The RUSNANO’s FIEP Representatives at the Russian Venture Forum Have Proposed the Concepts of an Investment Loan and a Digital Face

14 April 2021

Specialists from the RUSNANO’s Fund for Infrastructure and Educational Programs (FIEP) (part of the VEB.RF Group) took part in the Russian Venture Capital Forum in Kazan on April 7 and 8.

Alexey Kachay, Board Member and Deputy Director General of FIEP, has moderated “The professional community, the innovation ecosystem, and the state: in search of an effective alliance” open dialogue. He invited the panelists to discuss the current state and main trends of the Russian venture capital market and find effective tools to support startups.

The panelists noted that the country had a range of development institutions that provided support to companies at the earliest stages of development, and their instruments had long proven themselves (the Innovation Promotion Fund, the Skolkovo Fund, and FIEP). There are also measures to support medium and large innovative businesses, including through a system of private equity and venture capital funds (Skolkovo Ventures, VEB Ventures, RUSNANO, and RDIF). At the same time, a startup often lacks resources for the intermediate stage of initial growth. New sources of growth can be harnessed and technology teams can be focused on developing technologies and products through internationally recognized instruments for raising investment, including non-equity ones. It is also advisable to develop digitalization.

In particular, a simplified procedure for investing in innovative companies in the early stages of development for a wide range of non-institutional investors could be one of the tools. “One of the effective tools for stimulating investment activity in Russia could be the so-called investment loan—a simple and balanced way of investing in innovative projects, technology companies, deep tech and material-based startups,” Alexey Kachay believes. The mechanism is based on a classic loan, but is not tied to a mandatory interest payment period, but entitles the lender to a share of the profits or proceeds of the project. In this way, the interests of the venture project and its investor are aligned. International experience shows that the effective operation of such tools requires regulation at the legislative level to balance the interests of the investor and the investment recipient. The relevant draft law has been prepared and would soon be presented for discussion with the professional community and the public authorities concerned.

At the round table “Fintech Trends: View of the Regulator, Banks, Businesses and Financial Technologies”, Anna Pisareva, Chief Analyst of the Department of Regulatory Support for Innovative Development at FIEP, and Ivan Ermokhin, Deputy Head of the Russian Center for Competence and Standards Analysis of OECD at RANEPA, presented an extended concept of a digital legal entity.

The concept involves the creation of digital platforms where early-stage companies generate their entire document flow from registration documents to business transactions on third-party agreements and ongoing information within the business operations. All of this is used to generate automatic reporting to government agencies, namely the Federal Tax Service, Pension Fund, Social Insurance Fund, and Rosstat. This allows getting rid of on-site inspections and the need to register the office at a postal address since the address also becomes digital.

As a result of digitization of all primary information, companies become fully transparent not only to regulators but also to banks, counterparties, and investors, making it easier to access international markets, said Antonina Levashenko, Head of the Russian Center for Competence and Analysis of OECD at RANEPA.

Reference

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 Sergey Kulikov.