Scale of Nanotechnology Industry: What RUSNANO’s Investments Brought to Russian Economy
RUSNANO finished 2019 not only with positive results in its investment portfolio, but also with a set of specific projects in the highly demanded areas, from renewable power generation to medicine
Trillion Sales Technologies
Last year, RUSNANO portfolio companies achieved an 11% increase in their sales of nanotechnology industry products—to RUB 445.4 bln compared to 2018. It should be noted that while RUSNANO, as one of the leading institutions for Russia’s development, is building the domestic nanotechnology industry, the accumulated sales of portfolio companies have reached a colossal amount of RUB 2.27 trln, and exports of these innovative companies have exceeded 353 bln RUB. In 2019, exports increased by 8.1%, to RUB 78.12 bln, compared to the previous year.
“We believe that in the next ten years, the Russian nanotechnology industry will become one of the top three among the high-tech industries in terms of export volumes,” Anatoly Chubais predicted back in 2017. As of today, if we take into account the manufacturers of nanoproducts independent of RUSNANO, the volume of Russian nanotechnology industry exports reached RUB 541 bln in 2019 alone.
According to RUSNANO’s development strategy, one of the key performance indicators is the faster growth rate of nano-revenue of invested companies compared to the dynamics of industrial production in the country. At the end of 2019, the growth of nano-revenue exceeded the dynamics of industrial production by 8.1 percentage points, which is 110.5% against 102.4%, according to Rosstat.
At the end of 2019, the growth rate of exports of portfolio companies exceeded the growth rate of exports of the Russian Federation (excluding the oil and gas sector) by 4.4 percentage points. This was achieved, among other things, due to RUSNANO’s systematic work on industry development. Today, the projects supported by the state company contribute to the solution of government tasks in the field of technological development.
“Dozens of RUSNANO’s portfolio companies are somehow involved in a wide range of national projects. Today, for example, RUSNANO is a leader in the Russian renewable power generation sector. And this is a direct contribution to the implementation of the national environmental project. In this regard, it should be noted once again that our activities directly, not indirectly or via some tricky methods, influence a significant part of national projects,” Anatoly Chubais says.
What is the impact of the establishment of RUSNANO on the budget? Tax liabilities made by the portfolio companies exceeded RUB 152 bln as of the end of 2019, and in 2018 recouped the government’s contribution to the establishment of RUSNANO in the amount of RUB 130 bln. Last year alone, nanotechnology companies paid RUB 20 bln in taxes.
“Almost all expenses of the government for the establishment of RUSNANO were reimbursed in the form of taxes. The goal we were established for, our mission have been fully accomplished and will be pursued in the future,” the head of the company stated.
Geography of New Production Facilities
One of the questions RUSNANO is often asked is: “Where can we see the real results for the economy, as statistics can be misleading?”
The answer to this question is very simple—the result can be seen in the establishment of new high-tech plants and enterprises. In 2019 alone, the number of launches in Russia under investment projects with RUSNANO’s participation increased by 18. In total, there are already 115 enterprises and R&D centres opened due to the nanotechnology company. Together with 13 nanocentres of the Fund for Infrastructure and Educational Programs, they cover 37 regions of the country.
Another indicator is the number of workplaces created. By the end of the last year their number in portfolio companies exceeded 40,000. Approximately 1,400 specialists are engaged in research and development activities. RUSNANO companies’ total expenditures on research and development (R&D) have exceeded RUB 46.9 bln over the whole period.
As is well known, RUSNANO selects promising projects and technologies and invests in companies at the stage of production creation or scaling-up. Since 2007, such investments have accumulated RUB 202.5 bln in a wide range of high-tech areas – from the production of materials with unique properties to the creation of new areas in medicine and energy.
RUSNANO makes a profit from its successful projects by investing in the establishment of new companies. By the end of 2019, there were 54 exits from the historical portfolio projects with an average IRR of 15.5% (compared to fair value in 2013, when portfolio management was transferred to RUSNANO Management Company). By the beginning of 2020, total revenues from the investment portfolio amounted to RUB 90.8 bln, which, together with the fair value of the current portfolio, exceed investments by RUB 14.1 bln. In other words, as of today, the result from investments is positive.
Arrival of Private Investors
Since 2014, RUSNANO has moved from direct investments in promising projects to the classic fund of funds model, i.e. investments began to come only from funds created together with industry partners in the private sector. Since then, the effectiveness of RUSNANO has also been measured by how many third-party funds have been raised for the development of the industry. By early 2020, nine new funds managed jointly by RUSNANO Management Company raised RUB 80 bln from third-party investors. In 2019 alone, external investors invested RUB 26.1 bln in two new funds. New funds with RUSNANO’s participation have already invested about RUB 43 bln in portfolio companies. The funds are focused on different sectors of the economy – renewable power generation, chemistry, and digital solutions.
“Venture business is about risks. You need to build a business in this area in such a way that you can hedge it. There is a simple idea about that. It is called a portfolio. What is a venture fund? It is a portfolio. And it is definitely not one, not three, not five, but 10-15, or even more projects. What are they for? Let us take the sails on the mast of the ship as an example. The ship got into a storm, some of sails were torn up, and some remained intact, so the ship reached the shore. You can fail many times, but it is important for the portfolio to bring a positive result in the end,” Anatoly Chubais explains.
Network of Infrastructure Centres
Without innovative infrastructure, no advanced production can be created or developed. The Fund for Infrastructure and Educational Programs (FIEP) of RUSNANO Group is responsible for creating the institutional conditions for the implementation of high-tech solutions.
The Fund’s area of responsibility includes nanocentres for technological start-ups, personnel training programmes, advanced regulatory documentation, demand stimulation and information support.
The Fund has formed a network of 13 nanotechnology centres in different regions of Russia. Every year, dozens of start-ups appear in them in the material based and hardware industries, and their total number has already reached 811. Investments in the network exceeded RUB 13.4 bln, 2.9 bln of which in 2019. Revenue from infrastructure projects over the past 12 months have increased by 70%, to RUB 9.4 bln, compared to 2018.
In 2019, five companies of the FIEP investment network were included in the V national rating of the most efficient technoparks, which is compiled annually by the Association of Clusters and Technoparks of Russia. For the fourth consecutive year, the first place in the rating of technoparks in terms of the efficiency of operation and attractiveness of sites for high-tech companies is taken by TechnoSpark Group (Troitsk, New Moscow).
“The unique competence of TechnoSpark is the ability to build new technology companies from scratch – from a start-up business hypothesis to a commercially sustainable business. Our companies are continuously investing in the development of new technologies. Only in this case do they have a chance to take their market share or even form a new segment. This is what attracts investors to us, so in 2019 we started opening our technology companies for them,” says Denis Kovalevich, CEO and shareholder of TechnoSpark Group of Companies.
Support of Innovations
The Fund develops personnel training programmes for high-tech industries. By the end of 2019, more than 94,000 specialists, teachers and students had been trained under 199 programmes. About 200 companies from 40 regions initiated the programmes. More than 75 higher education institutions took part in the development. 70 professional standards for promising engineering professions have been approved.
The Fund is improving the system of technical regulations and standards to remove barriers to innovations. The Innovation Certification project involves 17 regions of Russia. 680 documents on compliance of quality, safety, eco-friendly and innovative products, technologies, facilities and enterprise management systems were issued, 76 of them in 2019. 255 national and interstate standards for nanoproducts have been developed, including 15 in the last year. 66 certificates for eco-friendly products and 12 reports confirming the reduction of the carbon footprint were issued.
Press Service of PAO Fortum
The FIEP initiates an increase in demand for innovative products in key industries. The total volume of their application during the capital repair of apartment buildings in 2019 amounted to over RUB 4.5 bln. The project documentation for Gazprom’s investment projects includes 22 nanotechnology solutions. 19 technologies are applied at the facilities of the Transneft system.
As part of the International Cooperation and Export national project, the Fund supported 17 companies manufacturing high-tech products.
RUSNANO Joint-Stock Company was founded in March 2011 through reorganization of state corporation Russian Corporation of Nanotechnologies. JSC RUSNANO contributes to implementation of the state policy on the development of the nanotechnology industry by investing directly and through investment funds of nanotechnology in financially effective high-technology projects providing the development of new production facilities in the Russian Federation. Its primary investment focus is in electronics, optoelectronics and telecommunications, healthcare and biotechnology, metallurgy and metalwork, energy, mechanical engineering and instrument making, construction and industrial materials, chemicals and petrochemicals. 100 percent of RUSNANO’s shares are state owned. Thanks to RUSNANO’s investments, there are currently 115 factories and R&D Centers opened in 37 regions in Russia.
Management of assets of RUSNANO JSC is carried out by Limited Liability Company established in December 2013, RUSNANO Management Company. Anatoly Chubais is the Chairman of its Executive Board.
Work to establish nanotechnology infrastructure and carry out educational programs is fulfilled by RUSNANO’s Fund for Infrastructure and Educational Programs, which was also established during the reorganization of the Russian Corporation of Nanotechnologies.
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The Fund for Infrastructure and Educational Programs was established in 2010 in accordance with Federal Law No. 211-FZ “On reorganization of the Russian Corporation of Nanotechnologies.” The Fund aims to develop the innovative infrastructure in the sphere of nanotechnology and implement the educational and infrastructure programs already started by RUSNANO.
The supreme collegial management body of the Fund is the Supervisory Board. Under the Fund’s Charter, the competence of the Supervisory Council, in particular, includes the issues of determining the priority directions of the Fund’s activity, as well as its strategy and budget. The Chairman of the Fund’s Executive Board, the collegial management body, is the Chairman of the Board of Management Company RUSNANO LLC Anatoly Chubais; the Chief Executive Officer of the Fund is Andrey Svinarenko.