As the next 10 years will see digital technology becoming the core of the world technological order, Russia might as well become a global leader in technology. But first, it needs to define its development priorities and not put off building its technological infrastructure and creating the best environment to nurture unicorns – the giants of the new economy, insists Alexey Ivanchenko, Deputy Chairman and Member of the Management Board of Vnesheconombank, speaking with BRICS Business Magazine.
Last summer, the government approved a federal program to develop a digital economy, and VEB is playing an active role in its implementation. What goals do you and other stakeholders face on the way to this new economy?
In 10 years, what we today call a new or digital economy will become the core economy. Technology has been radically transforming entire industries, inspiring new business models, and prompting the largest players to revise their strategies. Startups are becoming full-fledged participants of big markets, successfully competing with large corporations and changing the rules of the game. Look, for example, at how digital platforms are transforming the service sector and conventional ways of the customer-provider interaction. VEB has been helping promote the innovation ecosystem as an integral part of the Russian economy. We have been working to create specialized funds, planning to invest in technological companies, helping them gain access to external markets, and providing financial and other opportunities linked to the state corporation’s infrastructure and broad network of partners.
Is there any chance for Russia to become a leader in the future economy? What steps should it take?
In order to become a leader in the global digital economy, we need to define our technological priorities, find our niches, and focus on them. Quantum, convergent, and blockchain technologies may be the next big things for Russia. All of them have been lacking a clear leader globally. So, becoming first to achieve something meaningful there will provide an economic springboard for a country. With a view to supporting these disruptive industries, VEB has founded its Blockchain Competence Center, while in February, it became a member of the first Russian consortium established to create a multiqubit quantum computer.
According to VEB’s strategy, promoting innovation is one of its priorities. What is your take on the quality of Russian startups and their role in building a digital economy?
Russia is full of promising ideas and interesting projects. Historically, we have had a strong engineering and research basis. We have been good at the so-called ‘deep tech’ – complex, research-intensive products such as those driven by big data, artificial intelligence, or the Industrial Internet of Things. It is an important competitive advantage in the international market.
However, projects often face difficulties when it comes to scaling up and turning their sketches into commercial stories, as the domestic demand for innovations and the level of consumer readiness for them are just not high enough so far. Technology parks, acceleration programs, and development institutions indeed provide decent support for the startup ecosystem. But there is a lack of financing at the scaling up and growth stages, as series A+, B, and C rounds have been seeing few investors or corporate funds participating. As a result, the potential of technological startups and the opportunities they could provide to the new economy are yet to be fully unlocked.
Those problems are not unique to our country and have been addressed across the world in numerous ways, including the use of state aid. In China and Singapore, for example, the governments have developed robust mechanisms to support startups and initiated public procurement of innovative products. That approach has proved effective. According to a study of the Chinese digital economy by the McKinsey Global Institute, China is already the global e-commerce leader and a home to one-third of the world’s unicorns. Startup Genome, an independent organization evaluating startup ecosystems, included Shanghai and Singapore in its 2017 rankings, while Beijing joined the Silicon Valley, New York, and London in the top five.
What activities will be essential to developing the Russian innovation ecosystem over the next five years?
The technological entrepreneur strives and aspires to implement his or her idea and turn it into a successful product. Proliferation of success stories requires a strong startup ecosystem. Today, creating a new regulatory framework to leverage disruptive technology becomes as relevant as developing that ecosystem’s infrastructure, financing, and building demand for innovations.
Last year, a special unit was created within the VEB Group to support innovative projects. Its objectives include developing digital economy projects and the National Technology Initiative, financing startups, and promoting potentially highly exportable Russian technologies across global markets, especially in Asia. Another focus of VEB Innovation is cooperation with research institutes and think tanks whose activities are strategically important for the country.
What needs to be done in order to make technological entrepreneurship more attractive and bring talent to the innovation industry?
Today, more and more talented young people decide to pursue a career in science or technological entrepreneurship. It is a good trend which needs to be supported.
An important thing here is to promote success stories. Last year, VEB together with NTV launched the Million-Ruble Idea show, providing Russian innovators with an opportunity to tell about their products and win a slice of a 60 million ruble pie. Many participants have benefited from the project, enjoying investors’ attention and larger customer networks. The upcoming season will focus on regional startups, with some of the leading technology universities delegating their promising teams as well. The renewed concept will be presented on the Youth Day at the St. Petersburg International Economic Forum, where expert judges will assess the performance of future participants and discuss the development of technological entrepreneurship in Russia. Even during the screening process, we saw strong projects with decent potential. Our goal is to support those who will build a new economy.
