#6036
#9
Ekspert
January 22, 2002
Russia's Tender Feelings for American Finance
Russia may attract more investments if it is good to U.S. venture capitalists
By Dan Medovnikov
therussianissues.com
A representative of an American venture fund told our correspondent last summer that the Russians would be acting like idiots if they failed to use the current situation to their own advantage. "Your market is a mess. The new economy has not lived up to expectations, billions of our dollars are burning up and the stockholders are angry and disappointed. On the other hand, we catastrophically lack promising ventures for our investments," he said.
True, according to preliminary estimates, venture investments in the U.S. high-tech projects were worth 30 billion dollars in 2001, down three times the 2000 figures. Venture investors have lost faith in the U.S. model of scientific and technological progress. They no longer believe that it will be as effective as it used to be in the past. In the meantime, enormous financial resources have been accumulated. Furthermore, under U.S. laws, venture funds that fail to allocate their resources are subject to huge fines at year's end. It is only natural that the circumstances have forced American venture capitalists to search for new undeveloped areas, including Israel, China and India.
However, Israel is at war. China's local laws oblige foreign businessmen to invest venture super-profits in the local economy. India is still mono-cultural in technological terms and venture capitalists are not interested in investing billions only in software projects. Therefore, they are turning their eyes to Russia, especially because it has managed to preserve a relatively high scientific and technological potential. Furthermore, Russian laws on investment profits are much more liberal than in China. s. Western transnational corporations, including those from the United States, have beaten a path to Russia's hi-tech door over the last ten years. A representative of Dow-Chemical tried to convince us that the Novosibirsk Institute of Catalysis had accumulated the world's largest stock of chemical know-how and that the company was willing to obtain its licenses. Another U.S industrial giant, General Electric, has been successfully cooperating with a cluster of Russian power engineering companies that are fulfilling its order for the production of a mono-crystal turbine shovel. The Boeing concern and the Tupolev design bureau worked on a project to design a supersonic commercial plane for many years, the Texaco company decided to finance the efforts of the Moscow innovation firm Soliton-NTT to develop an electromagnetic canon for probing underwater oil wells, and the Intel firm has set up a joint venture in Nizhny Novgorod to make advance software. Hundreds of other examples could be given to demonstrate U.S. interest in Russian hi-tech ventures.
However, venture funds are a different business. Unlike corporations, they are guided by tough logic and include innovation projects in their production schemes. A branch of industry or a technological cluster to which a project belongs is not everything for a venture capitalist. He is much more concerned with the ability to resell the project quickly and at a higher price either at an exchange after all IPOs are placed or to a profile corporation if a project has been successfully launched. Things look pretty bad in Russia in this respect. Despite numerous attempts, Russia has failed to create its own NASDAQ, while local profile corporations have shown little interest in defining the innovative contour of their industries thus far. At the same time, Russia has just started to form its own venture funds and does not have dozens of billions of dollars, while Western transnational corporations will continue to finance the solution of its exclusive private technological tasks. That's definitely not enough for building a full-scale national scientific and technological strategy. So, it would be stupid to miss an excellent opportunity to attract U.S. venture billions to Russian innovative projects. There is no choice. We'll have to renew attempts to create our NASDAQ again, to stimulate the demand of domestic producers for our innovations and be tender with fearful and capricious American venture capitalists.
It is absolutely essential for Russia to compete with India, China, Israel and other potential rivals who will sooner or later become interesting to American venture capital. We are not idiots, after all!
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