Venera Petrova about the risks of developing the startup market

One of the topics at the Open Innovations forum last week was the state of the venture capital market in Russia – in 2023, the volume of such investments fell to $118 million (seven-year minimum) and even in comparison with the first year of the military operation in Ukraine decreased more than tenfold (see. “Kommersant” dated March 5). Compared to such a low base, the market is beginning to revive – at least according to the head of the Ministry of Economy, Maxim Reshetnikov. At least within the framework of the state RVC, a number of decisions have recently been made on the creation of new funds, and the launch of projects with the participation of industrial partners is being discussed. “For us, winter is most likely ending, some kind of thaw is coming, and one can even say that there is a smell of spring in the air,” the minister stated. At the same time, he made a reservation: one must be prepared for the fact that without state funds the technology sector “will not grow,” and the state itself needs “the right to make mistakes”—not all projects will result in results in the required time frame.

Another option for expanding state participation in supporting the venture market is described in the bill introduced to the State Duma last week on providing legal entities with an investment tax deduction when they make venture and direct investments in innovative projects of small technology companies (STC) through investment partnerships. In this case, the investment partnership agreement must be concluded for a period of at least five years without the right of early termination, assignment of rights or allocation of shares. The White House has already approved the initiative, noting, however, that it will lead to uncovered shortfalls in regional budget revenues. Whether in such a situation the subjects will want to give the right to deduction is a big question, until it is clarified, the idea designed to facilitate the creation of regional venture funds and increase the flow of money into the MTK looks overly ambitious.

First Deputy Prime Minister Andrei Belousov explains the “warming” in the venture capital market by the demand for technology – however, almost exclusively from large companies, for which since 2014, due to the Crimean sanctions, the paradigm of the global technological and scientific space began to change. The combination of expanding state participation in the venture market with reliance on the demand of only large Russian businesses, however, can lead to the fact that “large companies will very quickly create appropriate divisions within themselves and “pupate” startups. “Our task is to prevent this from happening in the next political cycle,” the official said: otherwise the wave of recovery in the startup market will soon pass. The startup market needs competition, and recently, due to systemic reasons, it has begun to fall sharply. The first deputy prime minister believes that corporate impulse alone will not be enough to form a stable market.