what is skolkovo

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What is Skolkovo? Russian initiatives to support national innovation ecosystem Ponomarev, rman, Hi-tech Development Subcommittee, State Duma sor for commercialization, Skolkovo Foundation 30/11/2010

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Page 1: What Is Skolkovo

What is Skolkovo?Russian initiatives to support national innovation ecosystem

Ilya Ponomarev, Chairman, Hi-tech Development Subcommittee, State DumaAdvisor for commercialization, Skolkovo Foundation 30/11/2010

Page 2: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

President’s call for modernization • Medvedev’s “4i” initiative

– Infrastructure– Institutes– Investment– Innovation

• Presidential address to the parliament in 2009 was focused on innovation– Most fashionable discussion topic

• Pres. Obama “reset” policy assumes that US and Russia are building common values– Creating a compatible innovation

ecosystem is a perfect example

Page 3: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Myth #1. Russia’s ecosystem lacks finance

• Government created numerous financial institutions

– Equity financing• Rusnano – $10b investment company• Russian Venture Corp – $1b fund of

funds• Rosinfocominvest – $150m PE fund• Bortnik Fund – seed and pre-seed

grants– Debt financing

• Vnesheconombank– Infrastructure support

• Hi-tech parks• Special economic zones• Skolkovo Foundation as an entry point

• Many large businessmen are thinking about investing in hi-tech

• Some VCs are formed, many with foreign capital

Page 4: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Real problem with finance• No exits within the

country• Lack of internal demand

– Foreign technologies usually preferred over Russian

– Government is absent• Deficit of physical

infrastructure– Inexpensive offices– Business services– Quality housing

• No experienced investors

Page 5: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Myth #2. All is needed is some legislation changes

• Russia’s legislation made a significant progress during recent decade– Corporate law– Securities law– IP regulation is copied from German

IP law– Tech transfer law (similar to Bayh-

Dole Act)– …

• Skolkovo Law unveils possibility to solve many issues “manually”– Taxation– Immigration– Construction permits

Page 6: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Real problem with legislation• Law enforcement• Some Russian laws are incompatible

with usual approach legal acts:– VC regulations – to be fixed soon

• No LLP form• VC funds in Russia are regulated as mutual

funds– Corporate legislation – options, stock

series– Technology transfer act – bureaucratic

• In some Acts bad wording leaves room for unfavorable misinterpretation– Software VAT exemption act– Privacy protection act

• Main points of immediate attention– State procurement act– Internet crime liability definition– Bankruptcy regulations– e-Payment systems– Miscellaneous industry-specific acts

(telecom, advertisement, mass-media, …)

Page 7: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Myth #3. Russia’s R&D is full of projects

• Huge Soviet legacy of technological ideas– Primarily in places like

Novosibirsk Akademgorodok• No practical knowledge of

handling IP rights• High desire to get involved

in commercial activities, but– No experience – Unadequate self valuation– No desire to follow the market

and find niches

Page 8: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Main problem of Russia’s innovation ecosystem – human resources

• No entrepreneurs, even less –experienced serial entrepreneurs– High entrepreneurial potential of Russians is

focused on avoiding govt regulations – Russians are willingly taking economic risks, but

current institutions punish such behavior• Lack of international business experience and

proper connections– No success stories to follow– Language barrier

• Education reform is controversial– Education, research and industry are disconnected– Heavy impact of brain drain– Demographic crisis of 1990s starts to hit– No adequate business schools, professors with

first-hand experience• Negative legacy

– Decreased level of people’s geographical mobility– Excessive concentration of business activity in

Moscow, colonial policies towards other regions– Housing and utilities deterioration

Page 9: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Objectives of Skolkovo1.To develop Russian innovation ecosystem by

creating a universal entry point to– Globalize Russian businesses– Localize international businesses to start R&D and

hi-tech manufacturing2.Create in Russia new companies and/or their

divisions, to develop new hi-tech services and products

3.Attract foreign specialists and support local talents in hi-tech

Page 10: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Key principles• Project is managed by a non-for-profit

Skolkovo Foundation, governed by a special law

• Project participants receive set of business services as well as certain incentives for companies with revenues up to 3 bln. Rbl.:

– 0% profit tax– 0% VAT (optional)– 0% property tax– 14% social payments– 0% custom duties

• Each structure unit of Skolkovo is an independent business with its own P&L

– Each department is supposed to grow into self-sustainable operation

– Each service is to be provided on competitive basis• Business model is developed as a private-

public partnership, but assumes separation of public and private funds

– After a while Skolkovo Foundation should become independent of state funding

Page 11: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

On-site project components• Office premises• Labs and small-scale

manufacturing• Residential space• Shared facilities and services:

– Prototyping centers– Financial services– Business incubators– Customs– IP support– Security

• New technology university (“Russian MIT”)

• Social and recreation space– Cafes and restaurants– Medical care– Schools and kindergartens– Entertainment

Page 12: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Admission• By decision of Skolkovo Foundation Board, based on

simple and transparent Admission Policy– By recommendation of accredited partners

(funds, hi-tech parks, business incubators, etc.)• Different types of residents with different set of

incentives:1. Intl. hi-tech companies (?)2. R&D centers of Russian/intl. low-tech

companies3. Mature Russian hi-tech companies (?)4. Hi-tech startups

• Different types of partners (?):– Hi-tech parks and SEZ– Investment funds– Banks and investment consultants– Marketing companies– Consulting and legal companies– Patent attorneys

• Participants should comply with Skolkovo mandate:– Based on new technology– Match one of 5 presidential priorities– Have link with a university– Be international

Page 13: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Skolkovo as an innovations hub

• Skolkovo is not just a special territory, it is a development tool for the whole country– Up to 2014 residents are not

required to be physically located in Skolkovo

– Admission is not a formal bureaucratic procedure, but decision of competent Skolkovo Foundation Board

• 50% Russians, 50% foreigners– Simple application at Skolkovo

web site and 5 minutes presentation to the Board

– Board does not verify the quality of the project, but makes the binary yes/no decision, whether it complies with Foundation mandate

– Regional network is based on hi-tech parks and SEZs

Page 14: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Commercialization chain

Education

Research

Business incubatorsCommercialization

Investments

Real estatePR & marketing

Page 15: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Education• Objective – to create and

manage a new technical university to create innovative environment and provide residents with high quality talent pool:– Initially graduate and

post-graduate– Partnership between MIT

and Bauman university

Page 16: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Research• Objectives:

– To create a network of leading-edge R&D labs as joint projects between foreign and Russian scientists

– To coordinate research activities to achieve highest chances to commercialize

– To provide equipment for dedicated and shared labs

• Technological clusters according to the 5 presidential priorities

• Coordination with Science Council chaired by Alferov and Kornberg

Page 17: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Commercialization• Objectives:

– Search for promising technologies both inside and outside Russia

– Consult entrepreneurs to create proper product lines

– Assist in creating companies– Introduce start-ups to potential customers

and investors– Facilitate proper IP protection

• Supervised units:– Technology brokers/business development

companies– Patent attorneys– Consultants– Training and mentorship programs,

internships– Project competitions– Skolkovo rep offices inside Russia (hi-tech

parks and SEZs)– Skolkovo rep offices overseas– Market research

• Dedicated Investment Council

Page 18: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

What are bus.dev. companies• Tech. broker/business development

company – private organization, which is – working on creation of new businesses and/or

IPs, – babysitting inexperienced entrepreneurs, – doing matchmaking between entrepreneurship,

investors and potential customers,– assisting in entering new market/jurisdiction

• Tech. brokers receive mandate to represent Skolkovo on a certain territory or in certain industrial domain

• Tech. brokers minimal costs are compensated; but real money comes from upside

• Each legal entity, created with assistance of tech. broker, transfers some of its equity to a dedicated Skolkovo Foundation commercialization fund/endowment

– No participation in existing companies– Broker in fact invests services as an equity

• Tech. broker is entitled to 20% of fund’s upside upon exit

Page 19: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Investments• Full scale of investment

tools– From pre-seed stage to

mature stages• Components:

– Cloud of business incubators– Network of partner funds– Skolkovo cluster funds

(5 special purpose finance units)

• Coordination with Rusnano and RVC

Page 20: What Is Skolkovo

Ilya Ponomarev, State Duma, 30/11/2010

Major milestones• Skolkovo Regulation Act –

September 2010• Skolkovo business model –

October 2010• Rep offices in Silicon Valley

and Boston – 2010• Admission of projects –

from December 2010• Nation-wide projects

competition - 2011• University deployment plan –

February 2011• Skolkovo construction –

2011-2015