarks", Sergey Safonov, partner of the practice of consulting services provided to the financial sector, PwC in Russia noted.



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