In 2012, the ITMO University and the US-Israeli venture capital fund RSV have established the startup accelerator iDealMachine. In 2013, the accelerator entered the top 10 most active in Russia. This is one of the successful examples of attracting Western capital, which was discussed on 26 of April at the lecture by business angel Christopher Watson at the ITMO University. Unfortunately, history of iDealMachine is the exception rather than the rule for the Russian business innovation. British expert listed a number of problems that hinder investment in Russian startups.
Christopher Watson, the Oxford graduate, has already been working in Russia for thirty years. He works on the various programs of the European Union. Today he represents the British Venture Fund (trust) ORBIT (the Oxford Russia Business Innovation Trust). Since 2002 ORBIT cooperates with Russian organizations supporting technological innovation, and invests in domestic innovative projects early.
In particular, ORBIT participated in the "Start -Invest" Foundation for Assistance to Small Innovative Enterprises in Science and Technology, as well as collaborating with the Russian Venture Company. In 2006 ORBIT partnered with the Center for Family Medicine in Tomsk, to jointly develop the Center for Reproductive Technologies "Stor", which eventually was successfully bought by a new management company in 2010-2011. In just 12 years the fund ORBIT has invested about half a million dollars in four Russian-British company. Profits that ORBIT received from these projects will be reinvested in new Russian projects.
"So far, the Russian private investment in start-ups is lower than in the West. For example, since 1993 just in the UK more than 20 000 companies has been invested amounting to over 9 billion pounds", Christopher Watson said. He works in ORBIT since 2003. Delivering a lecture at the ITMO University, Christopher Watson noted that the practice of attracting British investment in Russia exists much longer than the fund ORBIT: trade relations of Muscovite Russia with Britain began in the middle of the XVI century and is still going on. Today, Western oil giants are involved in Russian corporations. Close partnership has led to the fact that since the early nineties of the twentieth century, Russia began to develop the western model of venture investment, supported by a number of European programs (eg , EUTACIS, ISTC, CNCP.
At the same time, foreign investors when entering the Russian market face a number of problems. Christopher Watson reported an extensive list of them. In assessing the market the business plans that meet western standards should not be used. Russian investors are reluctant to participate in co-financing projects and foreign investors do not meet the appropriate financial support. Bureaucracy delays the process of registration of joint ventures. At the same time, the Russian government organizations can not be engaged in commercial partnership without special permission, the process of obtaining which sometimes lasts longer than a year. Tightening business processes is a common problem of startups in Russia. Transfers between Western and Russian banks take too much time. Mail is unacceptably slow and courier services and telephone are too expensive. Most practical in such circumstances are Skype and email. The rapid development of start-ups is also prevented by human error. The difficulties of translation also make communication of Russian and Western partners less. Qualified Russian scientists have too weak expertise in business - however, few of them are willing to develop commercial skills. In Russian business traditions of delegation are not rooted. All decisions are usually made by a "boss", which leads to a lack of initiative on the executive level. Documents are also maintained not very well. It is difficult to attract investment also because of lack of an extensive list of "success stories" of Russian venture projects. An IPO is problematic to organize, companies are repurchased rare, and current conditions of commercial transactions not always allow maximizing of revenue.
Despite these problems, some Russian regions, primarily in Moscow and St. Petersburg have reached considerable success in relationships with foreign investors. These cities are located in close proximity to the center of political power and have incomparably greater share of federal funding, Christopher Watson said. At the same time, in the Urals and Siberia powerful technology centers are located. In recent years they have begun to compete with the historical “centers of power “ in Russia.