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CAPITAL MARKETS

Russian state capital leads growth in tech sector

A Silicon Valley-style venture capital industry centred on Moscow might be unlikely, at least for now. But sustained state encouragement including funding could drive a boom in Russia’s high-tech industry. Dominic O’Neill reports.

Anna Chapman, a former spy, started this summer as editor of Venture Business News, a print and internet newsletter for Russian tech finance.

After the US expelled Chapman and others last year for being part of a Russian spy ring, prime minister Vladimir Putin said: "I have no doubts they will have interesting, bright lives."

But Chapman’s new job is in some ways just another patriotic mission. And participation in this mission – to grow Russia’s high-tech industry — is becoming more widespread.

Putin himself launched a so-called Agency for Strategic Initiatives in June, providing backing to medium-sized businesses in sectors where technological innovation is important. He mentioned pharmaceuticals in particular.

According to Putin, this is complementary – not a rival – to Russian president Dmitry Medvedev’s project to turn the Moscow suburb of Skolkovo into a hub for the development and commercialisation of new technologies.

State development bank VEB will invest in Putin’s project, with VEB potentially providing funding to companies selected by the agency. Last year, VEB approved plans to deploy 20% of its lending in the high-tech sector.

Up to now, Russia’s larger industrial companies have often been ill at ease deploying new technology.

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