The government will announce the creation of industrial venture funds

The fact that the government has prepared a whole range of measures to develop the venture capital market to support the IT industry was told to Vedomosti by two sources close to the Ministry of Digital Development and the head of one of the IT companies. Prime Minister Mikhail Mishustin may announce these measures as early as June 1 during the CIPR (Digital Industry of Industrial Russia) conference in Nizhny Novgorod, Vedomosti’s interlocutors say.

Also, Maxim Parshin, Deputy Minister of Digital Development, Communications and Mass Media, announced measures to develop the venture market at one of the conference panels on May 31. “We expect that based on the results of this CIPR, tomorrow, decisions will be made that it will be about creating industry funds – investment funds, venture funds – to develop Russian solutions,” Parshin said.

According to him, the current grant support mechanism should be used in exceptional cases, when the state understands the need for a particular solution, but at the same time realizes that there is no market for these solutions now and its creation will not pay off if the developers do it only for their own money. check.

In April, Minister of Digital Development Maksut Shadayev also announced the development of a set of measures to develop the venture investment market – for the development of the IT industry. Venture investments, he said, should replace the institution of grants, which are now being given to promising IT companies. “Grants are good, but we understand with you that our economy will continue to go through difficult times in any case. And of course, we need to have market financial institutions, market players that will, in general, attract, invest in IT companies,” the minister said.

According to Parshin, on June 1, the leaders of the industrial competence centers (ICCs) created a year ago will report to Prime Minister Mikhail Mishustin and “decisions will be made to correct further movement.”

In October 2022, Deputy Prime Minister Dmitry Chernyshenko, who oversees the direction of the digital economy, stated that the ICC had requested 190 billion rubles from the state. for the development of Russian software. According to him, the requested amount is calculated for three years, it is comparable to the annual costs for the purchase of foreign licenses by companies.

According to a Vedomosti source close to the organizers of CIPR, the plenary session will be attended by Interros and Norilsk Nickel President Vladimir Potanin, Rosatom CEO Alexei Likhachev, Severstal owner Alexei Mordashov and other top managers and owners of large companies . The composition of the speakers may change, he warned.

An Interros representative said that the company already has a Voskhod venture fund, established in 2021. “The fund is managed by an independent management company, and the main investor of the fund is Interros,” she explained. According to her, Interros is investing 10 billion rubles in the fund’s projects. within five years. Whether the company can create a new fund for the tasks set by the government, she did not specify.

The representative of “Rosatom” at the time of publication of the material did not respond to a request.

“A set of measures has been prepared and is being coordinated with the departments. Perhaps it will be discussed at the CIPR, ”a representative of the Ministry of Digital Development commented to Vedomosti on the discussion of the document. The Ministry of Economic Development is also involved in the development of measures. “The department received a document,” a representative of the Ministry of Economics told Vedomosti. “He is at work.”

The press service of the government forwarded questions to the Ministry of Digital Development, and a representative of Chernyshenko’s apparatus recommended “to follow the speeches and discussion (at the TsIPR. – Approx. Vedomosti) at the plenary session on June 1.”

According to the IIDF, the current venture capital market has shrunk by 10 times due to the fact that in 2022 many participants in the Russian venture capital market either suspended their activity or left the country, director of the IIDF Kirill Varlamov commented to Vedomosti on the current state of the segment. According to him, in 2023 investment volumes may grow slightly, “but one should not expect cardinal changes.” “If earlier investors counted on the return on investment through capitalization, now the focus is on the ability of a startup to generate profits and return investments through dividends,” he concluded.

In addition, the Ministry of Digital Development is counting on the status of a “systemically significant developer,” Parshin said at the CIPR session. This mechanism will work in such a way that the government will conclude a contract with any IT company whose solution it considers promising, but not finalized to the required level. The company, for its part, guarantees its completion to the parameters required by the government, as well as the search for the necessary funding for this. In return, the government provides the developer with preferences in public procurement on the “second extra” principle: that is, if this company offers its product, then companies without a similar status are not allowed to make this purchase, the deputy minister explained the principle of the new mechanism.

“We are actively working on the details of these agreements with developers, customers – everyone is ready to find money for this. The corresponding draft federal law on the definition of such a status and corresponding preferences has been prepared, submitted to the government, and the government submitted to the State Duma. We expect that it will be adopted this year and begin work,” Parshin concluded.

Since the start of the reform of development institutions in 2020, the activity of the state in creating funds has stopped, says Alexei Basov, managing partner of BSF Capital investment bank. “If before that, 3-5 funds were launched a year, mainly on the basis of the Russian Venture Company, then not a single one has been created over the past two years,” he said. According to him, the reformatting of the economy, like other new challenges, has generated a demand for investment, new products and replacement technologies, “which the country has not encountered since the 90s.”

“Industry funds are a classic tool for the accelerated development of industries experiencing a shortage of private capital. A number of segments, primarily those with separate regulation or a high threshold for entering the market, are now avoided by a private investor. Therefore, the decision that colleagues are talking about, if supported, will become a landmark. And it will mean the return of the venture model to the state tools,” Basov continued.

According to him, the model of the fund differs in many respects from the concept of industrial centers, which functioned as an institute for the development of the IT industry for the last year. One of the main differences is a more market approach to the formation and structuring of the portfolio. “But it makes no sense to compare these tools in terms of efficiency, they are relevant at different stages and in relation to different tasks of the state,” Basov summed up.

“According to Dsight’s forecast, in 2023 the number of transactions could reach 130-150, and the volume of investments could be about $400 million (excluding major transactions and IPOs),” Darya, head of research at the Dsight platform for venture capital investments, told Vedomosti in April Zharkov. She also mentioned the historic low in venture capital investment over the past seven years. At the end of the year, only 137 transactions were recorded, in 2021 – 306, the expert noted.