Attracting financing for Russian businesses, including high-tech companies, remains one of the key challenges in today’s market environment. As access to traditional bank lending continues to tighten, companies are increasingly turning to capital markets, exploring options such as bond placements and even IPOs to raise funds. But are conventional instruments still the only viable path to capital? In a turbulent economic environment, what new investment formats are emerging for both businesses and investors, offering alternative “safe havens” for capital allocation? How significant are a company’s brand strength and level of trust when it comes to securing financing? These issues, along with potential solutions and strategies for adaptation, were discussed by participants at the 5th International Congress of Financiers held in St. Petersburg. The congress was organized by the Moscow International Currency Association.
The cost of capital
Congress participants noted that the high cost of capital remains a serious challenge for the economy.
“More than half of investment financing comes from companies’ own funds, while borrowed money is used mainly to support working capital. At current interest rates, financial results are effectively erased, leaving businesses without resources for investment,” said Alexei Vedev, research fellow at the Russian Presidential Academy of National Economy and Public Administration and Director of the Macroeconomic Policy Department at the Eurasian Economic Commission.
At the same time, bank lending is unlikely to become a real solution. Historically, no more than 10% of capital investment has been financed through bank loans, the expert noted, as companies typically rely on borrowed funds to replenish working capital rather than to finance long-term development.
According to the expert, a softer monetary policy could help address the problem. In his view, this would require bringing the key interest rate down to single digits, reducing the tax burden, and using both fiscal and monetary stimulus measures to support economic growth.
At the same time, it is important to avoid reigniting inflation. Economist Andrei Nechayev, Russia’s first Minister of Economy, notes that inflation is currently slowing, with expectations that it could reach 5.86% by the end of 2026. However, surveys conducted by the Central Bank of the Russian Federation show that inflation expectations among the population remain elevated, hovering at around 15%.
“The Central Bank’s leadership is facing an almost impossible task: supporting economic growth without triggering a new wave of inflation,” Andrei Nechayev noted.
Venture capital in focus
The venture capital market is increasingly being viewed as an alternative source of financing for technology companies, particularly during periods of uncertainty and heightened volatility. Its distinctive feature is its countercyclical nature: when traditional sectors face turbulence, new opportunities often emerge, says Artem Genkin, Chairman of the Venture Capital Commission at the Council for Financial Markets and Investment (Russian Chamber of Commerce and Industry).
“Any black swan event affecting neighboring alternative savings markets makes the prospects for the domestic venture capital market even more apparent,” Artem Genkin noted.
At the same time, he emphasized that entering the venture market requires careful preliminary assessment. Venture financing involves a wide range of risks – including operational, regulatory, and technological risks – while investment liquidity remains inherently limited until strategic investors enter the picture.
Nevertheless, for businesses, venture capital continues to offer an opportunity to secure long-term financing for an idea, technology, or team, particularly in cases where banks refuse lending due to insufficient collateral or a lack of profit under Russian accounting standards. In addition, venture financing does not require immediate debt servicing.
A window for opportunity
When seeking financing, companies should first look to private investment funds (which increased their investments by 70% year-on-year), as well as investor syndicates, which account for 34-36% of all deals, a phenomenon largely unique to the Russian market.
Additional opportunities for venture financing are also emerging as a result of government policy. According to Artem Genkin, the state increasingly views the venture capital market as an instrument for supporting technological sovereignty. At the federal level, legislation on technology policy has now been adopted, national targets have been established for stock market capitalization growth, and artificial intelligence initiatives are receiving substantial support through the Data Economy national project. By 2028–2030, key components of the country’s critical information infrastructure are expected to transition to domestic solutions. Together, these developments are generating immense demand for Russian startups.
At the same time, amendments to criminal legislation continue to hinder the attraction of venture capital.
“The criminalization of public investment solicitations has affected not only fraudulent schemes but also legitimate projects that seek financing. The adopted legislation has effectively turned the very act of making a public offer into a challenge for businesses,” Artem Genkin noted.
In addition, venture capital remains heavily concentrated geographically: nearly all infrastructure supporting the industry, including development institutions, is located in just six or seven regions, with venture projects from other parts of the country often forced either to relocate or to operate without access to “smart money.”
Betting on trust
Participants in the congress also agreed that Russian banks are facing growing challenges in attracting capital. Increasingly, competition in the sector depends less on interest rates and more on reputation, transparency, and the ability to build strong client relations, said Natalya Vidyaikina, partner at Balance Group.
“True reputation means remaining highly regarded even after you’ve left the room and without having paid for recognition,” the expert explained.
According to her, modern banks must move away from a closed operating model and prioritize a human-centered approach by eliminating queues, simplifying interfaces, and saving clients’ time. Building partnerships with other businesses is also essential, allowing banks to become a single entry point for clients. Furthermore, preserving a memorable and recognizable brand identity remains essential, since people still place value on genuine human interaction.
“Reputation does not depend on the Central Bank rate or the exchange rate. It depends on the degree of attention we devote to it. Trust is often more important than the profit we generate,” Natalya Vidyaikina emphasized.
Long-term perspective
Amid mounting economic challenges, both businesses and the government require access to long-term financing. One potential source is endowment life insurance (ELI), according to Evgeny Shcheklanov, CEO of Everia Life insurance company. He noted that the Russian life insurance market has reached 2.2 trillion rubles and now accounts for more than 57% of the country’s total insurance market. In addition, the endowment life insurance segment has maintained stable annual growth of 10–30%, despite current macroeconomic pressures.
“Life insurance represents long-term, reliable capital that helps the state build bridges, roads, healthcare facilities, and infrastructure projects. We are the foundation – the source of long-term financing for the Russian economy,” Shcheklanov emphasized.
In an environment marked by high uncertainty and tight monetary policy, sustainability rather than immediate profitability becomes the key priority for businesses. This is where the direct connection between insurance and financing becomes evident. Funds accumulated through life insurance policies represent liabilities with maturities of 10–20 years – exactly the type of long-term resources corporations need to implement capital-intensive investment projects.
A serious challenge
Financing for small businesses also remains a challenge. Pavel Samiev, head of the BusinessDrom analytical center, points out that payment delays from major customers are increasing, despite the fact that procurement volumes from SMEs reached a historic high last year.
Access to bank financing is becoming increasingly restricted as well. The number of SMEs with active loans has already begun to decline, along with the number of recipients of subsidized loans. Certain sectors of small business are already entering a “red zone,” where obtaining loans is effectively impossible. These sectors include construction and related industries, agriculture, restaurants, hotels, and the broader hospitality industry.
“Subsidized lending programs for SMEs are being reset. Three-year planning cycles imply a reduction in the scale of subsidized support. In practice, small businesses now have no opportunities to secure loans at preferential rates,” Pavel Samiev stated.
One possible solution could involve restructuring SME loan portfolios. However, this would require overdue payments to be fully reflected in official statistics – a process that occurs with an anticipated delay.