Russia needs new development strategy for industrial infrastructure

Russian startups, as well as the country’s venture capital industry, are facing a very different situation today. Extending to foreign markets has become predictably problematic for Russian startups, while only a few years ago, many venture investors were certain that a startup had no future unless its founders had international ambitions. However, new opportunities have opened up domestically, created by the steady import substitution trend. Plenty of niches have emerged for the rapid development of domestic material-based startups and DeepTech companies.

In a situation like this, it is of the essence to revise the principles of managing technological innovation and the relevant infrastructure, including technology parks and other supportive environments for developing new products of value to society. There are at least two reasons to do this. Firstly, the recent experience with tech companies and technology parks in Russia has revealed a few weaker points in the domestic infrastructure for startups; these bottlenecks need to be addressed as soon as possible in view of the new challenges.

Secondly, a country that has embarked on the path of achieving technological sovereignty needs new technologies and products now and cannot just wait for some enthusiast or entrepreneur to start developing them. It is imperative to initiate the creation of products with clear potential value to the Russian economy, and companies that manage technology parks and special economic zones can play this important role. Large corporations’ venture funds may have the necessary resources and experience as well. Therefore, they can evolve to startup studios, or startup factories, quickly enough.

Most importantly, these startup studios should focus on monitoring the market, so when suppliers or contractors ‘drop out’ of the value chains, they could promptly launch new projects to meet the emerging demand for a replacement of their products. That would definitely require extensive business experience in various industries, which is something a modern technology park should have, being a platform that brings together new projects and contractors.

In fact, many existing technology parks and special economic zones in Russia have one major deficiency – they do not provide new tech companies with access to partners and peers they need for development. Until now, most management companies focused on providing workspace, which includes buildings, engineering systems, fire safety systems, etc. Meanwhile, new projects have a far more urgent necessity – they need technological infrastructure that includes contractors in metalworking, tool engineering, industrial design, electronics, etc. This is what a technology park management company should take care of – attract the required contractors or create its own ones.

The key step here is to build up software infrastructure to a state when a startup can quickly perform the required number of tests and reach the first release because only contractual production can adopt new products fast and with no damage to its economy. Prototypes and even small series are too expensive to produce for a startup that is not tooled for production. Purchasing equipment only to produce a prototype is a sure way into a dead-end. And it is almost impossible to place an order with an ordinary plant: any non-standard jobs will cost a lot of money and take a lot of time until there is a vacant window. Contractual production is the solution.

At the same time, management companies could play the role of investors and founders of new projects. A modern management company is supposed to function as a startup studio that launches companies and invests in their development at the initial stages while also attracting spin-offs of large corporations. Certainly, this new role would require management companies to boost their competence drastically. One way is to intensify business contacts. Thanks to extensive networking and information exchange with businesses, entrepreneurs and consumers, they can discover viable hypotheses for new products.

A new model of management companies will be able to meet the challenges facing the Russian economy, as well as the strategic goals that Russia has set for itself.

By Oleg Lysak, CEO of TechnoSpark (part of Rusnano)

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