what are the problems faced now a technology company, and what kind of support do you offer?
Alexander Povalko: RVC generates a package of priority measures to support technology business, which consists of two blocks. The first one focuses on the company’s National technology initiative (NTI), the second – on high-tech small and medium-sized businesses.
many of the companies in the STI are now not enough resources to accomplish performance of projects, in particular, to provide the required level of co-financing. Not to stop projects on formal grounds, we propose to temporarily revise the requirements.
we Also plan to allocate among the projects STI are those that have the potential for solving problems associated with the pandemic and all around it. There are quite ready to launch projects that can work to fight the virus – for example, one may produce a test system, the other develops inhalers, providing targeted delivery of the drug into the respiratory tract. Our challenge now is to maintain their resources as quickly as you can to bring these companies from the test phase and validation of hypotheses on market. Projects in which this period is more than 4-5 months, now not a priority.
in Addition to medical projects, very fast growing request for services to provide remote life – from video conferencing to distance learning. Many are faced with the fact that the system is not designed for such a large increase in users and begin to choke. They also need resources to infrastructure worked steadily and cope with the increased load.
a Separate task – to reduce transaction costs for projects and reduce the bureaucratic procedures for granting support. Now changing the reporting system, as internal control is practically impossible. We expect to quickly approve new requirements for the description of the projects, radically reducing the amount of information that you must provide.
What measures are developed for technology companies, not related to STI?
Alexander Povalko: Small and medium-sized high-tech companies we want to offer resources to multiple tasks. The first and most obvious, which somehow many are already working, is saving commands. It is very important to prevent the loss of people and technology. For this kind of support for the big request. In addition, we see that a significant part of the companies – about a third – consider the crisis as the possibility of expanding into new markets. Business activity is reduced, the part of more cautious companies and investors are leaving certain markets and niches. For others it is the opportunity these markets to take, to build new supply chains. And for that we need the money – in particular, low-interest loans for the implementation of export and government contracts, tools of compensation of exchange rate differences in the purchase of imported equipment, the mechanisms of compensation of expenses on the development and attraction of new talents. As an investment Institute, we can offer at this time of much-needed liquidity for the technology industry.
For export support we plan to offer a separate comprehensive product – low-interest loans, grants and entrance to capital at a fair valuation. This combination is, we think, will take a fair position in respect of companies that are ready to move forward. On the one hand, not lifting them to the free resources on the other – while maintaining their attractiveness to investors for future rounds of investment.
first and foremost, we orientirueshsya for those who are able to attract investors in syndicated projects. In different directions, many dozens of projects. The grants were discussed in the range of 50-100 million rubles for the project. Low-interest loans to be used for co-financing up to 50% of the contract amount.
When both units support measures start working?
Alexander Povalko: with regard to the draft STI support measures will soon be submitted for approval to the Interdepartmental working group of NTI. Those support measures, where we are talking about the tools mers will be discussed at the next Board of Directors.
In March investors at a meeting with the President discussed the possible creation of a new Fund of funds – how is now a good time to do this?
Alexander Povalko: I Think that a good. It will significantly increase the amount of venture capital in the country. The main role of the new Fund is to create a system of investment projects on later stages. In recent times, such investors have become major corporations. But in turbulence it will be more difficult to make decisions, many will go the way of reducing costs – is a familiar scenario in crisis.
At the same time, corporate venture funds have gained a significant speed only in the last year. There were more than hundreds of trades, and with the participation of industrial and financial holdings. Running funds with the participation of Rosatom, Gazprom Neft. About plans on creation of funds has announced the Railways and STLC. Quite a lot of time was spent on changing the thought patterns of the corporate giants.
Now it is important to see that the crisis is an opportunity to diversify its business through investment in new projects. And with this kind of solutions the business can help – for example, through tax incentives for corporate in��esterow. We have in the development Strategy of the venture capital market have been proposed such measures. Breaks for corporations that participate in the funds as limited partners (the limited partners – Ed.). For them it would be a significant incentive instrument.
Recently in the state Duma introduced a bill on the so-called “right to risk” in venture capital investments. What is it about?
Alexander Povalko: the Amendments to the law on science and scientific-technical activities was presented to the state Duma, Ministry of economic development. RVC was one of the authors of the document. “Right to risk” provides venture capital funds regulatory and legislative guarantees related to the special nature of such investments. Venture projects with a wide range of potential risks, starting with technology and ending with the market. The inability of the funds to return the investors ‘ money is not always tied to competencies of managers. Even the most successful of them have taken off and not taken off the projects in the portfolios. Venture project can “break” almost any stage. Can be a wonderful technology, but the market applications it finds. Or brought a product to market, but something has changed – the coronavirus came – and you and your product is not interesting. Before each disruption potentially created risks for investors. The amendments removed from the Manager the need to prove that he is innocent, if the idea was implemented poorly.
Change is correct, but we cannot say that this is a finalization of everything that could be done for the development of the venture capital market. Remain, for example, tax incentives, about which we spoke. Even changing the order of calculation of tax will make venture capital more attractive. This is a very important task, especially now, when technology projects will need additional funds to survive and develop further.
What role should play institutions? And how do you measure the results? In February, the Chairman of the Federation Council Valentina Matviyenko, for example, criticized Federal and regional development institutions for economic inefficiency and offered to do a revision.
Alexander Povalko: the Activities of the development institutions should be completely transparent both for authorities and for companies. It is important to fix a specific performance and to give everyone the opportunity to quickly and visually assess how they are executed.
the Main direction of the RVC’s work today – the creation of venture funds together with private investors, including large domestic business. The funds in turn invest in high-tech companies. It is the amount of funds and proinvestirovany��x these Fund companies, the main indicator of the effectiveness of RVC.
Today, with the participation of RVC capital, there are 29 funds for 2019, the size of their assets grew by more than a third. In the Fund portfolio includes more than 170 companies from different industries – medicine, energy, health, new materials. RVC invests annually an average of about 30 projects. We regularly monitor the portfolio quality on a number of criteria: potential for value growth, the demand for the technology market and export potential. There is an important “secondary” indicators derived from investments socio-economic effects. These include the created results of intellectual activity, paid to the budget taxes, new jobs.
By the beginning of this year in portfolio companies of RVC funds created about thousands of development – REED (of the results of intellectual activities), these companies paid to the budget more than 10 billion rubles in taxes and created 5 million jobs. And not just hired 5 more employees, and has attracted professionals for unique solutions to high tech problems. Last year, the export revenues of our portfolio companies was approximately $ 100 million. Their products are in demand in Japan, China, USA, UK. Economy-wide figures may seem insignificant. However, the venture capital market and in foreign countries is only a fraction of a percent of GDP – 0.4% United States, 0.5% in China, 0.6% in Israel, and the role of the venture capital industry is huge. Developed technological economy understand this and keep the focus on this area. About half of all current companies listed on the stock market, past the stage of venture financing. Among them almost all the tech giants.
the gap in the amount of venture market of Russia and Western countries still large, but since 2006, the market of direct and venture investments in Russia has increased more than eight-fold in ruble terms. Our long-term goal – fold increase by 2030 the share of venture capital market in the national GDP, to about 400 billion rubles a year. To get closer to its achievement, we, together with other development institutions is still a lot of work to increase the quantity and quality of venture projects and the creation of favorable conditions for private capital.