Investing "seed" stages: the case for ideas
Dmitry Vasyutinsky: Investing in the "seed" stages is a good initiative. It's up to ideas and projects.Obviously, we need to try different systems and methods in order to then evaluate what is better and what is worse.
It is impossible to develop an ideal mechanism while sitting in an office. And there was no such thing in any country in the world! Trial and error was used everywhere.
The Board of Directors of JSC "Russian Venture Company" (RVC) approved the financing of the "seed" stages of Russian innovations. A billion rubles have been allocated, but so far no specific financing mechanisms have been determined.
Dmitry Vasyutinsky, Director of the Department of Alternative Investments and Real Estate, Deputy General Director of Alliance ROSNO Asset Management, comments on the decision of RVC.
– What financing mechanisms do you think are needed, and which of the investors would be interested in investing in the "seed" stage?
– I think that, first of all, it should be interesting to business angels, that is, those who invest in projects at the seed stage, the earliest stage. This is how it happens, for example, in America, where the sowing stage is often financed by business angels. As for the financing mechanisms, they need to be determined. In any case, they must satisfy the state in terms of transparency, quality control over the intended use, since this is public money. For example, in America, where business angels have existed for a long time, there are no mechanisms. After all, this is an unregulated scheme: just private people gather and decide whether to invest in the project or not. In our case, the state should determine what mechanisms should be in place so that it feels comfortable allocating money at an early stage.
– Which companies are better for business angels to invest in? Are there any criteria?
– When it comes to the sowing stage, there is no company yet. There is only an idea that needs to be transformed into the next stage, which will give an understanding of what products or services need to be released, to which market, what is the volume of this market, what kind of financing is needed, what a business plan should look like. Therefore, it is impossible to talk about the criteria for selecting companies at this stage. As for industries, then, of course, business angels should invest in those industries that potentially give the greatest return in terms of the use of money. This is a fairly large list, but these are all innovative industries, those in which technological advantages are an important competitive "weapon", it is through them that you can grow a high capitalization and get the maximum return. These are telecommunications and the Internet, new materials and biotechnologies, alternative energy sources, etc.
– The head of the Ministry of Economic Development of the Russian Federation Elvira Nabiullina noted that there is a large shortage of projects in which money can be invested. Is it so?
– Yes, this is a huge problem, she is absolutely right, and we fully agree with her.
– There is a Bortnik fund that deals with venture investment issues. And there is RVC, which offers some alternative program. Are both of these tools necessary?
– I believe that instead of theorizing about which tools make sense and which do not, it is more appropriate to try them in practice, and then evaluate whether it made sense or not. The fact is that in Russia the processes from below are going badly and the state is a very important regulator, the initiator of many of them. Therefore, it is obviously advisable to try different systems and methods in order to then assess what is better for us and what is worse. It is impossible just sitting in the office to develop an ideal mechanism at once. And this has never happened in any country in the world! Everyone had a trial and error method. Market participants, including the state, looked at the results, quickly learned something, corrected mistakes and moved on. Therefore, we believe that it is advisable to try this form. Moreover, the Bortnik Foundation does other things: it gives grants to scientists, researchers, which in itself is the most important element. Without grants, young scientists and developers, we believe, will not be able to create any innovative economy at all. The Bortnik Foundation is the beginning of a certain innovation chain. A young scientist who has a qualification and is ready to engage in research and design work can receive, for example, a Bortnik grant in order to conduct R&D, register intellectual property. Then, if this person wants to commercialize the results of his scientific and technical activities, then, perhaps, he will go to business angels or to RVC and will not receive very much money. And after some time, he will be able to come to venture capitalists in funds that, as a rule, invest larger amounts than business angels. So I think that investing in the "seed" stages is a good initiative that expands the possibilities of financing new innovative companies.