Of cational one) worth a total of Rb. 10.3bn, including the said number 104 projects worth a total of Rb 5.5bn – out for the Corporation’s funds. Another 2 347bn, including ROSNANO’s co-funding in the projects were launched with the funding amounting to amount of Rb 140bn, were approved (in 2010 – Rb 0.2bn projects, Rb 146bn and 47bn, respectively). The Corporation allocated Rb 64bn for 49 projects, including32bn – in 2010. ROSNANO fulfilled its investment obligations by 11 projects. ROSNANO’s participation with Rb 30bn in creation of 8 venture funds worth a total of Rb 62bnwas approved. Of the said number 4 funds were financed (SkolkovoNanotech, Advanced Nanotechnologies, Nanomet, Rosnano Capital), of which 3 are up and running Vnesheconombank By late 2008 as a creditor contributed to financing of By late 2010 Vnesheconombank contributed to fund54 investment projects, of which contributed to 5 ing of 97 investment projects, of which to 94 – as a projects as an investor, too, while to another two creditor. As well, the Bank provided guarantees to projects – as a guarantor. The volume of loans on investment projects. The volume of disbursed loans implementation of investment projects accounted for accounted for Rb 306bn, the balance-sheet value of Rb 129.9bn. In 2008, the Bank started financing 21 stock the Bank acquired in the process of allocation of new investment projects in Russia support to the project was Rb 27bn, and the volume of guarantees provided was a. Rb 11bn. In 2010 the Bank began financing 27 new investment projects and disbursed Rb 126bn in loans on projects implementation, including Rb 61bn- on new projects, and invested in corporate stock over Rb 20bn Roseximbank By late 2008, the Bank’s credit portfolio accounted By late 2010, the Bank’s credit portfolio accounted for Rb 4bn, including some 2.5bn extended in the for Rb. 5.1bn, including some 3bn extended in the form of pre-export funding. The volume of loans form of pre-export and investment lending (aiming, as disbursed in 2008 was Rb. 29bn a rule, at modernization of equipment of manufacturing corporations seeking to reduce production costs of their exports). In the course of the year, Rb 3.7bn was disbursed (prolonged) in loans SME Bank In 2008, as many as 1,600 loans worth a a total of Rb. In 2010, MSEs were granted some 5,000 loans for a 7.8bn were disbursed to SMEs. total of over Rb 27bn. By the end of the year, the In all, since 2004, the Bank extended nearly 6,500 aggregate volume of the support to SMEs accounted loans to SMEs for a total of over Rb 23bn for, on an accrual basis, some Rb 80bn. In the frame of the “Financing for innovation and modernization” program in 2010 alone the Bank disbursed 12 loans for a total of Rb. 0.8bn * By 2008 RFTD had de facto terminated its project financing operations.
Sources: the official corporate reports, the development institutions’ official homepages.
RUSSIAN ECONOMY IN trends and outlooks Importantly, a number of Russian development institutions have lately substantially modified operations (or, at least, modifications began to emerge therein), and, as a rule, for the better:
• As the most visible recent tendency it is worth noticing the aforementioned activation of efforts to complete building the system of development institutions, primarily in respect to creation of new ones both by the state (Skolkovo Foundation) and by the already existing institutions (RVC and ROSNANO’s venture and infrastructure funds, among others – see Fig. 6);
• The processes of Russian development institutions’ integration into the global innovation system have gained a notable momentum: at this point, it would be appropriate to cite a string of programs with Vnesheconombank’s participation (co-funding of projects in the area of infrastructure, industrial production, energy efficiency and resource management with the World Bank; a joint program with EBRD on funding investment projects in the frame of the Russia-EU “Partnership for Modernization” initiative, and incorporation by RVC and ROSNANO of subsidiaries and foundations under foreign jurisdictions;
• An important operational direction for the institutions and funds in question has recently been support of development of various elements of the innovation operational (information, educational one, etc.) infrastructure. At this point, it should be noted that while creation by ROSNANO of the Fund for Infrastructure and Educational Programs allows to speak about incorporation of the respective operational direction in the individual legal entity format, creation, for instance, of the InfraFund and BioFund under RVC (in the focus of the latter are both innovation and service companies that deliver laboratory, informationanalytical and consulting services) constitutes the every initiation of the respective operational directions under the aegis of Russian Venture Company;
• Meanwhile, the development institutions have substantially bolstered their cooperation with respect to support of innovation activities. The most visible manifestations of the process in question are the “Agreement of the Nine” aiming at securing a perpetual funding of innovation projects1; bilateral agreements between individual funds and institutions, such as creation of the RVC’s Seed Investment Fund with participation of the Fund for Assistance to Innovation, the RVC running evaluation of projects that seek funding out of regional venture funds. Besides, it is worthwhile to note the recently started “mutual penetration” of managing structures of different development institutions, which is most visible at the level of their Boards (Advisory Councils);
• The search for optimal forms of organization of development institutions’ operations, shaping up new directions and instruments of support, including in pursuit of strategic prospects, is under way. To cite particular moves or core initiatives in this area suffice it to refer to the incorporation of ROSNANO and the planned for a foreseeable future privatization of a fraction (up to 10%) of the newly established joint-stock company’s stock; the transformation of RFTD from public institution into an autonomous one and renewal of its operations on supporting R&D with the emphasis on projects implemented in the frame of tech In 2010, a number of public development institutions, including Vnesheconombank, ROSNANO, the RF Ministry of Education, Fund for Assistance to Innovation and RVC, as well as 2 non-profits (OPORA Rossii and the Russian Association fof Direct and Venture Investment), and MICEX, and the Federal Agency for Youth concluded a cooperation agreement which provides for organization of a prompt information exchange about projects in progress to arrange for their “transfer” from one institution to another.
Section Institutional Issues nological platforms; the already repetitiously cited creation of RVC and ROSNANO’s funds; initiation by the Russian Bank for Development of the “Financing for Innovation and Modernization” program. It is also worth noting a practically completed process of development of strategic guidelines (plans, programs, etc.) for core institutions for years to come1;
• Development institutions have to some degree succeeded in solidifying trust in them through their leadership’s professional reputation. In this regard the most shining example is the composition of the RVC’s Board, with 3 out of its 7 members being independent directors and renowned business community representatives.
Fig. 6. The System of Existing Financial Development Institutions and the Ones under Development While considering the balance of the development institutions’ strengths and weaknesses (Table 20) it can be noticed that each of them is in possession of a substantial spare capacity to bolster operations on support of innovation: for example, the Fund for Assistance to Innovation could raise its caps on both the volume of support and the size of supported companies, as well as enhance its operational transparency and improve the overall performance; Vnesheconombank could bolster the innovation component; Rosinfocominvest could tackle nor The only clear “lacuna” today is the absence of such a public document for the Fund of Assistance to Innovation; however, it has already crafted a draft medium-term action plan.
RUSSIAN ECONOMY IN trends and outlooks mative hurdles to the start of its investment operation; and practically all the institutions could expand the array of forms of support and intensify their efforts to attract private resources.
Table Main Strengths and Weaknesses of Development Institutions with Respect to Support of Innovation Strengths Weaknesses 1 2 Fund for Assistance to Inno- Implements a grant-based scheme of support, no problems Financial resources are limited.
vation with “walking out” from the supported projects. A significant fraction of programs suspended during the A developed territorial structure in place, a broad “encom- crisis.
passing” of Russian regions, a well-developed evaluation The Fund’s support may go only into funding R&D and system. works directly related to R&D implementation.
Credibility, the possibility for a substantial scaling of A fairly low cap on support of a single project.
“Start” and “SMART” programs without lowering the Restrictions on subjects of supported projects (albeit not selection quality bar. so stringent) appear excessive on the seed stage and on Flexibility and creativity in shaping up new programs. the pre-seed one in particular.
Possibility for building a program of new directions of Possibilities for purchasing special equipment are considsupport, particularly with regard to small business – export- erably restricted by the effective standards1, ergo, probers lems with supporting start-ups where costly equipment is needed.
No approved development strategy and public performance reports available RVC Possibilities for flexible participation in creation of various Shift of the focus on creation of funds without cofunds together with private businesses. sponsors.
RVC’s lessen principle with regard to decisions on projects Due to the established prioritization (priority directions of selection generate general framework for private initiative development of research, technologies and technics, and and risk allocation. the list of critical technologies of RF) there may exist a In addition to “typical” venture funds, shaping up special- lack of attention to interdisciplinary projects, new, rapidly ized ones (seed, infrastructure, sectoral (BioFund). growing sectors that have failed to make it into the list of High activity, regular putting forward new practical initia- officially set priorities tives on creation of new funds, development of the innovation-venture ecosystem, etc.
RVC’s Seed Investment Fund With account of a substantially higher (compared with the Overly strict capping on marginal earnings of a company ‘Start” program) cap on support of a individual project –s potentially applying for support – in reality it is microthe possibility for implementation of investment-intensive companies, not even small-sized businesses which are projects at the seed stage across a broad spectrum of the- subject to support.
matic directions. Due to the innovation pattern of the “seeding”, the probNo caps on kinds of financial costs associated with projects lem of “walkaway” from projects.
implementation, flexible conditions with regard to projects Requirement to supported companies’ operations to be in implementation timelines. line with priority directions of development of research, Focus on capitalization of innovation firms. technologies and technics, and the list of critical techPossibility for creation in the future of a steady flow of nologies of RF appears excessive transactions on “walkaway” from projects with the help of the system of venture partners Regional venture funds Attraction of RF Subjects’ funds to develop the venture Low level of investment activity: as of late 2010 the industry. average transactions-to-fund ratio was just around 2 to 1.
A due account of the regional specificity of venture invest- The need for an “intermediary link” – The need for «rement, possibility for flexible “walkaway” timelines. gional funds for assistance to venture investment in Decreasing small-sized innovation companies’ costs of small-sized enterprises in the technical sphere most of access to support which are used to create a sole venture fund.
Requirement for RVC to run evaluation of projects seeking A broad representation of RVC on the funds’ Boards in the funds’ investment can positively influence the quality of tuned, with evaluation of projects can result in an excessupported projects sive concentration of real control powers in the hands of RVC.
Negative record of interaction with private management companies (in Tyumen oblast, Stavropol krai).
An insufficient level of the overall transparency of the system of created funds and their deliverables Skolkovo Foundation Considerable amount of support, grant-based operational The priorities embrace just a fraction of promising direcpattern. tions of technological development.
Possibility to combine financial support with other mecha- The current concept of the Foundation and the Innovation nisms provided for residents of the Skolkovo Innovation Center is better suited to accommodate large, wellCenter: large-scale tax, customs and tariff benefits, a simpli- established companies, rather than innovation startups fied procedure of employment of foreign workforce, softening administrative barriers to doing business with the use of an independent institutional regulation system Proportion of funds used to purchase special equipment may not exceed 15% of the value of the contract.
Section Institutional Issues cont’d 1 2 Rosinfocominvest Focus on a partial privatization, possibility to refine the Ban on the Fund investing until the moment the governscheme of attraction of private investment at the Fund’s ment reduces participation in its capital to 51%, the level which can prove effective in the ICT sector, along absence of any progress in attraction of private sharewith implementation of a broad totality in respect of short- holders and, as a consequence, the absence of the Fund’s term projects profile operations.