Investors are changing their benchmarks
Russian venture may switch from ICT to biotech and medicineEkaterina Kalysheva, "Russian Business Newspaper" – Innovations No. 43-2011
The World Bank cited data according to which the global market volume of information and communication technologies is $ 3,279 trillion, while Russia accounts for only 1.8% of global ICT costs (1,770 billion rubles). Meanwhile, the Ministry of Communications previously announced data according to which the volume of the domestic ICT market in 2010 amounted to 1919.1 billion rubles. The World Bank report also indicates that the United States leads the world in terms of ICT costs – they account for 28% of total expenditures. The eurozone accounts for 26.1%, Japan – 9.3%, China - 8.1%, India – 2.2%. The report also notes that the Russian region is quite promising and can be useful to the BRICS participants, since "high-tech technical and engineering resources are concentrated in our country." Russia can also be useful because "it is adjacent to the key players in this market – China, Japan and the United States." That is why private equity and venture capital funds in Russia are most willing to invest in IT and ICT.
But experts believe that in the coming decade, the situation may radically change: recently, government agencies have most often provided assistance to companies in the field of healthcare and biotechnology.
Last year, more than $1 billion worth of transactions were recorded in the segment of information and communication technologies (ICT). With a total market volume of $ 2.4 billion, the share of ICT was 43%. The disparity in the distribution of investment capital by industry is particularly noticeable in comparison with the Western venture capital market. So, in the USA, IT companies attracted $ 7.2 billion last year, or 27% of the total investment.
At the same time, some experts predict that in the near future the share of IT projects will only increase. So, by the end of the year, the Russian Venture Company (RVC) is going to launch a cluster fund of information and telecommunication systems, mechatronics and robotics with an authorized capital of 1.5 billion rubles, which will be invested in robotics and the creation of IT infrastructure, the company said in a press release.
"There are several reasons why investors are willing to invest their money in IT startups," says Olga Uskova, President of the National Association for Innovative Development and Information Technology. "The information technology industry, which emerged in the 1990s, has formed a good base over the past two decades, which turned out to be necessary for Western investors who started working together with domestic developers."
"The dominance of Internet projects among the recipients of investments is due to the relatively low initial volume of investments, as well as the clarity and clarity of the business models of projects," said Ilya Ponomarev, a member of the State Duma Committee on Information Policy, Information Technologies and Communications. – But most importantly, Internet projects have a potentially high and fairly fast return on investment. The size of investments in Internet projects and software development, especially at an early stage, can be extremely small. Tens of thousands of dollars can sometimes be enough to start a project and organize a team. This opens the way to investments for those who simply do not own millions to invest in more "heavy" areas like energy. And since information technologies affect most modernization areas in one way or another, their more active investment support is inevitable compared to other industries.
As noted in the Cleandex report for 2010, there are no subsidies for biofuel producers in Russia, and one of its varieties – bioethanol – is completely equated to food alcohol, which is why it is subject to an appropriate excise tax, which is higher than the cost of a liter of conventional gasoline. However, there are also positive examples in the field of energy and energy conservation. So, we can recall the case of the Optogan company. The success of this project, created with the participation of Rusnano, is largely due to state support for the production of LEDs. But this is rather an exception to the rule.
However, interest in ICT in general and Internet projects in particular is a global trend, and here Russian investors are simply trying to keep up with their foreign colleagues. The success of Google, Facebook, Skype is in plain sight, and this naturally generates a desire to earn a lot and quickly, experts say. "Internet services and software are the only industry in the world in which it is possible to grow a company from zero to a value of billions of dollars in one year," Ilya Ponomarev is sure.
As much as the activity of Russian investment funds in the IT sector is noticeable, their activity in other areas seems to be just as modest to the market. The Russian Association of Direct and Venture Investment (RAVI) in its market review for 2010 draws attention to investors ignoring companies in such areas as ecology, alternative energy, new materials: "At the same time, these industries are the object of active interest of investors abroad, not least due to various measures to support these industries from the state." Such a disparity can lead to a situation of catching up with the development of these industries in Russia, analysts of the association warn. Indeed, all over the world, one can observe an increasing strengthening of the position of clean technologies in the list of investors' interests.
According to Cleantech Group, last year venture funds in North America, Europe, India and China invested $ 7.8 billion in companies in this sector, which is 28% more than in 2009.
In addition to energy, Russia remains in a catch-up position in terms of investments in healthcare. So, in 2010, American companies from this sphere attracted $ 7.4 billion. Moreover, the main investments in the amount of 3.4 billion dollars went to the biopharmaceutical sector. At the same time, the RAVI report did not include a single investment transaction related to the Russian biotech. "The lack of interest in projects from this area on the part of private Russian funds is quite understandable," says Olga Uskova. – In order to develop innovative products in this industry, a serious infrastructure is needed. Such a startup will ask for money for a laboratory, equipment, conducting preclinical and clinical trials. The only way out is to outsource some of the work, and to foreign companies, which, although less expensive, is still a costly matter. Only the presence of a powerful infrastructure leads to more active investment in biotech startups in the United States – 14% of the total volume of venture investments of $ 26.2 billion."
However, according to RAVI's forecasts, it will soon be possible to talk about a new positive trend. The Association recorded a 40% increase in the total volume of investment transactions in medicine and healthcare in 2010, in which $ 53 million was invested. So far, however, this is only 2.1% of the total volume of last year's investments. To a large extent, these industries owe their growth to venture capital funds created within the framework of public-private partnerships. Thus, RVC funds invested 1.4 billion rubles in medicine and pharmaceuticals in 2010.
"The balance of power in the venture capital market will still change," says Ilya Ponomarev. – New specialized funds, which are created with the participation of state institutions, can become drivers for new industries. So, at the beginning of 2011, the RVC Biofund began its work with a planned authorized capital of 1.5 billion rubles. His goal should be to invest in service companies that will provide consulting, analytics, and laboratory services to new projects. Ideally, the fund will have to create an ecosystem in which biotech startups can appear and develop."
At the same time, so far, the share of innovative drugs on the Russian market produced domestically is, according to experts, less than 1%.
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06.12.2011