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CONTENTS EXECUTIVE SUMMARY

New efforts to modernize the Russian economy have taken

04. Can high-tech hubs help on even greater significance since the implementation of
to modernize Russia? Western sanctions and recent volatility in global energy
BY George gogolev markets. As a result, a renewed focus on technological in-
08. A strategy for the novation could be one way to diversify the Russian economy
development of Russian and insulate it from external economic shocks. Most im-
technoparks portantly, the commercialization of new innovations could
BY Andrei shpilenko
provide a long-term boost to Russian economic growth and
16. How to create a favorable consolidate gains for Russia’s emerging middle class.
environment for technology The federal government, which has always played an im-
hubs in Russia
BY Russian Ministry of
portant role in the development of Russia’s innovation sec-
telecom and mass commu- tor, now faces a number of critical strategic questions of
nication
how to develop regional innovation ecosystems in a time of
18. Can Russia become an increased isolation from the West and decreased funding
innovation leader? for science.
BY oleg buklemishev
One major initiative to bridge the innovation gap has been
22. Case study: Three to channel resources – both financial and administrative –
centers for Russian into the creation of new technoparks, high-tech hubs and
innovation.
#1: Skolkovo Innovation innovation clusters.
Center In the report below, we highlight the early successes and
BY alexei sitnikov
challenges of Russia’s modernization drive, with an em-
23. #2: Bauman Moscow phasis on the role of the state in guiding and supporting
State Technical University innovation efforts at the local level, primarily through the
BY evgeny starozhuk
creation of new technoparks. In addition to highlighting
24. #3: The Troitsk several case studies of Russian innovation at work – includ-
Technopark ing the Skolkovo Innovation Center in Moscow – the report
BY sergei sharakshane
analyzes the most important factors in Russia’s long-term
27. Russia’s long-term transition to an innovation economy and provides multiple
transition to an innovation steps to help Russia realize its full potential for innovation.
economy
BY kendrick white

28. Top 10 recommendations

for Russian innovation
entrepreneurs
BY kendrick white

28. Editor’s picks

press photo
 REPORT

FROM Making sense of

THE
EDITOR Russia’s modernization
initiatives
Sanctions and the growing isolation from the West continue to
influence the development of Russia’s innovation economy, at
least in the form of the deterioration of the investment climate
and increased economic instability. Modernization of the Rus-
sian economy, which is now cut off from Western foreign loans
and still heavily dependent on oil and gas revenues, becomes a
matter of survival.
In this report, we decided to look closely at the hubs where In addition, Oleg Buklemishev of Moscow State University
Russian innovation is being developed today. In doing so, we gives a highly critical assessment of the current efforts to mod-
are trying to make sense of the most recent modernizing initia- ernize the Russian economy. He insists on three alternative
tives and sort out the vast array of new technoparks, high-tech ways to capitalize on Russia’s advantages in order to transform
hubs and innovation clusters. the economy and create new breakthroughs in the field of
The co-authors of our report are on-the-ground practition- innovation.
ers and leading thinkers of the Russian innovation economy. This Russia Direct report also contains three case studies of
George Gogolev of the Russian Venture Company (RVC), a Russian high-tech hubs and specific recommendations for
joint-stock company created by the Russian government with Russian innovation entrepreneurs from Kendrick White, a U.S.-
a mission to help set up Russia’s own venture capital industry, born entrepreneur with more than 20 years of investing and
writes about the challenges of transitioning to new models of management experience in Russia.
innovation in the country whose industry still largely relies on I hope you will enjoy this report. Please do not hesitate to send
old internal Soviet R&D supply chains. me an email at e.zabrovskaya@russia-direct.org if you have
Andrei Shpilenko of the non-profit Association of Science any questions or suggestions.
Parks in High Technology gives a detailed overview of Rus- We value your feedback, especially as we are preparing to
sia’s technology parks and provides a briefing on the newly launch a paid subscription model for all of our reports. For
adopted framework documents in this field. His analysis is fol- more information about the Russia Direct paid subscription
lowed by a commentary from the Russian Ministry of Telecom model, please go to our website www.russia-direct.org.
and Mass Communications, which sheds light on the Russian
government’s priorities in creating favorable environment for
technology hubs.
Ekaterina Zabrovskaya, Editor-in-Chief

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Ekaterina Zabrovskaya Editor-in-Chief Pavel Koshkin Executive Editor Dominic Basulto Executive Editor, U.S. Ksenia Zubacheva Managing Editor
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INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015

 RUSSIA-DIRECT.ORG

AUTHORS

OLEG BUKLEMISHEV is an associate professor in the department of economics at

Moscow State University. From 2000 to 2004 he was an assistant to the prime minister and
deputy director of the secretariat of the prime minister of Russia. From 2005 to 2012, he
was chief analyst and member of the board of directors at NGO MK Analytics. He is author
of the book, “The Eurobond Market” (1999).

GEORGE GOGOLEV is head of the Innovation Ecosystem Development at

Russian Venture Capital, a state funded agency which finances developments in Russian
high-tech. He previously served in sales, marketing and PR positions in various fast-
growing tech companies in Russia. Gogolev is also an active investor and holds a Ph.D. in
geography from the Russian Academy of Sciences.

SERGEI SHARAKSHANE is the spokesman for the Russian Academy of Sciences (RAS).
Holding advanced degree in mathematics and philosophy, he spent 40 years working in journalism
and served as an assistant to the Press Minister in two ministries during the Soviet Union. In addition
to his work as a spokesman to the RAS, he is also a member of the expert council to the ‘A Just Russia’
party faction of the Russian State Duma.

ALEXEI SITNIKOV is the vice president of Institutional Development and Executive

Secretary of the Board of Trustees of the Skolkovo Institute of Science and Technology. Prior to
joining Skolkovo, Sitnikov served as vice president for operations and development at the New
Economic School in Moscow and held the position of program coordinator for Russia at the
Freeman Spogli Institute for International Studies at Stanford University.

EVGENY STAROZHUK , Ph.D., is provost of economics and innovation at Bauman

Moscow State Technical University. An expert in financial management and credit who
attended the Russian Federation Financial Academy, Starozhuk served as deputy director
of the N.N. Andreyev Acoustics Institute (2007-2009). He most recently served as general
director of the Atoll Research Institute.

ANDREI SHPILENKO, Ph.D., currently serves as the director of the non-

profit Association of Technoparks in High Technology and chairman of the board
of the Youth Innovation Center. Shpilenko is an expert and innovator in youth
entrepreneurship, startup businesses, and partnerships between the public and
private sectors.

KENDRICK D. WHITE is the vice rector for Innovation at the Lobachevsky

State University of Nizhny Novgorod (UNN) and the director of UNN’s Technology
Commercialization Center. He is also the founder of Marchmont Capital Partners, LLC,
and a U.S.-born entrepreneur who has built unique know-how in commercializing
early stage, high-tech investment projects over more than 20 years of investing and
management experience in Russia.

2- 3
Can high-tech hubs help to
modernize Russia?
Faced with numerous economic challenges, Russia needs a new
strategy to boost its innovation development.

GEORGE GOGOLEV

T
he late 20th century has seen a major evolution of the innovation model
from structured vertical corporate research and development (R&D) sys-
tems to distributed startup ecosystems.
As the corporate model gradually dissolved in the 1980s and 1990s due to in-
creased global competition and falling margins, venture capital firms and start-
ups have started taking over this niche.
However, the efficiency of the new model depends on the critical mass of
knowledge, business, capital and proper governance concentrated in certain
geographical regions.

INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015


The most successful ecosystems in the U.S., for
example, developed around the best universities, in-
cluding Stanford, MIT and Harvard.
These schools provide a good interdisciplinary
knowledge base, as they host a diversity of schools
(Science, Arts and Humanities, Medical, Law and
Business, Engineering) and boost the ecosystem
around them by attracting and providing the best
human capital on the planet.
HOW RUSSIA TRIED
TO KEEP UP WITH THE REST
OF THE WORLD
As the world was transitioning to new models of in-
novation, Russia after the collapse of the Soviet Union
was going through a major political and economic cri-
sis and therefore was unable to go through a smooth
transition to the new model.
The industry largely still relies on old internal Soviet
R&D supply chains and is highly controlled by the
RUSSIA-DIRECT.ORG
government. Embracing open innovation is therefore
a grand challenge.
Moreover, Soviet universities for the most part were
not involved in science and R&D activities, as R&D
was done in vertically integrated applied research
centers, and science was developed in the Russian of
the Academy of Sciences.
As a result of this division, universities are dis-
tanced from the industry as well as from the process
creating the needed knowledge base to feed intel-
lectual property (IP) into the innovation ecosystem.
They are currently in the process of learning to do
large volumes of scientific research and corporate
R&D, but embracing entrepreneurship and the im-
portance of building innovation ecosystems is still a
distant concept.
If we take a look at the current development of
regional innovation in Russia, we will notice that
Moscow is the only region that has a more or less
complete set of institutions to grow a proper ecosys-
tem. This is a result of the centralized nature of all the
Technoparks are built as a catalyst
for the development of innovation
clusters. In all cases the main
purpose of technoparks lies in
creating favorable conditions for
innovative companies through
building the environment and
infrastructure they need.
4 -5
 REPORT
Novosibirsk. Akademgorodok.
In the laboratory of the
Institute of Theoretical and
Applied Mechanics, Siberian
Branch of the U.S.S.R.
Academy of Sciences. 1978
TASS
economic activity in the country.
27%
Other regions with high potential are St. Peters-
burg, Kazan and Novosibirsk, but they all lack criti-
cal ingredients, such as venture capital and anchor
corporations of global scale.
All of the existing regional innovation ecosystems
The three-year
are a legacy of certain Soviet, and in most cases,
survival rate for
most of Russia‘s even tsarist science and industrial centers. Modern
technoparks. Russia, however, started moving in this direction
rather early, opening the first technopark in Tomsk in
1990 (during the Soviet era), and the program con-
tinued through the 1990s.
Most of the early technoparks were associated
with universities. In the mid-1990s, the government
started an industrial park program bringing innova-
tors closer to manufacturers. However, most of those
early initiatives were not successful as they were ini-
tially taken as a way to get additional state subsidies.
This point was proven by a state accreditation of ex-
isting technoparks completed in 2000.
THE CURRENT INNOVATION MODEL
IN RUSSIA
The new wave of ‘modernization’ under president
Dmitry Medvedev in 2008-2012 brought a new wave
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
of innovation ecosystem initiatives as well as new ap-
proaches to creating techno and industrial parks.
A number of development institutions were cre-
ated including Russian Venture Capital (a state fund
of funds), Rusnano (a late-stage nanotechnology in-
vestment fund) and Skolkovo (an initiative to create
an innovation ecosystem from scratch near Moscow).
These and other institutions started accumulating
sufficient expertise on how to develop innovation
ecosystems and advise all levels of government and
management teams on these issues.
This triggered a new wave of creation of tech-
noparks of a different sort, which were actually
aimed at modern startups. One of the biggest pro-
grams was run by the Ministry of Telecom and Mass
Communications, which co-financed the creation of
12 technoparks with regional authorities all over the
country.
A year and a half ago, Russian Venture Capital
commissioned a research project to Ernst & Young
to study the current status of technoparks and busi-
ness incubators. This study showed that Russia had
slightly over 100 functioning technoparks and 110
business incubators. Most of those are owned by the
state and a few are private. In terms of efficiency,
they are in general still far from global standards.
Statistics from the National Business Incubator As-
sociation (NBIA) and European Business Network
(EBN) are fairly similar and measure success rate by
survival of companies after a certain period of join-
ing a technopark or graduating from an incubator
program.
Usually the survival rate is 85 to 90 percent after
three years. Most of the Russian technoparks showed
a survival rate of 27 percent. The top 5 percent of
Russian technoparks, however, performed similar to
global standards.
Differences between top performing and average
technoparks were mostly in the rigor of the selec-
tion process, the presence of independent admission
committees and the services they provided to com-
panies. The best admitted only 9 percent of appli-
cants (compared to an 11 percent average in Europe),
had independent admission bodies and provided ex-
tensive consulting services to their residents.
Others mostly considered technoparks to be a real
estate business, admitted 37 percent of applicants
and had no independent admission panels. This was
partly stimulated by KPIs they got at the regional
and state levels, which did not stimulate long term
growth, but required to show either number of resi-
dents or workplaces created.

Lately best practices have been proliferating in the
system and a lot of the existing and new technoparks
are improving their management and strategy. Most
of the technoparks and incubators are still either
connected to or situated next to universities and are
forming a larger innovation ecosystem.
There are only a handful of universities in Russia
that have a chance of becoming global innovation
hubs, and it is essential to develop the right services,
governance and functionality around those.
If we look at universities with the potential to drive
the local ecosystems in Russia, they too lack criti-
cal ingredients either in leadership and governance,
available land for development around them or in the
complexity of the research and education they do.
For example, Moscow State University, being the
highest internationally ranked Russian university,
lacks an engineering school and has almost no art
and design.
Moscow Institute of Physics and Technology, which
is currently actively developing an entrepreneurial
community driven by its successful alumni and ranks
the highest among Russian schools in global science,
technology, engineering and math (STEM) ratings,
has no business, arts or medical schools. Therefore, it
can only play a major role in IT and materials.
In order to transform any of these schools into real
drivers for the knowledge economy and globally
competitive innovation hubs, it is crucial to dramati-
cally improve governance and leadership, diversify
education and science and embrace high tech busi-
nesses, global or local, willing to work in close prox-
imity to these schools. As of now, the necessary vi-
sion is only being formed and the current leadership
burdened by the Soviet experience is not ready to
dive into the new reality.
INITIATIVES FOR 2015 AND BEYOND
Faced with the challenge of global competitiveness,
Russia is currently launching important initiatives,
such as the Russian government project “5-100.” It
aims at boosting the international ratings of Russian
universities. Another one is the New Technological Ini-
tiative, which forecasts the growth of future markets
and develops ways in which the nation can play a role
in those.
These initiatives are pushing the system in the right
direction and bringing positive change. However, still
more focus is needed on certain high potential ge-
ographies to build self-sustaining innovation growth
engines of a global scale.
RUSSIA-DIRECT.ORG
Novosibirsk
Akademgorodok
Akademgorodok is a great example of the current
state of the development of regional innovation
ecosystems. Built in the middle of the Cold War as
ALSO READ an isolated center for the most active scientists,
Akademgorodok has long been seen as a success
Russia Direct Report of the Soviet academic system. Even when faced
“The Future of with the economic turmoil of the 1990s it did
Russia’s Innovation
not lose its charm, being located in a beautiful
Economy.”
Download at http:// pine forest on the Ob’ river and populated by the
www.russia-direct. children and grandchildren of some of the best
org/archive. mid-20th century Russian scientists. Some of
them made good progress building IT companies,
some made great high-tech niche products, but
no large firms materialized. However, they created
a critical ingredient — a generation of locally bred
entrepreneurs. They pushed the local government
to build a technopark, created modern prototyping
facilities and started growing the local innovation
ecosystem on the fertile soil of the highly educated
population of Akademgorodok. Yet the progress
has been terribly slow and it is rather clear why:
Most of the city is still run by the Russian Academy
of Sciences, which is distancing itself from any
possible connections with real businesses. The
local university had originally been built as a school
to supply basic researchers to the Academy and
it still sees itself this way, being wary of what is
going on in the outside world and skeptical of what
outside businesses want to do with their grads.
Global companies love to place their R&D centers
here and use the abundant high quality human
capital of the region, but they are not willing to
open up any markets or engage in local merger
and acquisition deals. With the absence of major
economic activity, local angel investors and venture
capitalists are virtually nonexistent. This is a case of
a region which has potential to become visible in the
global landscape, but like many Russian innovation
ecosystems, is handicapped by its past.
SLAVA STEPANOV
6-7
 report

PRESS PHOTO

A strategy for the development

of Russian technoparks
U
One of the key ntil relatively recently, Soviet science cities were rightly considered by

questions here is: Why Russian legislators as highly desirable in many industries and sectors. The
technoparks that replaced them, with rare exceptions, lag far behind simi-
create technoparks in lar structures abroad both in terms of creating the best environment for innova-

the first place? tive startups and commercializing the output of resident companies.
What is being done to effectively treat the afflictions of Russia’s homegrown
technoparks? What are the results so far, and what can we expect them to de-
liver?
Andrei Shpilenko
Why does Russia need technoparks?
As international experience shows, every technopark in the developed world is
created with specific goals in mind. One of the main goals is to generate scientific
breakthroughs and knowledge. To achieve that at one site requires a combination
of fundamental and applied science with cutting-edge research centers, either
industry-specific or diversified across sectors.
In some cases, the goal is to create small innovative enterprises, thereby pro-
viding regions with new jobs.

Insider’s guide to Russian high-tech hubs | #9 | JUNE 2015

 RUSSIA-DIRECT.ORG

“ When people talk about the “innovation storm,” it should

be remembered that for wide-scale innovations to emerge,
difficult circumstances are not enough. You need a sound
institutional environment.“
Russian economist Alexander Auzan

Lastly, technoparks are built as a catalyst for the
development of innovation clusters. In all cases, ho-
wever, the main purpose of technoparks lies in cre-
ating favorable conditions for innovative companies
through building the environment and infrastructure
they need, and providing resident companies and
research organizations with a host of benefits and
privileges.
THE GROWTH OF RUSSIA’S
TECHNOPARKS
The new technoparks are all rather reminiscent of So-
viet science cities. And it is no coincidence that the
first wave of Russian technoparks, built in the early
1990s, appeared as part of technical colleges and
public research centers in academy towns and sci-
ence cities.
Unfortunately, a good number of these parks are no
longer functioning — a sad consequence of the lean
years when science, innovation and industry were
all pushed to the periphery of government atten-
tion. Nevertheless, the goals they set and conceptual
building blocks they created are one of the ingredi-
ents required to turn technoparks into healthy living
organisms modernized and adapted to the specifics
and challenges of today.
Hence, the objectives of today’s technoparks also
include diversifying the economy of the Russian
Federation, changing its structure, developing pro-
duction in high-tech areas, and raising national self-
esteem. Technoparks are also the basis on which to
build future industrial and innovation clusters.
Today, all bets are on clusters to create the environ-
ment for the “new industrialization.” To meet these
expectations, every cluster must have a core and a
catalyst for development in the form of a technopark
as a generator of new projects and new kinds of
products. Without such a generator of ideas, clusters
©SERGEY PYATAKOV/ RIA NOVOSTI
We are talking here about fairly advanced tech-
noparks. As the experience of the world’s best
technoparks demonstrates, it takes six to ten years
to get a technopark up and running, i.e. to provide
the requisite technical facilities and make the park
attractive to businesses. That implies creating a
technological, engineering and institutional infra-
structure, and, more importantly, implementing
mechanisms and programs to make doing business
in technoparks better than anywhere else. Full rec-
ognition takes about 30-40 years of operation at full
capacity. Whereas many technoparks outside Russia
have celebrated at least their twentieth anniversary,
inside the country only three such organizations are
more than 20 years old, while one is 10-20, a hun-
dred are 3-5 years old, and sixty-five are 1-3 years
old. The upshot is that in Russia today 97 percent
of technoparks are in the embryonic stage, and are
hence at risk of being nipped in the bud.
In Russia today, 97
percent of tech- THE GOVERNMENT’S ATTEMPTS TO
noparks are in the
DEVELOP TECHNOPARKS
embryonic stage,
and are hence at In the mid-2000s, a new impetus to set up tech-
risk of being nipped noparks came from the adoption of the “Concept
in the bud. of long-term socio-economic development of the

risk becoming regressive manufacturers of a single

product. As the first attempts at cluster develop-
ment show, clusters must always aim to improve the
competitiveness of its member companies and their
products in terms of R&D. Doubtless that is also the
prerogative of technoparks.

8 -9
 REPORT
Russian Federation to 2020.” This document identi-
fied, among other things, the need to implement a
national system of innovation, providing for the crea-
tion of technoparks. In the same period, a substantial
amount of public money was allocated to the estab-
lishment of technoparks under a series of dedicated
programs, including a comprehensive program to
create technoparks in Russia in the sphere of high-
tech, a similar program under the auspices of the
Ministry of Economic Development, and a program
under the Ministry of Education and Science to de-
velop innovative infrastructure at universities.
Consequently, in the period 1990-2015, Russia saw
the establishment of 179 techno parks. The record
year was 2013, when 200 were registered.
RUSSIA’S MOST SUCCESSFUL
TECHNOPARKS
The best Russian technoparks are not far short of
world-class in many categories, including availability
of infrastructure for launching innovative startups and
range of services on offer.
The most famous example in this regard is the high-
tech park in Khanty-Mansiysk Autonomous Okrug-
Yugra, which formed the basis for the Regional Engi-
neering Center. Many interesting startups have been
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
© ALEXANDER KRYAZHEV/RIA NOVOSTI
brought to fruition at the technopark in Novosibirsk
Academy Town in Siberia and at Zhigulevsk Valley,
a technopark in central Russia in the city of Samara.
Among the country’s most developed tech-
noparks that fully meet their stated objectives are
the IT park in Kazan, Mordovia Techno Park, Tomsk
Nanotechnology Center, and Sarov Techno Park,
which is home to a supercomputer simulation cent-
er. The multisectoral Technopolis Moscow is also
developing rapidly.
WHAT IS HINDERING THE
DEVELOPMENT OF TECHNOPARKS?
The examples given so far achieved success mostly “in
spite of” rather than “thanks to.” Post-2013 the num-
ber of techno parks in Russia began to decline, a trend
that still persists. The main reason was the lack of an
established legal framework defining the goals, tasks
and principles of technoparks, as well as their role in
the national system of innovation.
There is still no precise system of financing and
government support measures, or criteria for evalu-
ating performance. The attempts to overcome this
regulatory backwardness have largely come about
through the persistent efforts of the Association of
Technoparks in the sphere of High Technologies.
 RUSSIA-DIRECT.ORG

STEPS TO IMPROVE THE SITUATION resolution of issues such as providing tax breaks and
creating business incubators, thereby eliminating
Taking into account the best Soviet and foreign ex- any shortcomings revealed during the accreditation
perience, combined with modern approaches to set- process.
ting up technoparks, the past two years have seen the Not all technoparks that apply undergo accredita-
drafting and adoption of a number of framework doc- tion. It is a matter of principle for our Association
uments in the field of technoparks. They include the that the ranks of technoparks should not contain
“Requirements for technoparks for their infrastruc- “simulacra” that allow federal agencies and regional
tural facilities, their activity and operation, and the authorities to paint an overly rosy picture of prosper-
list of services and their provision to techno parks ity in the field.
in the sphere of high technologies,” and the “Guide-
lines on the activity, goals and tasks of technoparks, COMMERCIALIZING NEW
and the composition, management, property, equip- INNOVATIONS
ment, land plot, engineering structure and range of
services of technopark residents.” If all illusions are put to one side, the problem of in-
At the end of last year and the beginning of 2015, novation commercialization looms large. The govern-
public consultations were held on drafting a new na- ment allocates quite considerable funds to the devel-
tional technopark standard, which is expected to be opment of technoparks, but recipient institutions do
approved by late June and published as the “Tech- not always utilize them effectively.
nopark Requirements” national standard (GOST). This practice harbors two extremes that effectively
Since 2014 there have been efforts to campaign for nullify the effect of investing in innovation. At one
voluntary accreditation of technoparks. Accredita- extreme, specific innovation projects are given pin-
tion means that a technopark contains all necessary point support, for example, through grants. But this
infrastructure to promote innovative business, and support is not evenly distributed across all stages of
implements cost-saving programs and measures. It the chain of commercialization in the project lifecy-
sends an important signal to startups and venture cle. As a result, certain stages remain “blind spots.”
companies, too. Accreditation helps the managing More often than not areas such as mentoring, as-
company of a technopark state its case more con- sistance in prototyping and business acceleration
vincingly in the dialogue with local heads in the joint are left out, and they represent the key services

The map shows the

Moscow
level of innova-
Saint Petersburg
Perm tion in Russia by
11.7%
Kazan region and provides
Yekaterinburg an overview of
Barnaul where the most IT
Krasnodar
65% firms are located
Nizhny Novgorod 1.7%
1.7% (with 65 percent
Rostov-on-Don
Ufa 1.7% 5% of them located in
1.7% 3.3%
Vladimir 3.3% Moscow). The main
Novosibirsk 1.7% characteristics of
% - share of all IT companies the top 5 Russian
in Russia located in
a given city 1.7%
IT companies are
1.7%
Top 5 IT companies, data for 2014 provided below.
$
2.4
billion

$ The level of innovation activity by region

1.6
billion
5,998 0.69 0.48 0.41 0.35
employees
$ $
4,241 802.2 $
employees million 675.6 591
2,712 million 2,610 million
2,747
employees employees employees

National Computer LANIT group Technoserv Softline ITG Source: Association of Innovative Regions of Russia/RIA Rating
Corporation of companies

10 - 11
 REPORT
‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘
that must be provided to innovators. At the other
extreme, support institutions, lacking sufficient re-
sources, try to maintain a number of additional busi-
ness streams over and above their basic activity of
supporting innovative startups. As a result, the funds
are squandered. For instance, Russian Venture Com-
pany (RVC), rather than focus squarely on creating
venture capital funds, additionally undertook expert,
consulting and other projects. Thus, we have yet to
build an effective system of project support at all
stages of the life cycle with the necessary concen-
tration of resources at each stage.
This is one of the stated functions of technoparks,
but very often poor goal-setting forces their man-
aging companies to focus on generating revenue,
which is most readily achieved by renting out floor
space. It turns out that Russian technoparks have
prospered primarily thanks to that practice.
But leasing should not be a technopark’s main ser-
vice. The chief objectives of their managing compa-
nies should be to increase the amount of revenue
and the number of innovative companies and jobs
generated by technopark residents.
The effectiveness of managing companies should
be properly assessed. If up to 70 percent of revenue
is made up of leasing payments, it means that the
technopark in question is failing to meet its intended
purpose, since at least 50 per cent of the managing
company’s revenue structure should come from pro-
viding services to residents and managing projects.
In order to ensure such revenue structure, tech-
noparks should have their own business incubator,
prototyping center, laboratories, engineering center,
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘
etc. By no means do all Russian technoparks have
such technological infrastructure at their disposal.
In addition, it is impossible to imagine a foreign
technopark without venture capital funds. But Rus-
sian technoparks have virtually none. Shared know-
ledge centers at technoparks are few and far be-
tween.
THE ROLE OF THE STATE IN
INNOVATION DEVELOPMENT
It is inevitable for questions to arise about the role of
the state in the development of technoparks. Today its
involvement in this process leaves a lot to be desired.
And that is despite the fact that public investment so
far in the development of technoparks currently totals
54 billion rubles, or about $1 billion. About 60 percent
of this sum has been spent on Skolkovo. The Rus-
sian Ministry of Communications spent 25 percent
of these funds as part of its now implemented core
program, the Ministry of Education and Science 17
percent, and the Ministry of Economic Development
1 percent. The investment is more than considerable,
which, however, cannot be said of the effect it has
produced.
Now the situation has slowly begun to change. The
resolution of the government “On the selection of
constituent entities of the Russian Federation having
the right to receive state support in the form of sub-
sidies for reimbursement of expenses on infrastruc-
ture for industrial parks and technoparks,” adopted
on October 30, 2014, identified four key departments
dealing with the creation and development of tech-
 RUSSIA-DIRECT.ORG

noparks. They are the Ministry of Economic Devel-

opment, the Ministry of Education and Science, the
Ministry of Communications (responsible for high- The first step has already
tech technoparks), and the Ministry of Industry (in been taken towards creating
charge of industrial technoparks). Thus, the first step
has already been taken towards creating an entry an entry point inside the
point inside the government for resolving issues with government for resolving
technoparks and submitting and discussing propos-
als for improving efficiency. issues with technoparks and
The next step should be to set up a single authorized submitting and discussing
body at the level of the government to coordinate
the activities of the federal center and the regions proposals for improving
in the creation and development of technoparks. efficiency.
The absence of such coordinator with broad powers
is hampering the development of program-based
actions, as well as the formulation and approval of
budgetary expenses, including at the level of Russian
Federation constituent entities. We have often stated from various platforms that
It is also necessary to overcome the departmental in order for technoparks to meet with their intended
fragmentation on matters pertaining to technoparks. purpose, they require legislation on preferential tax
It must be said in their defense that this disunity of treatment and other privileges currently offered to
technopark “curators” is not so much their fault as industrial parks. The activity of the latter is governed
the unfortunate consequence of the prolonged lack by a separate law under which they receive state
of a common government strategy in this area. support, including interest rate subsidies on loans,
As a result, each department tries to create its measures to support private industrial parks through
own rules of the game and use its own set of tools the Ministry of Economic Development, etc. Without Public investment
to tackle industry-specific tasks. One is focused on creating a similar environment for techno parks, they in the development
developing business incubators, another on pro- will not be able to generate new innovative compa- of technoparks
moting techno parks and techno-innovation special nies. In their present form, techno parks are simply currently totals
economic zones (SEZs). Collectively, they essentially unable to carry out this key role. about $1 billion.
perform one and the same task — creating mecha-
nisms to commercialize innovative projects. But ul-
timately their efforts and government resources are
spread too thin.

WHAT OTHER MEASURES

ARE REQUIRED TO SUPPORT
TECHNOPARKS?
For its part, the Association of Techno Parks in the
sphere of High-Tech has produced a number of pro-
posals aimed at improving legislation in this area of
activity. In particular, it is proposed that the RF law
“On technoparks” and the “Development strategy
(creation) of technoparks” be drawn up and adopted
by 2020. It is also necessary within the framework
of the Interdepartmental Commission for the im-
SERGEY FADEICHEV/TASS

plementation of the Innovation Development Strat-

egy of the Russian Federation to 2020 to define the
place, role and function of technoparks in the na-
tional innovation system with a view to actualizing
this document.

12 - 13
 REPORT

EXPERT COMMENT

CEO,
Russian
Venture
Company

Igor
Agamirzian
Software technologies today
have become the platform for
technological development.
Information technologies are
at the foundation of all current
industrial breakthroughs (from
traditional industries to new in-
dustries). It seems that Russia
has great human potential here
as mathematics has always
been one of the main fields of
focus in Russia. And it is math-
ematics that provides the basis
for software development and CAN THE GEOPOLITICAL CRISIS HELP REJUVENATE
information systems manage- RUSSIAN INNOVATION?
ment worldwide.
The leading countries in math- The Russian economy faces the formidable task of becoming competitive in the
ematics are the U.S., France new technological paradigm and simultaneously upgrading manufacturing in the
and Russia, which is evident old. This can be achieved only through modernization of production.
from the number of winners of A couple of years back, many Russian companies bought up not only equip-
the Fields Medal (considered ment in Europe and Asia, but also other companies and firms, acquiring in the
by many to be the Nobel Prize process modern R&D centers and new market niches.
of mathematics). The Russian The ensuing crisis and political ramifications actualized the topic of import
leadership in this area has a substitution, including in the segment of R&D and the production of innovative
long history, back to the pio- products. Here, too, the value of technoparks as a tool in the unassisted front-
neering Swiss mathematician line development of next generation fundamental technologies on the basis of
and physicist Leonhard Euler, scientific and technological groundwork unique to domestic industry is multiply-
who spent almost half his life in ing. After all, the economy is built on a specific model: R&D followed by imple-
Russia and essentially became mentation and production on an industrial scale.
the founder of the Russian Logic suggests that all phases of this essentially single process should be unit-
mathematical school. ed by a common system and methodology of control, and a single algorithm
In the 20th century, the main that provides a clear sequence of actions and effectiveness at each stage. Ide-
achievements of Russia were ally, startups nurtured in technoparks should grow in stature and expand into
not in the area of applied sci- industrial parks, where the current state support package will enable them to
ences, but rather in theoretical carry out industrial-scale production of high-tech products. That is the knowl-
sciences – in math and physics. edge economy in a nutshell.
This background should be lev- In no way does import substitution imply autarchy, or economic self-sufficien-
eraged by today’s higher edu- cy. Russian industry thrives on collaboration with foreign investors and joint
cation institutions, thus helping large-scale international projects.
Russia to boost its technologi- As technoparks develop and residents become sufficiently large-scale to move
cal development and join in the into industrial parks and clusters, the ability to partner with foreign investors
global technological growth. seems set to rise to a qualitatively new level.

INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015

RUSSIA-DIRECT.ORG

14 - 15
 REPORT

THE MINISTRY OF TELECOM AND

MASS COMMUNICATIONS OF THE
RUSSIAN FEDERATION

T
he Russian government today attaches great
importance to the development of advanced
technologies. This is seen in the gradual crea-
tion of favorable conditions for Russian companies
via new legislation and in the provision of financial
support for centers carrying out innovative research.
The government is also taking measures to simplify
conditions for foreign players to operate in the Rus-
sian market. Supporting technoparks (“technology
parks”) in this connection is one of the Russian gov-
ernment’s key priorities in the near future.

DMITRY ASTAKHOV/TASS
THE BUILD-OUT OF RUSSIA’S
TECHNOLOGY PARKS
Today in Russia there are many technoparks, innova-
tion clusters and special economic zones for develop-
ing the country’s future high-tech businesses. And, at

How to create
the federal level, a series of measures is being imple-
mented to support the establishment of additional
technology parks. Previously, the Russian Ministry of

a favorable
Telecom and Mass Communications oversaw an in-
tegrated program called “Establishment in the Rus-
sian Federation of Technology Parks in the Sphere of

environment for
Advanced Technologies.” It operated for eight years
from 2007 to the end of 2014.
At the end of this program’s implementation, 12
technology parks had been established in 10 Rus-

technology hubs
sian regions, which today accommodate more than
775 companies and have created almost 19 thousand
jobs. The annual income for technopark companies

in Russia
in 2014 was more than 40.5 billion rubles ($712.7 mil-
lion). Investment from the federal center comprised
13 billion rubles ($228.6 million), while the regions in-
vested 18 billion rubles ($316.8 million). This is argu-
ably one of the most effective programs for creating

Today Russia has about 200 an innovation infrastructure with support from the
federal budget.
registered technoparks. Thanks to In 2014, the Russian government developed a

new government initiatives, that new support mechanism for establishing technol-
ogy parks. It is intended to give Russian regions the
number may increase in the near opportunity to reimburse part of the financial cost

future. spent on establishing the technology park infra-

structure using federal taxes paid by companies lo-
cated in technoparks. It also creates the opportunity
to reimburse some of the expenses for the payment
of interest on loans, which had been taken for the
construction of facilities and their infrastructure.

INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015

 RUSSIA-DIRECT.ORG

A LEGAL FRAMEWORK FOR THE IT One of the main problems in

INDUSTRY
developing the IT industry in
Besides infrastructure, it is important to establish at- Russia remains the lack of staff.
tractive conditions for running an IT business in Russia.
At the present time the Ministry of Telecom provides There are steps being taken
the following benefits for accredited IT companies: by the Russian government to
• Reduced rates for insurance contributions (con-
tributions to pensions and medical insurance) — up ALSO READ narrow this gap.
to 14 percent of payments for individuals (compared
to 30 percent common rate in Russia); The problem
• The opportunity to use a simplified process to of the ‘brain percent, rising from 25 thousand to more than 42.5
recruit highly qualified foreign specialists; drain’ becomes thousand scholarship positions in universities.
increasingly
• The right to include in expenses the cost of elec-
important for Russia
tronic computing technology as material expenses in in relation to global BRICS AND RUSSIA’S FUTURE
their full amount; workforce mobility. TECHNOLOGICAL DEVELOPMENT
• Reduced to 15,5 percent profit tax for companies Find out what
in Novosibirsk and Penza regions (compared to 20 Moscow is doing to Today, one country and just a few companies monop-
reverse the outflow
percent common profit tax rate in Russia). olize the global software market. That could change
of talent. Download
The total number of IT companies accredited by our special report as Russia expands its role within the BRICS. This year
the Ministry of Telecom is currently more than 5 “From Brain Drain it is the chairman of the BRICS. On July 9-10, the annu-
thousand. Those paying a lower insurance rate dur- to Brain Gain” from al summit of these countries will be held in Ufa. Since
ing 2011-2014 had more stable growth in revenue and our website: www. the start of the year, the head of the Ministry of Mass
russia-direct.org/
federal tax payments at a higher rate than the aver- Communications Nikolay Nikiforov has personally
archive
age for the economy as a whole. held negotiations with minsters from Brazil, India, Chi-
The total amount of tax on personal income, listed na, and South Africa, and they all are concerned about
by these organizations for 2014 exceeded 17.8 billion the current situation. Nikiforov suggested that BRICS
rubles ($313.4 million), excluding tax deductions, the should join forces to develop computer software. This,
amount of income accredited companies reached in particular, guarantees access for Russia’s future de-
311.6 billion rubles ($5.5 billion), the average salary velopment in the appropriate BRICS markets, which
of employees was 84,000 rubles per month ($1,480). account for half of the world’s market.
1
This is several times greater, than the average in- _____________
come in Russia, and shows that developing the IT [1] The average monthly wage in Russia at the end of
industry is a serious starting point for balanced, sci- April 2015 was 32,805 rubles ($579). Rosstat.
entific growth in the country’s economy. Russian tech hubs by area
of specialization
THE TALENT GAP
On the other hand, as before, one of the main prob-
lems in developing the IT industry in Russia remains
the lack of staff. There are steps being taken by the
Russian government, though, to narrow this gap.
As a result of joint work between the Ministry of
Telecom and the Ministry of Education and Science,
the number of budget places in universities for IT
specialists for the 2016-17 academic year will be in-
creased by 31 percent in comparison with the 2015-
16 academic year.
In 2014, institutions managed to increase training
for IT professionals from September 2015 by 34 per-
cent. Over the past two years, government demand
for IT professionals has grown by more than 70

16 - 17
 REPORT

Can Russia become an

innovation leader?
The government must do more to make Russia a welcoming place
for innovators and their new technologies.

© SERGEY PYATAKOV/RIA NOVOSTI

OLEG BUKLEMISHEV

RUSSIA AND OTHER GLOBAL

T
he oft-repeated pronouncements about mo-
dernizing the Russian economy and overco-
ming Russia’s dependence on raw materials in
favor of new technologies have been almost a man-
tra for years.
All kinds of innovative technoparks, clusters, in-
cubators and start-ups have been discussed at the
highest level of government, and the promises of full
support for domestic scientific and technological de-
velopments have not bypassed a single government
program.
But what lies behind the sound and fury? Is Rus-
sia’s innovation economy really moving in the right
direction?
INNOVATORS
If you believe the official statistics compiled by
Rosstat, over the past decade the proportion of high
tech and science-intensive industries has increased
by 2.3 percentage points to nearly a quarter of GDP.
Every tenth organization in the country is putting
various innovations into practice. As a result, in
2013 innovative products, works and services were
implemented to the tune of 3.5 trillion rubles (about
$63 billion at today’s currency exchange rate).
But there are lies, damned lies and statistics. How
does one know if the village is real or a facade?

INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015


Unfortunately for Russia, it is most likely just a
façade. The picture is far less encouraging both in
terms of statics and dynamics when Russian science
and innovation is compared internationally.
For instance, according to the Russian Academy
of Sciences spending on science per capita in Rus-
sia is 5-6 times lower than in the leading countries.
The number of researchers per thousand employees
is three times higher in Finland than in Russia, and
more than two times higher in Korea, Japan, Den-
mark, the United States and Sweden.
Russia’s share of global spending on R&D is less
than two percent (the United States accounts for
almost a third), and the figure is about the same in
terms of patent applications — even lower than Rus-
sia’s slice of global GDP.
Moreover, the current level of R&D funding in real
terms is about half the level of 1990 (the Soviet Un-
ion spent about 5 percent of GDP on R&D).
RUSSIA’S INNOVATION ADVANTAGES
The average Russian scientist, as acknowledged by
President Vladimir Putin, is now 48 years old, and in
some branches of knowledge (for example, the top-
priority nuclear industry) much older than that. The
“road map” of Russian science to 2020 may well en-
visage an increase in the proportion of employees
aged 39 or under to 41.5 percent by 2018 (currently 33
percent), but how it can be done at wages lower than
in almost any other profession is unclear.
It is no coincidence that polls over the past decade
by the non-governmental research organization Le-
vada Center on parents’ preferred careers for their
children have shown a steady decline in the populari-
ty of science and engineering, and even the still pres-
tigious job of computer programmer is beginning to
lose its shine. According to Levada Center, for exam-
ple, only 15 percent of Russians in 2014 wanted their
children to pursue careers in computer programming
or other high technology fields.
At the same time, Russia can still draw on a reserve
of important groundwork needed to break into the
innovation vanguard, namely, the well-earned repu-
tation of Russian science and the country’s still active
cutting-edge schools and technological know-how in
several key areas. There are still talented young peo-
ple who, despite everything, continue to be drawn to
fundamental science and applied research; energetic
Russian businessmen who still manage — even in ex-
treme investment conditions — to achieve success;
and the untapped potential of harnessing university
RUSSIA-DIRECT.ORG
science to the practical needs of the national econo-
my in terms of scientific and technical developments.
THREE WAYS TO CAPITALIZE ON
RUSSIA’S INNOVATION ADVANTAGES
There are three important ways that Russia can trans-
form these natural advantages into a genuine break-
through in the field of innovation.
#1. Introduce new government policies that encour-
age innovation
First, it needs to be understood at the state level
that economic modernization and diversification is
urgently required for the country’s development, and
is not simply a half-forgotten political slogan from
the time of Dmitry Medvedev’s presidency. Without
a doubt, science and education is the cornerstone of
successful modernization.
The budget cuts to research and education must
stop, and Russia’s top scientists and talented young-
sters who choose this challenging pursuit should be
offered competitive base salaries, allowing them to
focus on scientific work.
However, material stimulus alone seems insuffi-
cient. Scientists in the Soviet Union enjoyed prestige
not just because of the decent salary, but also be-
cause the image of researchers as doing something
interesting and important was actively promoted in
movies and on television. The same could be true
today if TV stations in Russia swapped the endless
tear-squeezing melodramas and stories of duels
between ugly criminals and wise policemen with a
good-quality serial about Russian scientists and the
diverse, engaging work they do. The possible dip
in ratings with the unscrupulous audience would
be well compensated by the positive social effect,
which is needed now as never before to support the
industry of science and knowledge.
#2. Ensure the protection of property rights, in-
cluding intellectual
Second, property rights need to be properly pro-
tected, along with freedom of entrepreneurship,
something that innovative industries need even
more than traditional ones. And introduction of new
technologies cannot emerge as a clear competitive
advantage when everyone knows that hunting for
government orders and privileges proves to be far
more beneficial for a company than any number of
innovations.
Of course, one can create a dozen or two tech-
noparks and incubators and give tax breaks or subsi-
dies normally available only to those innovators able
18 - 19
 REPORT
to hire special well-paid lawyers and lobbyists.
And one can certainly be proud of what has been
achieved at the Skolkovo Innovation Center outside
of Moscow, where entrepreneurs and researchers get
by a little bit better than the rest of the country. But
it would be much better from an innovation point of
view if the efforts were spent primarily on progres-
sively improving the business climate and promoting
competition not only inside special isolated zones,
but everywhere. Only then can high tech output be
actively commercialized, and such incubators and
subsidies become genuinely productive.
Otherwise, the rest of the country will miss out on
this positive experience, and the small number of is-
lands of prosperity will sooner or later sink into the
surrounding swamp.
#3. Abandon isolationism
The last but not the least, in the interests of mod-
ernization, the policy of isolationism and xenophobia
needs to be abandoned once and for all. As shown
too often in the course of human history, it is incom-
patible with progress in the field of science and in-
novation, and with progress in general.
Above all, it hinders the fight against pseudosci-
ence, which, despite the best efforts of the scientific
community in recent years to expose false disser-
tations and inflated degrees, continues to flourish.
“Locked-in syndrome” is a typical feature of many
Russian scientific communities, and the lack of real
competition and clear-cut comparisons between
genuine and phony science allows them to stand in
the way of the next generation of Russian talent.
If someone wants to build a modern Russian inno-
vation paradise on the basis of the sharashkas [the
hard-labor experimental design bureaus vividly de-
scribed by Alexander Solzhenitsyn in his 1968 novel
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
DONNAT SOROKIN/TASS
In the First Circle], you can be assured that noth-
15%
ing will come of it. When there is now a stigma at-
tached to accepting a grant from a foreign organiza-
tion, there will be an inability to attract the best and
the brightest to science. Like it or not, but a diverse
global marketplace of research ideas and results has
already taken shape, and Russia is only a small and of Russians in
hardly the most advanced player. 2014 wanted
No one can erect a barrier in the way of people’s their children to
desire to succeed through realizing their skills and pursue careers
talents. Therefore, Russia’s only chance to win the in computer
global competition is not to create a new Iron Curtain programming
that only will accelerate the existing brain drain, but or other high
to create the best environment for Russia’s young technology fields.
talent to thrive, so that armed with new knowledge (Levada Center)
and experience from study and internships abroad,
they always want to return home.
However, the case of the non-profit Dynasty Foun-
dation, recently declared a “foreign agent,” shows
that in spite of everything, the Iron Curtain mental-
ity and sharashka-style modernization are alive and
well, and continue to march triumphantly across the
country. Yet, it is precisely this foundation, set up by
one of the nation’s most prominent tech entrepre-
neurs, Dmitry Zimin, that did so much to discover
and nurture young scientific talent in Russia. The fact
that Zimin thought it wise to leave Russia sends a
very loud and clear signal that drowns out the official
mantra of modernization.
Whatever happens in the long run, it will take a
considerable amount of time and effort to expose
the prevailing xenophobic notions that are patently
false and deeply detrimental to the future of Russian
science and innovation. But nothing less is required
if we want to see Russia become a leading innovative
power in the twenty-first century.
RUSSIA-DIRECT.ORG

20 - 21
 REPORT
Case study: Three centers for
Russian innovation
#1: Skolkovo Innovation Center
#2: Bauman Moscow State Technical University
#3: The Troitsk Technopark
GETTY IMAGES
ALEXEI SITNIKOV
T
he idea to wean Russia off its dependency on
oil and gas exports is as old as the Russian
market economy itself. Russian government
throughout the 1990s and 2000s have been experi-
menting with several turnkey solutions to the prob-
lem. A number of free economic zones, high-tech
hubs and incubators emerged throughout Russia’s
territory. All received government funding and had
one purpose – to stir high-tech development and
production. Yet against the background of high and
rising oil and gas prices, these new creations were
nowhere on the list of priorities for private investors.
Then the 2008 financial crisis happened. The de-
valuation of the ruble began to deplete the govern-
ment’s hard currency reserves, unemployment levels
started to impact consumer demand, and big corpo-
rations found themselves near default on their dollar
and euro-denominated debt. If before the crisis there
was a belief that Russia had been the “island of stabil-
ity in stormy waters,” the dynamics of the crisis have
eroded this belief completely.
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
Skolkovo didn’t have a name first. The idea was to
create a science and technology enclave with special
legal and regulatory regimes, fuel it with a sizable
government subsidy and support research and de-
velopment (R&D) and startups in one of two areas:
Russia’s segments of comparative advantage (IT,
space, nuclear) or high demand and large market (bi-
omedicine and energy efficiency). Principles applied
to the enclave called for it to be globally competitive,
free of corruption and equally friendly to the startup
community and big transnational corporations.
Skolkovo Innovation Center has never been con-
sidered by its founding fathers as a toy project, just
a carbon copy of similar centers in other countries.
Rather, it was a direct answer to the challenges of
the 2008 crisis. The government could not afford to
spend more, so the economy needed to make more.
The goal of Skolkovo was never to restructure the
Russian economy; Instead, the goal was and is to
test new approaches to R&D, as well as new busi-
ness practices to be applied outside of Skolkovo. The
Center today hosts about 1,000 startups. It has raised
nearly 60 percent of development funding from the
private sector. The startups came to Skolkovo from
nearly 50 regions of Russia and already have gener-
ated a turnover of about $1 billion.
These results show that the model works. Support-
ing high-tech research with the right set of regula-
tions, some funding and mentorship work just as
well in Russia as in any other country. The experi-
ence of Skolkovo also shows that the main challenge
in developing the innovation center is not in the in-
frastructure, regulation or funding. It is in the ability
to source, engage and empower human capital. A
nationwide transformation will occur only and if the
models such as Skolkovo are fueled with the critical
mass of human talent, hungry for challenge and dis-
covery.

#2:
Bauman Moscow State
Technical University
EVGENY STAROZHUK
T
he activities of Bauman Moscow State Techni-
cal University (BMSTU), a leading university for
engineering education in Russia, has for a long
time been aimed at the scientific and technical sup-
port of Russia’s defense industry and the superiority
of the country in the aerospace industry. For this rea-
son, the university’s cooperation with private com-
panies in the sphere of innovation has only recently
become a priority area for development.
Today, the leading role is given to cooperation with
Russian companies. However, the university is also
prepared to work with foreign companies. An exam-
ple of this could be the recent agreement between
BMSTU, Kaluga Region, and the Austrian manufac-
turer of communications and navigation equipment,
Frequentis. The purpose of the agreement is to co-
operate in a range of areas, including development
of micro-electronic components in the sphere of air
traffic management and flight safety.
Furthermore, BMSTU is collaborating with such in-
ternational engineering giants as General Electric,
Siemens, and Mitsubishi Electric.
In many cases, BMSTU’s partnerships with foreign
companies are based in areas where the university
traditionally has a high degree of expertise: in me-
chanical engineering, instrumentation and micro-
electronics. In the near future, priority areas for sci-
entific and technical development and for expanding
international cooperation include additive technology,
composite materials, nanoplasmonics and complex
functional systems, ion-plasma technology, robotics
and supercomputers, information and communica-
tion technologies, and biomedical equipment. These
technologies are the precursors of future scientific
and technical progress in the world, and we cannot
allow ourselves to be left on the sidelines.
THE EFFECT OF WESTERN
SANCTIONS
The recent exacerbation of the political situation that
led to the introduction of sanctions against Russia by
a number of nations could not help but affect BMSTU.
RUSSIA-DIRECT.ORG
© SERGEY PYATAKOV/RIA NOVOSTI
We cannot The most significant changes were caused by eco-
nomic instability. Prices increased for equipment pur-
allow chased by the university, especially technologically
ourselves advanced scientific machinery.
Investors have become more careful, especially in
to be left regard to expensive projects. This has aggravated
on the the situation even more in the area of venture capital
investments in advanced technology projects, which
sidelines. in Russia are still insufficiently developed.
In regards to the effect sanctions are having on for-
eign companies’ cooperation with BMSTU, one must
take into account that business needs to develop
competitive advantages by developing technical in-
novations to prevail over unstable political trends.
Ultimately, if the mutual benefits of cooperation be-
tween companies and the university are obvious to
both parties, the company will take the necessary
steps to establish cooperation.
Furthermore, it should be noted that the economic
policy that has been implemented in Russia is aimed
at replacing imported products with those from the
domestic market.
This cannot be achieved without the participation
of scientific-research organizations. The policies for
import replacement will lead to localization of ad-
vanced technological products in Russia. One can
hope that this will create the foundation for long-
term development of Russia’s scientific-research and
educational organizations.
22 - 23
 REPORT

As a result of the
reforms of the
1990s, almost 80
percent of industry-
based applied
science was elimi- RG

nated, engineering
bureaus perished, #3: the initial phase of the innovation process, in which
pilot production small and medium-sized businesses (including start-
dried up, and the The Troitsk Technopark ups) implement scientific ideas.
manufacturing The testing ground for this solution is the Troitsk
sector was largely SERGEI SHARAKSHANE Technopark at the Lebedev Physical Institute (LPI) of
destroyed. the Russian Academy of Sciences. This world-class

T
he economic transition toward innovation and
import substitution raises the problem of de-
veloping small innovative enterprises. The crux
of the matter is that, as a result of the reforms of
the 1990s, almost 80 percent of industry-based ap-
plied science was eliminated, engineering bureaus
perished, pilot production dried up, and the manu-
facturing sector was largely destroyed.
The only optimistic conclusion to be drawn is that
the country must learn to work in real-world condi-
tions, i.e. to recreate a system that would enable many
achievements of academic research to be put into
practice.
Nevertheless, retracing the last century’s path of
applied science would be a mistake. New experience
is needed, along with fundamentally new organiza-
tional, scientific and commercial forms and intercon-
nections between them.
The country needs a clear market-oriented model
of scientific and industrial infrastructure that covers
scientific institution has produced seven Nobel lau-
reates. The key component of the technopark model
lies in the search for ways to connect fundamental
research to practical applications.
THE RUSSIAN SILICON VALLEY?
Stroll around the technopark campus, created in
2008 outside Moscow, and every 20-30 meters you
will literally stumble across new innovative enterpris-
es, known as “residents.” Despite being described as
small, they create products in high demand both at
home and abroad.
The reason for that is the organic bond between
the technopark and the research institution. Part of
this intrinsically new model is that the technopark is
a subdivision of the LPI, in which regard, new resi-
dents have to meet special criteria.
Every organization applying for residency is obliged
to state its case before the LPI scientific council and

INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015


demonstrate the extent to which it is knowledge-in-
tensive. As a result of the strict filtering process, half
of the resident employees registered here are them-
selves LPI scientists: they work on the implementa-
tion of scientific ideas up to and including product
commercialization.
What immediately catches the eye is the high level
of global competitiveness, the “overtaking without
catching up” ethos, and the great prospects for im-
port substitution. There is no escaping the fact that
if production is based on imported technology, back-
wardness is built in from the start, which only intensi-
fies as the creator of the technology moves forward
in the meantime. But if innovation proceeds from a
fundamental research laboratory, a business incuba-
tor, it forces global competitors to play catch-up.
THE REQUIREMENTS FOR BUILDING A
WORLD-CLASS TECHNOPARK
It is worth noting that the Troitsk Technopark found its
feet in just seven years. Practice shows that the activi-
ties of this young venture are in tune with the coun-
try’s top priorities: rearmament, Arctic exploration,
and the creation of 25 million high tech jobs. Hence,
the Troitsk hub can serve as a model in the implemen-
tation of the government’s strategic objectives.
On the topic of Troitsk Technopark, it would be
amiss not to mention its founder, Professor Vladimir
Nevolin, LPI deputy director, doctor of physics and
mathematics, and Honored Scientist of Russia. He
has visited a host of countries, including many fact-
finding trips to technoparks in the United States,
Germany and Britain.
Based on this experience, Nevolin set about creat-
ing the Moskovrechye Technopark at the Moscow
Engineering Physics Institute — generally considered
to be the first technopark in Moscow. He took into
account the Soviet Union’s rich experience of imple-
menting technological innovations in industry. That
was where the concept of the “science-education-
industry” triangle took hold as the basis for shaping
an innovative infrastructure.
Here, then, are the basic requirements resulting
from this concept. For an industrial park set up un-
der a scientific institution (as in the case of the LPI),
it makes no sense to create a symbiosis with an ex-
isting industrial enterprise. There is no large contin-
gent of qualified employees, and no expanded pro-
duction base. That is not a minus, but a plus. Many
technoparks in Russia (Kazan, Naberezhnye Chelny,
Pereslavl, and elsewhere) would be labeled “industri-
RUSSIA-DIRECT.ORG
al parks” in Western terminology. They are generally
set up on the basis of former industrial enterprises.
However, the experience of Western Europe and
the United States shows that if technoparks are al-
lowed to operate without constant communication
with the scientific “founding father,” they quickly
degenerate and die. A technopark will function bet-
ter and — more importantly — longer if it maintains
ACADEMY
contact with an academic institution. That is why the
entire Troitsk technopark is bound to the LPI through
OF SCIENCES
the activities and research of the latter. The Russian
Not only the technopark benefits, but also the in- Academy of
stitution, whose staff can work in transitional areas Sciences (RAS),
headquartered in
from pure science to applied engineering. Their sci-
Moscow, is the
entific ideas turn into technological solutions, and highest scientific
become either devices or technologies that can then institution of the
be implemented in the wider industrial sphere. country and the
Furthermore, the technopark is a kind of trinity: it leading center for
basic research in
combines not only science and innovation, but also
natural and social
training, providing an inflow of young people into sciences. The
science. For students at leading physics institutions, Academy includes
the technopark has turned out to be a valuable train- 9 departments, 3
ing base. regional branches,
and 14 regional
scientific centers.
LEGISLATIVE OBSTACLES FOR
RUSSIA’S TECHNOPARKS
The LPI’s technopark represents the most promising
model for the entire system of the Russian Academy
of Sciences, since despite all the upheavals of the last
quarter century, Russian science still possesses great
development potential.
Of course, in isolation, the research institute can-
not shoulder the weight of such a technopark. Nev-
ertheless, the LPI is the largest institute of the Rus-
sian Academy of Sciences, and home to very many
professionals carrying out research in different areas.
However, clusters of institutions, for instance, can
already adopt the practice of the LPI. One example
is the science city of Troitsk itself — with its eight in-
stitutes under the Russian Academy of Sciences and
two non-academic research institutions.
Each houses a lot of interesting developments. The
LPI made them an offer: Let’s create a Troitsk Sci-
entific Center Technopark on the basis of the LPI’s
Troitsk hub with due regard to its organizational and
methodical achievements. All agreed.
One legislative “but” remains. The executive authori-
ties are fond of repeating that an academic institution
should be engaged in pure science, and if something
innovative comes from it, it should be taken from you
because it’s not part of your brief. For some reason it’s
24 - 25
 REPORT
Top 6 innovations of
Troitsk Technopark
1  A micromachine with femtosecond lasers for
surface treatment of materials at the nanoscale;
2  A powerful
femtosecond
laser complex — 10
terawatts (more than
the capacity of all
the world’s power
plants in the world
combined);
3  Coordinate-temporal field generators for the
GLONASS system with the highest level of
precision anywhere in Russia;
4  Ultra-large capacitors — an original LPI
brainchild. Charging such capacitor for 10
hours, the stored energy can power a smart home
for 10 hours, or start a haulage truck in Arctic
conditions at -50°C;
5  Silicon carbide, which is used to store spent
nuclear fuel and create large gamma-ray
telescopes for studying black holes etc., and which
can also be used to view Earth from space at
ultra-high resolution. Roscosmos and Rosatom are
very interested in such products. Silicon carbide
is used to make so-called “foam glass” — an
environmentally friendly thermal insulator used in
construction, superior to all other such products by
a factor of 10;
6  Tools with diamond cutting surfaces, and
milling cutters more than a meter in diameter
used to cut through and recycle huge disused
concrete structures. These can be applied to
replace the surface of runways for next-generation
aircraft; only this tool can remove such high-
strength concrete. Several airports in Russia have
already been modernized in this way. The tool is
needed for different kinds of drilling, e.g. during the
construction of subway systems.
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
necessary to prove time and again that a generator of
high tech projects can only be created on the basis of
a major research institution.
Unfortunately, that widespread belief is reflected
in a law adopted by the Moscow City Duma, in ac-
cordance with which a technopark can operate only
under the aegis of a commercial managing com-
pany. As a non-commercial organization, the LPI is
categorically opposed to the bottom line having pri-
macy in the development of its scientific technopark.
The institute makes no attempt to maximize revenue
from resident companies, since it would quickly turn
A technopark will function better
and — more importantly — longer
if it maintains contact with an
academic institution.
into a wheeler-dealer seeking to “sell” its premises
to the highest bidder. The Troitsk hub’s managing
organization, therefore, is the LPI itself, which has
proven its capacity to act as such. Regrettably, there
is no federal law on technoparks at present, although
attempts have been made to draw one up.
DEVELOPMENT OF THE INNOVATION
ECOSYSTEM AROUND THE RUSSIAN
ACADEMY OF SCIENCES
The Troitsk hub effectively shows how the innovation
ecosystem around the Russian Academy of Sciences’
fundamental research institutes should develop. Moreo-
ver, the LPI is ready to point the way through dissemi-
nating organizational and methodological ideas, con-
ducting seminars on the basis of the technopark, and
sharing best practices. In fact, the technopark is itself a
startup on the scale of tomorrow’s national economy,
and represents the embryonic phase of the transfer of
technology from the sector of science to the sector of
industry, design and implementation of new tech solu-
tions. Today Russia boasts a number of innovative in-
stitutes, but their approach is too one-sided: They give
consideration only to ready-made projects. The LPI, on
the other hand, seeks to create an incubator of new in-
novations, i.e. a place where they are conceived and nur-
tured. Such technopark literally points the way forward
to becoming an innovative country.

Russia’s long-term transition
to an innovation economy
There are growing signs that Russia’s
youngest entrepreneurs are creating
the basis for a new innovation-based
economy.
KENDRICK WHITE
In spite of the negative impact that sanctions have
had on Russia’s economy, there is in fact a certain
paradox at play here. In business plan competitions
across Russia over the past year, more and more op-
portunities were visible which involve domestically
developed new technology discoveries that are better
able today to attract local angel investors, as well as
interested corporate investors and partners.
The Lobachevsky State University of Nizhny
Novgorod, for example, has seen a dramatic increase
in interest on the part of the corporate and invest-
ment communities, including both domestic and in-
ternational partners, seeking to cooperate and bet-
ter understand what technology solutions Nizhny
Novgorod can offer.
Many local Russian enterprises were historically able
to make off the shelf purchases of high tech solutions
from Western suppliers. Today, these markets have
been closed to them. There’s evidence that they are
finally turning to the vast scientific community within
Russia to satisfy their technology demands. It is even
possible that the sanctions may be a sort of blessing in
disguise for much of the Russian research community
as funding will surely continue to support these efforts
as enterprises find their traditional channels closed.
Those not afraid of the short-term unpredictabil-
ity and risk inherent in Russia’s long-term transition
from a commodity driven economy to an innovation-
driven economy must understand that this process
only started 22 years ago, and will require another 20
years to complete. Keeping the long-term nature of
this transition in mind is essential for any of Russia’s
partners to keep in mind.
There will always be periods of advancement and re-
treat in this complex transition, and for most foreign-
RUSSIA-DIRECT.ORG
ers, it is not entirely clear why Russian leaders often
make the choices that they make. Russia is primarily
interested in protecting its independence, even if this
means that sometimes decisions can appear to be il-
logical to outsiders. This desire for independence ex-
tends to banking, telecoms, minerals and mining, and
many other spheres.
While it may appear to be self-defeating, there is cer-
tain logic in Russia’s approach to development, and
for any sincere partners willing to take these nuances
into consideration, there can be great rewards for the
long-term development of business partnerships in
Russia.
There is reason to believe in the future of Russia’s
younger generation of innovation driven entrepre-
neurs. If all goes according to plan, they will eventu-
ally establish Russia as a leading innovation economy
in the global economy.
For example, there are great opportunities in Russia’s
biomedical and diagnostics segments. Advances in 3D
modeling, early-stage cancer detection, on the spot
wound healing and resolution enhancement represent
significant breakthroughs worthy of being introduced
into global markets in the nearest future.
TOP U.S.-RUSSIAN HI-TECH FORUMS
#1: Open Innovations Forum and Technology Show
This five-day forum dedicates each day to a different aspect of technology’s impact
on human life, with guest speakers and demonstrations showcasing cutting edge
innovation. When/Where: October 28 – November 1, 2015, Moscow, Russia.
#2: Russian-American Innovation Technology Week (RANIT)
The 20th annual meeting of RANIT seeks to build mutually beneficial partnerships
between the U.S., Eurasia, and Russia through the development of pharmaceutical and
biotech innovations. When/Where: June 11-25, 2015 in several locations in the U.S.
#3: Russia-U.S. Innovation Week
Russia-U.S. Innovation Week is an invite-only conference whose aim is to establish
American-Russian business cooperation in the sphere of innovation development. The
event brings together an elite group of business and government representatives from
both countries. When/Where: TBA.
#4: 2016 IASP Conference
The International Association of Science Parks and Areas of Innovation (IASP) World
Conference is a key platform for heads and senior officials of science parks of various
countries to meet and share experiences. When/Where: TBA.
26 - 27
 REPORT
By Kendrick White
TOP 10 RECOMMENDATIONS FOR RUSSIAN INNOVATION ENTREPRENEURS
1  Entrepreneurs should consider their projects,
from the outset, to be driven by global market
demands. Experienced, smart money investors are
keen to see not just local market potential, but also
international market expansion potential.
2  Pay attention to your project’s unique
intellectual property and ability to solve
specific problems with a unique approach.
Having a plan in place to protect one’s intellectual
property, through either secret know-how or patent
protection alternatives, is also critical to maximizing
the value of any new innovation idea.
3  Be ready to tell potential investors about
your track record and past success stories
and lessons learned. Sometimes an entrepreneur’s
greatest failures proved to provide the greatest
insights.
4  Talk about your partners and those that
currently are supporting you. In other words,
show that you have built a team around you that
supports what you are doing. There is nothing more
risky for an early stage investor than to back a lone
horse who tells that he can do it all, all by himself.
5  Prepare your business model canvas as the
first step in your project development. What’s
your core value proposition? What’s your core
market of buyers? Have you already talked to
them and confirmed that your solution is actually
a key problem for your market? What’s your
business model? What’s your IP protection and
commercialization roadmap?
EDITOR’S PICKS
TOP 5 TWITTER ACCOUNTS
FOR RUSSIAN #INNOVATION
@nnikiforov Nikolay Nikiforov is the Minister of Telecom and Mass
Communications of Russia, which is one of the government bodies
fostering the growth of technoparks.
@IASPnetwork Updates from the International Association of
Science Parks and Areas of Innovation (IASP).
@USRIC_en The U.S.-Russia Innovation Corridor connects start-up
companies and universities.
@EWDN_Russia East-West Digital News (EWDN) is an
international information company dedicated to Russian digital
industries.
@i_regions Tweets from the Association of Innovative Regions of
Russia.
INSIDER’S GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
6  Practice pitching your idea to your friends and
family and then keep developing your pitch
to potential partners, buyers, and investors. Your
pitch can be customized to your audience and you
should continuously get feedback on your pitch and
constantly update this.
7  Be prepared for your team to “pivot.“ What this
means is that what you start out with as your
initial project idea is very likely to change many
times prior to your securing funding and start-up
capital. Even after that, you will likely alter your
business model and initial business plans many
times before you achieve a certain critical scale of
operations.
8  Entrepreneurs must seek out smart money
investors, meaning these who also know your
product and market segments, and who can help to
advise you, not just throw money at your project.
9  Don’t be afraid of failure and mistakes. Way
too many entrepreneurs become afraid
that their projects might not be competitive and
therefore are afraid to start in the first place.
10 . Seek out the local leaders of the innovation
ecosystem, and partner with them in order
to secure successful long-term opportunities.
Local business angel clubs, local universities, local
venture fund managers, local high tech enterprises
led by experienced Russian entrepreneurs. Global
enterprises should work to align themselves with
the future generation of innovation driven leaders.
BOOKS AND ARTICLES
ON RUSSIAN INNOVATION
1.Loren Graham, Lonely Ideas: Can Russia Compete? Cambridge,
MA: The MIT Press, 2013.
2.Doren Chadee and Banjo Roxas, Insitutional Environment,
Innovation Capacity and Firm Performance in Russia. Critical
Perspectives on International Business 9 (1/2), 2013, pp. 19-39.
3.Zhanna Mingaleva and Irina Mirskikh, On Innovation and
Knowledge Economy in Russia. International Journal of Social,
Education, Economics and Management Engineering, 4 (6), 2010,
pp. 169-178. http://waset.org/publications/12397/on-innovation-
and-knowledge-economy-in-russia.
4.Chun-Yao Tseng, Technological Innovation in the BRIC
Economies. Research-Technology Management 52 (2), March-April
2009, pp. 29-35.