The 3rdSino-Russian"Investing in Innovation" Forum was held on 16th October, as part of the Open Innovations Forum. The participants discussed development trends in the venture investment market, the innovation ecosystems of Russia and China, and also options for creating joint funds and investment projects in the field of high technology. The Forum also included a presentation of Russian technology start-ups, in anticipation of Chinese venture funds.
The Forum was organized by RVC, the Eurasian Union of the Torch Centre and the Venture Capital Professional Commission of the Science and Technology Financial Promotion Association of China, with the support of the Ministry of Economic Development of the Russian Federation and the Ministry of Science and Technology of the People's Republic of China.
At the Forum's opening ceremony, RVC's General Director, Alexander Povalko, drew attention to the growing level of interest shown by government and business on the subject of Sino-Russian cooperation and also commented on the results of the previous "Investing in Innovation" forums: "The two events have already produced tangible results: new funds are appearing, the number of transactions made between companies in our countries is increasing and we are embarking upon joint projects and programmes. Our common goal is to create conditions for the growth of investment business in the field of technology, whilst at the same time getting rid of the barriers caused by a lack of information ontheopportunities for cooperation."
The existence of a "green light" for joint investment technology projects was also noted by representatives of the Chinese delegation. "I am verypleased to havebeen able to come to Russia and participate in the 3rdSino-Russian"Investing in Innovation"Forum. Together with RVC, we've done a lot of work to bolster cooperation between our countries in the area of scientific and technological innovation. In particular, new approaches to investment have been discovered and a better understanding of the characteristics of our markets has been achieved. We are hoping for a further positive dynamic and an increase in the number of joint projects," said Xu Xiaoping, Chairman of the Venture Committee of the All-China Association for the Financial Promotion of Science and Technology.
Qualitative changes have recently taken place in the level of cooperation between Russia and China, especially in the fields of science and innovation. Li Hui, China's Ambassador Extraordinary and Plenipotentiary to Russia said: "We are continually moving in the direction of stable economic growth, based on mutual cooperation. This is a consequence of the openness of our relationship. China and Russia are not only neighbours, but also good friends. Our goal is to increase mutual trust in all areas of interaction. Attracting new investments will allow us to continuously build on the existing base of economic development."
Sergey Gorkov, Deputy Minister for Economic Development of the Russian Federation, gave his opinion on how cooperation in the field of investment and innovation could be improved: "Russia and China are traditionally linked by long-standing, good-neighbourly relations. Cooperation in the field of innovation opens up new opportunities. Primary legislation has already been put into place to boost the innovation ecosystem in Russia. Our task now is to more actively use that potential. It is essential, that angel investments are supported and new venture capital funds are formed. For us, the important thing is to accelerate export business, which RVCsaysis about access to external, global markets."
During the Forum, participants also discussed the investment landscape of Russia and China, as well as possible models of cooperation. In particular, Alexey Basov, RVC's Deputy General Director and Director of Investment, spoke about the state of the Russian venture market: "Our market is a little less than 20 years old, but already has all the properties of a classic, mature venture market. Today, we are able tocarry out all the important types of transaction, both domestic transactionsand those involving foreign players. We are hoping for closer cooperation with our Chinese partners and expect this to be at a maximum this year."
Yang Liu, CEO of CreditEase, noted that the Chinese venture capital market is now showing high levels of growth: "This is due to a breakthrough in recent years in China's agricultural and industrial sectors, as well as to the introduction of new technologies and the development of online trading. We are pleased to see Russian players in the Chinese market. But it must be understood, that where there are opportunities, there are also risks. In order to work in the market of another country, one needs a good understanding of the characteristics of that market. The creation of joint funds and partner structures could help investors in our countries."
Rebecca Fannin, founder of the US company "Silicon Dragon Ventures", gave a view of the Chinese market from the US perspective: "In recent years, we have seen a rapid growth of technology in China. Where in the past, local manufacturers routinely copied foreign innovation, they are now creating and implementing their own solutions. In today's China, the use of cash is almost a thing of the past. As regards investment, China will now increasingly turn its attention to Southeast Asia. It is likely, that there will also be more interest in Russia."
In discussing prospects for cooperation, the Forum's participants also touched on the topic of sanctions and their potential to limit financial operations and hinder access to global markets. According to Alexander Lupachev, director of the "Russia Partners" fund, in matters of joint partnership investment, business is unaffected by the existing sanctions: "The sanctions don't get in our way when developing foreign investment projects. We currently interact with China on three levels: we invest in Chinese companies, attract investors to our funds and scale up business for our portfolio companies in China. However, there are some particular complications. In China today, each company has some 50-100 competitors for investment, and getting information on them is difficult. At the same time, venture transactions tend to go through quickly here. Investors either have to act by rule-of-thumb, or they have to look for partners who understand the local market. We chose the second option and entered the Chinese market through a fund of funds. There are always opportunities and the main thing is not to miss them."
The Sino-Russian "Investing in Innovation" Forum has been held annually since 2016, in accordance with a memorandum on cooperation in the field of innovation signed between the Ministry of Economic Development of the Russian Federation and the Ministry of Science and Technology of the PRC. This year, the event was attended by over 150 representatives of the leading Russian and Chinese venture funds, institutional investors, corporations, government bodies and innovation infrastructure agencies.
RVC JSC is a state fund of funds and the institute for development of the venture industry in the Russian Federation. The main objectives of RVC are to stimulate development of the private venture investment industry in Russia and take on the role of project office for the National Technology Initiative (NTI). RVC's authorised capital amounts to more than RUB 30 billion. This is owned in full by the Russian Federation, represented by the Russian Federal Agency for State Property (Rosimushchestvo). RVC now has a total of 26 funds with a total value of RUB 41.8 billion. RVC joint-stock company share: RUB 24.8 billion. RVC currently has funds in 225 portfolio companies. The total sum approved for investment amounts to RUB 18.6 billion.