iR&Dclub conducts a roundtable on Corporate Venture Funds at INNOVUS

Research and Development Directors Club conducted a roundtable on Corporate Venture Funds within the XV Innovation Forum Energy of Innovation Development in Tomsk on May 22 - 23. The event participants spoke about the experience of corporate venture funds (CVF) creating in the world and in Russia. A training programme for pilot teams that manage corporate venture capital, which is part of a joint project of the Club and RVC OJSC, was also presented at the event.

The moderator of the event was the director of public relations and interaction with public authorities of NP Research and Development Directors Club Vladimir Costeev. He reminded the audience that the Russian Economic Development Ministry repeatedly addressed state-owned companies in 2011-2012 with the offer to think about creating a CVF. Only 5 companies expressed their willingness. Lack of motivation to create CVFs was demonstrated by a survey of companies conducted by the Club in the past year: 2/3 of respondents claimed that innovations were not the main factor in companies’ success and, therefore, it was not necessary to invest efforts and resources in their development. Has the situation changed?

Leading specialist in the innovation management department of the FSUE Russian Satellite Communications Company Vitaly Glavatskih described the company’s position regarding CVFs. It appeared that The FSUE Russian Satellite Communications Company realized, when felt the compulsion to innovate and analyzed the situation, that the situation in the industry compromised its core business. The last two satellites simply did not reach their target position because of poor equipment supplied. Innovation is required not only within an enterprise, but across the industry. The FSUE Russian Satellite Communications Company started to cooperate with RVC that had had prepared materials on aerospace cluster fund. The Satellite Communications Company is preparing to become a partner of the fund.

The decision to create CVF was proposed by RusHydro JSC. According to the head of the Innovation Development Directorate of RusHydro JSC Oleg Kalinko, the CVF will finance innovations not only in RusHydro, but in RAO ES of East which became part of RusHydro. It will also be responsible for the technology transfer, will accumulate intellectual activity results and sell them to both domestic and foreign markets.

Sergey Kortov, the vice-rector for innovations in Ural Federal University, gave another example of the fund’s creation. The university has not been forced to innovate unlike state-owned enterprises. It is a conscious choice of its management that puts innovation on a par with education and research - the main objectives of the University. Of course, it was also possible to fund innovations from other sources and not the Fund, but the paperwork would take from 0.5 to 2 years, while timing is one of the main factors for innovation. UrFU plans to make its existing Fund self-sustaining in 5 years, and generates a second fund to finance student developments.

CEO and Chairman of the Management Board of RVC JSC Igor Agamirzyan, in turn, explained why Russia still has not a dozen working CVFs. The thing is that Russian companies do not understand the use of CVFs. Meanwhile, the motivation may be different:

- management of company’s available funds;
- desire to be aware of the competitor’s market activity, a kind of ‘industrial espionage’;
- the development of an affiliate system in the industry;
- acquiring companies interesting to the corporation.

In addition, as noted by the managing partner of Bright Capital Valery Krivenko, there is a subjective reason: the availability of a fund in the company's structure helps to maintain a spirit of innovation, stimulates creative research within the company, does not allow to stagnate and become complacent with current achievements.

The discussion was summed up by the Chairman of the Investment Committee of Waarde Capital Vladimir Gromkovsky. In his opinion, it is necessary to develop the innovation ecosystem, that very rainforest (a term from the book of the same name), where giants and dwarfs, weeds and useful plants live together. And the greater the diversity of the Rainforest participants’ interests is, the more successful appearing ideas are.