GuideToRussianHighTechHubs June2015 0

r u s s i a- d i r e c t.
o r g
|#9 | JUNE 2015
to Russian hi-tech HUBS
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EXECUTIVE SUMMARY
CONTENTS
New efforts to modernize the Russian economy have taken

on even greater significance since the implementation of
04. Can high-tech hubs help

to modernize Russia?
Western sanctions and recent volatility in global energy
BY George gogolev
markets. As a result, a renewed focus on technological innovation could be one way to diversify the Russian economy
08. A strategy for the
and insulate it from external economic shocks. Most im-
development of Russian
technoparks
portantly, the commercialization of new innovations could
BY Andrei shpilenko
provide a long-term boost to Russian economic growth and

consolidate gains for Russias emerging middle class.
16. How to create a favorable

environment for technology
hubs in Russia
The federal government, which has always played an important role in the development of Russias innovation sec-
BY Russian Ministry of
telecom and mass commu-
tor, now faces a number of critical strategic questions of
nication
how to develop regional innovation ecosystems in a time of
18. Can Russia become an

innovation leader?
increased isolation from the West and decreased funding

for science.
BY oleg buklemishev
One major initiative to bridge the innovation gap has been
22. Case study: Three

centers for Russian
to channel resources both financial and administrative

into the creation of new technoparks, high-tech hubs and
innovation.
#1: Skolkovo Innovation
Center
innovation clusters.
In the report below, we highlight the early successes and
BY alexei sitnikov
challenges of Russias modernization drive, with an em-
23. #2: Bauman Moscow
phasis on the role of the state in guiding and supporting
State Technical University
innovation efforts at the local level, primarily through the
BY evgeny starozhuk
creation of new technoparks. In addition to highlighting

several case studies of Russian innovation at work includ-
24. #3: The Troitsk

Technopark
ing the Skolkovo Innovation Center in Moscow the report
BY sergei sharakshane
analyzes the most important factors in Russias long-term
27. Russias long-term
transition to an innovation economy and provides multiple

steps to help Russia realize its full potential for innovation.
transition to an innovation
economy
BY kendrick white
28. Top 10 recommendations

for Russian innovation
entrepreneurs
BY kendrick white
press photo
28. Editors picks
REPORT
FROM
THE
EDITOR
Making sense of
Russias modernization
initiatives
Sanctions and the growing isolation from the West continue to
inuence the development of Russias innovation economy, at
least in the form of the deterioration of the investment climate
and increased economic instability. Modernization of the Russian economy, which is now cut off from Western foreign loans
and still heavily dependent on oil and gas revenues, becomes a
matter of survival.
In this report, we decided to look closely at the hubs where
Russian innovation is being developed today. In doing so, we
are trying to make sense of the most recent modernizing initiatives and sort out the vast array of new technoparks, high-tech
hubs and innovation clusters.
The co-authors of our report are on-the-ground practitioners and leading thinkers of the Russian innovation economy.
George Gogolev of the Russian Venture Company (RVC), a
joint-stock company created by the Russian government with
a mission to help set up Russias own venture capital industry,
writes about the challenges of transitioning to new models of
innovation in the country whose industry still largely relies on
old internal Soviet R&D supply chains.
Andrei Shpilenko of the non-prot Association of Science
Parks in High Technology gives a detailed overview of Russias technology parks and provides a brieng on the newly
adopted framework documents in this eld. His analysis is followed by a commentary from the Russian Ministry of Telecom
and Mass Communications, which sheds light on the Russian
governments priorities in creating favorable environment for
technology hubs.
Write to us
Send an email to:
In addition, Oleg Buklemishev of Moscow State University

gives a highly critical assessment of the current efforts to modernize the Russian economy. He insists on three alternative
ways to capitalize on Russias advantages in order to transform
the economy and create new breakthroughs in the eld of
innovation.
This Russia Direct report also contains three case studies of
Russian high-tech hubs and specic recommendations for
Russian innovation entrepreneurs from Kendrick White, a U.S.born entrepreneur with more than 20 years of investing and
management experience in Russia.
I hope you will enjoy this report. Please do not hesitate to send
me an email at e.zabrovskaya@russia-direct.org if you have
any questions or suggestions.
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launch a paid subscription model for all of our reports. For
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INSIDERS GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015
RUSSIA-DIRECT.ORG
AUTHORS
OLEG BUKLEMISHEV is an associate professor in the department of economics at

Moscow State University. From 2000 to 2004 he was an assistant to the prime minister and
deputy director of the secretariat of the prime minister of Russia. From 2005 to 2012, he
was chief analyst and member of the board of directors at NGO MK Analytics. He is author
of the book, The Eurobond Market (1999).
GEORGE GOGOLEV is head of the Innovation Ecosystem Development at

Russian Venture Capital, a state funded agency which nances developments in Russian
high-tech. He previously served in sales, marketing and PR positions in various fastgrowing tech companies in Russia. Gogolev is also an active investor and holds a Ph.D. in
geography from the Russian Academy of Sciences.
SERGEI SHARAKSHANE is the spokesman for the Russian Academy of Sciences (RAS).
Holding advanced degree in mathematics and philosophy, he spent 40 years working in journalism
and served as an assistant to the Press Minister in two ministries during the Soviet Union. In addition
to his work as a spokesman to the RAS, he is also a member of the expert council to the A Just Russia
party faction of the Russian State Duma.
ALEXEI SITNIKOV is the vice president of Institutional Development and Executive

Secretary of the Board of Trustees of the Skolkovo Institute of Science and Technology. Prior to
joining Skolkovo, Sitnikov served as vice president for operations and development at the New
Economic School in Moscow and held the position of program coordinator for Russia at the
Freeman Spogli Institute for International Studies at Stanford University.
EVGENY STAROZHUK , Ph.D., is provost of economics and innovation at Bauman

Moscow State Technical University. An expert in nancial management and credit who
attended the Russian Federation Financial Academy, Starozhuk served as deputy director
of the N.N. Andreyev Acoustics Institute (2007-2009). He most recently served as general
director of the Atoll Research Institute.
ANDREI SHPILENKO, Ph.D., currently serves as the director of the nonprot Association of Technoparks in High Technology and chairman of the board
of the Youth Innovation Center. Shpilenko is an expert and innovator in youth
entrepreneurship, startup businesses, and partnerships between the public and
private sectors.
KENDRICK D. WHITE is the vice rector for Innovation at the Lobachevsky

State University of Nizhny Novgorod (UNN) and the director of UNNs Technology
Commercialization Center. He is also the founder of Marchmont Capital Partners, LLC,
and a U.S.-born entrepreneur who has built unique know-how in commercializing
early stage, high-tech investment projects over more than 20 years of investing and
management experience in Russia.
2- 3
Can high-tech hubs help to

modernize Russia?
Faced with numerous economic challenges, Russia needs a new
strategy to boost its innovation development.
GEORGE GOGOLEV
he late 20th century has seen a major evolution of the innovation model
from structured vertical corporate research and development (R&D) systems to distributed startup ecosystems.
As the corporate model gradually dissolved in the 1980s and 1990s due to increased global competition and falling margins, venture capital rms and startups have started taking over this niche.
However, the efficiency of the new model depends on the critical mass of
knowledge, business, capital and proper governance concentrated in certain
geographical regions.
RUSSIA-DIRECT.ORG
The most successful ecosystems in the U.S., for

example, developed around the best universities, including Stanford, MIT and Harvard.
These schools provide a good interdisciplinary
knowledge base, as they host a diversity of schools
(Science, Arts and Humanities, Medical, Law and
Business, Engineering) and boost the ecosystem
around them by attracting and providing the best
human capital on the planet.
HOW RUSSIA TRIED

TO KEEP UP WITH THE REST
OF THE WORLD
As the world was transitioning to new models of innovation, Russia after the collapse of the Soviet Union
was going through a major political and economic crisis and therefore was unable to go through a smooth
transition to the new model.
The industry largely still relies on old internal Soviet
R&D supply chains and is highly controlled by the
government. Embracing open innovation is therefore

a grand challenge.
Moreover, Soviet universities for the most part were
not involved in science and R&D activities, as R&D
was done in vertically integrated applied research
centers, and science was developed in the Russian of
the Academy of Sciences.
As a result of this division, universities are distanced from the industry as well as from the process
creating the needed knowledge base to feed intellectual property (IP) into the innovation ecosystem.
They are currently in the process of learning to do
large volumes of scientic research and corporate
R&D, but embracing entrepreneurship and the importance of building innovation ecosystems is still a
distant concept.
If we take a look at the current development of
regional innovation in Russia, we will notice that
Moscow is the only region that has a more or less
complete set of institutions to grow a proper ecosystem. This is a result of the centralized nature of all the
Technoparks are built as a catalyst

for the development of innovation
clusters. In all cases the main
purpose of technoparks lies in
creating favorable conditions for
innovative companies through
building the environment and
infrastructure they need.
4 -5
REPORT
Novosibirsk. Akademgorodok.
In the laboratory of the
Institute of Theoretical and
Applied Mechanics, Siberian
Branch of the U.S.S.R.
27%
The three-year
survival rate for
most of Russias
technoparks.
economic activity in the country.

Other regions with high potential are St. Petersburg, Kazan and Novosibirsk, but they all lack critical ingredients, such as venture capital and anchor
corporations of global scale.
All of the existing regional innovation ecosystems
are a legacy of certain Soviet, and in most cases,
even tsarist science and industrial centers. Modern
Russia, however, started moving in this direction
rather early, opening the rst technopark in Tomsk in
1990 (during the Soviet era), and the program continued through the 1990s.
Most of the early technoparks were associated
with universities. In the mid-1990s, the government
started an industrial park program bringing innovators closer to manufacturers. However, most of those
early initiatives were not successful as they were initially taken as a way to get additional state subsidies.
This point was proven by a state accreditation of existing technoparks completed in 2000.
THE CURRENT INNOVATION MODEL

IN RUSSIA
The new wave of modernization under president
Dmitry Medvedev in 2008-2012 brought a new wave
TASS
Academy of Sciences. 1978
of innovation ecosystem initiatives as well as new approaches to creating techno and industrial parks.
A number of development institutions were created including Russian Venture Capital (a state fund
of funds), Rusnano (a late-stage nanotechnology investment fund) and Skolkovo (an initiative to create
an innovation ecosystem from scratch near Moscow).
These and other institutions started accumulating
sufficient expertise on how to develop innovation
ecosystems and advise all levels of government and
management teams on these issues.
This triggered a new wave of creation of technoparks of a different sort, which were actually
aimed at modern startups. One of the biggest programs was run by the Ministry of Telecom and Mass
Communications, which co-nanced the creation of
12 technoparks with regional authorities all over the
country.
A year and a half ago, Russian Venture Capital
commissioned a research project to Ernst & Young
to study the current status of technoparks and business incubators. This study showed that Russia had
slightly over 100 functioning technoparks and 110
business incubators. Most of those are owned by the
state and a few are private. In terms of efficiency,
they are in general still far from global standards.
Statistics from the National Business Incubator Association (NBIA) and European Business Network
(EBN) are fairly similar and measure success rate by
survival of companies after a certain period of joining a technopark or graduating from an incubator
program.
Usually the survival rate is 85 to 90 percent after
three years. Most of the Russian technoparks showed
a survival rate of 27 percent. The top 5 percent of
Russian technoparks, however, performed similar to
global standards.
Differences between top performing and average
technoparks were mostly in the rigor of the selection process, the presence of independent admission
committees and the services they provided to companies. The best admitted only 9 percent of applicants (compared to an 11 percent average in Europe),
had independent admission bodies and provided extensive consulting services to their residents.
Others mostly considered technoparks to be a real
estate business, admitted 37 percent of applicants
and had no independent admission panels. This was
partly stimulated by KPIs they got at the regional
and state levels, which did not stimulate long term
growth, but required to show either number of residents or workplaces created.
RUSSIA-DIRECT.ORG
Lately best practices have been proliferating in the

system and a lot of the existing and new technoparks
are improving their management and strategy. Most
of the technoparks and incubators are still either
connected to or situated next to universities and are
forming a larger innovation ecosystem.
There are only a handful of universities in Russia
that have a chance of becoming global innovation
hubs, and it is essential to develop the right services,
governance and functionality around those.
If we look at universities with the potential to drive
the local ecosystems in Russia, they too lack critical ingredients either in leadership and governance,
available land for development around them or in the
complexity of the research and education they do.
For example, Moscow State University, being the
highest internationally ranked Russian university,
lacks an engineering school and has almost no art
and design.
Moscow Institute of Physics and Technology, which
is currently actively developing an entrepreneurial
community driven by its successful alumni and ranks
the highest among Russian schools in global science,
technology, engineering and math (STEM) ratings,
has no business, arts or medical schools. Therefore, it
can only play a major role in IT and materials.
In order to transform any of these schools into real
drivers for the knowledge economy and globally
competitive innovation hubs, it is crucial to dramatically improve governance and leadership, diversify
education and science and embrace high tech businesses, global or local, willing to work in close proximity to these schools. As of now, the necessary vision is only being formed and the current leadership
burdened by the Soviet experience is not ready to
dive into the new reality.
Novosibirsk
Akademgorodok
Akademgorodok is a great example of the current
state of the development of regional innovation
ecosystems. Built in the middle of the Cold War as
an isolated center for the most active scientists,
Akademgorodok has long been seen as a success
of the Soviet academic system. Even when faced
with the economic turmoil of the 1990s it did
not lose its charm, being located in a beautiful
pine forest on the Ob river and populated by the
children and grandchildren of some of the best
mid-20th century Russian scientists. Some of
them made good progress building IT companies,
some made great high-tech niche products, but
no large firms materialized. However, they created
a critical ingredient a generation of locally bred
entrepreneurs. They pushed the local government
to build a technopark, created modern prototyping
facilities and started growing the local innovation
ecosystem on the fertile soil of the highly educated
population of Akademgorodok. Yet the progress
has been terribly slow and it is rather clear why:
Most of the city is still run by the Russian Academy
of Sciences, which is distancing itself from any
possible connections with real businesses. The
local university had originally been built as a school
to supply basic researchers to the Academy and
it still sees itself this way, being wary of what is
going on in the outside world and skeptical of what
outside businesses want to do with their grads.
Global companies love to place their R&D centers
here and use the abundant high quality human
capital of the region, but they are not willing to
open up any markets or engage in local merger
and acquisition deals. With the absence of major
economic activity, local angel investors and venture
capitalists are virtually nonexistent. This is a case of
a region which has potential to become visible in the
global landscape, but like many Russian innovation
ecosystems, is handicapped by its past.
ALSO READ
Russia Direct Report
The Future of
Russias Innovation
Economy.
Download at http://
www.russia-direct.
org/archive.
Faced with the challenge of global competitiveness,

Russia is currently launching important initiatives,
such as the Russian government project 5-100. It
aims at boosting the international ratings of Russian
universities. Another one is the New Technological Initiative, which forecasts the growth of future markets
and develops ways in which the nation can play a role
in those.
These initiatives are pushing the system in the right
direction and bringing positive change. However, still
more focus is needed on certain high potential geographies to build self-sustaining innovation growth
engines of a global scale.
SLAVA STEPANOV
INITIATIVES FOR 2015 AND BEYOND
6-7
report
PRESS PHOTO
A strategy for the development

of Russian technoparks
One of the key
questions here is: Why
create technoparks in
the first place?
Andrei Shpilenko
ntil relatively recently, Soviet science cities were rightly considered by

Russian legislators as highly desirable in many industries and sectors. The
technoparks that replaced them, with rare exceptions, lag far behind similar structures abroad both in terms of creating the best environment for innovative startups and commercializing the output of resident companies.
What is being done to effectively treat the afflictions of Russias homegrown
technoparks? What are the results so far, and what can we expect them to deliver?
Why does Russia need technoparks?

As international experience shows, every technopark in the developed world is
created with specific goals in mind. One of the main goals is to generate scientific
breakthroughs and knowledge. To achieve that at one site requires a combination
of fundamental and applied science with cutting-edge research centers, either
industry-specific or diversified across sectors.
In some cases, the goal is to create small innovative enterprises, thereby providing regions with new jobs.
Insiders guide to Russian high-tech hubs | #9 | JUNE 2015
RUSSIA-DIRECT.ORG
When people talk about the innovation storm, it should

be remembered that for wide-scale innovations to emerge,
difficult circumstances are not enough. You need a sound
institutional environment.
Russian economist Alexander Auzan
We are talking here about fairly advanced technoparks. As the experience of the worlds best
technoparks demonstrates, it takes six to ten years
to get a technopark up and running, i.e. to provide
the requisite technical facilities and make the park
attractive to businesses. That implies creating a
technological, engineering and institutional infrastructure, and, more importantly, implementing
mechanisms and programs to make doing business
in technoparks better than anywhere else. Full recognition takes about 30-40 years of operation at full
capacity. Whereas many technoparks outside Russia
have celebrated at least their twentieth anniversary,
inside the country only three such organizations are
more than 20 years old, while one is 10-20, a hundred are 3-5 years old, and sixty-ve are 1-3 years
old. The upshot is that in Russia today 97 percent
of technoparks are in the embryonic stage, and are
hence at risk of being nipped in the bud.
Lastly, technoparks are built as a catalyst for the

development of innovation clusters. In all cases, however, the main purpose of technoparks lies in creating favorable conditions for innovative companies
through building the environment and infrastructure
they need, and providing resident companies and
research organizations with a host of benets and
privileges.
THE GROWTH OF RUSSIAS

TECHNOPARKS
In Russia today, 97
percent of technoparks are in the
embryonic stage,
and are hence at
risk of being nipped
in the bud.
THE GOVERNMENTS ATTEMPTS TO

DEVELOP TECHNOPARKS
In the mid-2000s, a new impetus to set up technoparks came from the adoption of the Concept
of long-term socio-economic development of the
SERGEY PYATAKOV/ RIA NOVOSTI
The new technoparks are all rather reminiscent of Soviet science cities. And it is no coincidence that the
rst wave of Russian technoparks, built in the early
1990s, appeared as part of technical colleges and
public research centers in academy towns and science cities.
Unfortunately, a good number of these parks are no
longer functioning a sad consequence of the lean
years when science, innovation and industry were
all pushed to the periphery of government attention. Nevertheless, the goals they set and conceptual
building blocks they created are one of the ingredients required to turn technoparks into healthy living
organisms modernized and adapted to the specics
and challenges of today.
Hence, the objectives of todays technoparks also
include diversifying the economy of the Russian
Federation, changing its structure, developing production in high-tech areas, and raising national selfesteem. Technoparks are also the basis on which to
build future industrial and innovation clusters.
Today, all bets are on clusters to create the environment for the new industrialization. To meet these
expectations, every cluster must have a core and a
catalyst for development in the form of a technopark
as a generator of new projects and new kinds of
products. Without such a generator of ideas, clusters
risk becoming regressive manufacturers of a single
product. As the rst attempts at cluster development show, clusters must always aim to improve the
competitiveness of its member companies and their
products in terms of R&D. Doubtless that is also the
prerogative of technoparks.
8 -9
REPORT
ALEXANDER KRYAZHEV/RIA NOVOSTI
Russian Federation to 2020. This document identied, among other things, the need to implement a
national system of innovation, providing for the creation of technoparks. In the same period, a substantial
amount of public money was allocated to the establishment of technoparks under a series of dedicated
programs, including a comprehensive program to
create technoparks in Russia in the sphere of hightech, a similar program under the auspices of the
Ministry of Economic Development, and a program
under the Ministry of Education and Science to develop innovative infrastructure at universities.
Consequently, in the period 1990-2015, Russia saw
the establishment of 179 techno parks. The record
year was 2013, when 200 were registered.
RUSSIAS MOST SUCCESSFUL

TECHNOPARKS
The best Russian technoparks are not far short of
world-class in many categories, including availability
of infrastructure for launching innovative startups and
range of services on offer.
The most famous example in this regard is the hightech park in Khanty-Mansiysk Autonomous OkrugYugra, which formed the basis for the Regional Engineering Center. Many interesting startups have been
brought to fruition at the technopark in Novosibirsk

Academy Town in Siberia and at Zhigulevsk Valley,
a technopark in central Russia in the city of Samara.
Among the countrys most developed technoparks that fully meet their stated objectives are
the IT park in Kazan, Mordovia Techno Park, Tomsk
Nanotechnology Center, and Sarov Techno Park,
which is home to a supercomputer simulation center. The multisectoral Technopolis Moscow is also
developing rapidly.
WHAT IS HINDERING THE

DEVELOPMENT OF TECHNOPARKS?
The examples given so far achieved success mostly in
spite of rather than thanks to. Post-2013 the number of techno parks in Russia began to decline, a trend
that still persists. The main reason was the lack of an
established legal framework dening the goals, tasks
and principles of technoparks, as well as their role in
the national system of innovation.
There is still no precise system of nancing and
government support measures, or criteria for evaluating performance. The attempts to overcome this
regulatory backwardness have largely come about
through the persistent efforts of the Association of
Technoparks in the sphere of High Technologies.
RUSSIA-DIRECT.ORG
STEPS TO IMPROVE THE SITUATION

Taking into account the best Soviet and foreign experience, combined with modern approaches to setting up technoparks, the past two years have seen the
drafting and adoption of a number of framework documents in the eld of technoparks. They include the
Requirements for technoparks for their infrastructural facilities, their activity and operation, and the
list of services and their provision to techno parks
in the sphere of high technologies, and the Guidelines on the activity, goals and tasks of technoparks,
and the composition, management, property, equipment, land plot, engineering structure and range of
services of technopark residents.
At the end of last year and the beginning of 2015,
public consultations were held on drafting a new national technopark standard, which is expected to be
approved by late June and published as the Technopark Requirements national standard (GOST).
Since 2014 there have been efforts to campaign for
voluntary accreditation of technoparks. Accreditation means that a technopark contains all necessary
infrastructure to promote innovative business, and
implements cost-saving programs and measures. It
sends an important signal to startups and venture
companies, too. Accreditation helps the managing
company of a technopark state its case more convincingly in the dialogue with local heads in the joint
resolution of issues such as providing tax breaks and

creating business incubators, thereby eliminating
any shortcomings revealed during the accreditation
process.
Not all technoparks that apply undergo accreditation. It is a matter of principle for our Association
that the ranks of technoparks should not contain
simulacra that allow federal agencies and regional
authorities to paint an overly rosy picture of prosperity in the eld.
COMMERCIALIZING NEW
INNOVATIONS
If all illusions are put to one side, the problem of innovation commercialization looms large. The government allocates quite considerable funds to the development of technoparks, but recipient institutions do
not always utilize them effectively.
This practice harbors two extremes that effectively
nullify the effect of investing in innovation. At one
extreme, specic innovation projects are given pinpoint support, for example, through grants. But this
support is not evenly distributed across all stages of
the chain of commercialization in the project lifecycle. As a result, certain stages remain blind spots.
More often than not areas such as mentoring, assistance in prototyping and business acceleration
are left out, and they represent the key services
The map shows the
Moscow
level of innova-
Saint Petersburg
tion in Russia by
Perm
11.7%
Kazan
region and provides

an overview of
Yekaterinburg
Barnaul
where the most IT
Krasnodar
65%
Nizhny Novgorod
Rostov-on-Don
1.7%
1.7%
Ufa
Vladimir
firms are located
1.7%
1.7%
(with 65 percent
3.3%
of them located in
5%
Moscow). The main
3.3%
1.7%
Novosibirsk
characteristics of
% - share of all IT companies

in Russia located in
a given city
the top 5 Russian

1.7%
IT companies are
1.7%
provided below.
Top 5 IT companies, data for 2014
2.4
billion
The level of innovation activity by region
1.6
billion
5,998
4,241
employees
employees
0.69
802.2
million
2,712
employees
National Computer LANIT group

Corporation
of companies
Technoserv
675.6
million
Softline
0.48
0.41
0.35
$
2,610
employees
591
million
ITG
2,747
employees
Source: Association of Innovative Regions of Russia/RIA Rating
10 - 11
REPORT
that must be provided to innovators. At the other

extreme, support institutions, lacking sufficient resources, try to maintain a number of additional business streams over and above their basic activity of
supporting innovative startups. As a result, the funds
are squandered. For instance, Russian Venture Company (RVC), rather than focus squarely on creating
venture capital funds, additionally undertook expert,
consulting and other projects. Thus, we have yet to
build an effective system of project support at all
stages of the life cycle with the necessary concentration of resources at each stage.
This is one of the stated functions of technoparks,
but very often poor goal-setting forces their managing companies to focus on generating revenue,
which is most readily achieved by renting out oor
space. It turns out that Russian technoparks have
prospered primarily thanks to that practice.
But leasing should not be a technoparks main service. The chief objectives of their managing companies should be to increase the amount of revenue
and the number of innovative companies and jobs
generated by technopark residents.
The effectiveness of managing companies should
be properly assessed. If up to 70 percent of revenue
is made up of leasing payments, it means that the
technopark in question is failing to meet its intended
purpose, since at least 50 per cent of the managing
companys revenue structure should come from providing services to residents and managing projects.
In order to ensure such revenue structure, technoparks should have their own business incubator,
prototyping center, laboratories, engineering center,
etc. By no means do all Russian technoparks have

such technological infrastructure at their disposal.
In addition, it is impossible to imagine a foreign
technopark without venture capital funds. But Russian technoparks have virtually none. Shared knowledge centers at technoparks are few and far between.
THE ROLE OF THE STATE IN

INNOVATION DEVELOPMENT
It is inevitable for questions to arise about the role of
the state in the development of technoparks. Today its
involvement in this process leaves a lot to be desired.
And that is despite the fact that public investment so
far in the development of technoparks currently totals
54 billion rubles, or about $1 billion. About 60 percent
of this sum has been spent on Skolkovo. The Russian Ministry of Communications spent 25 percent
of these funds as part of its now implemented core
program, the Ministry of Education and Science 17
percent, and the Ministry of Economic Development
1 percent. The investment is more than considerable,
which, however, cannot be said of the effect it has
produced.
Now the situation has slowly begun to change. The
resolution of the government On the selection of
constituent entities of the Russian Federation having
the right to receive state support in the form of subsidies for reimbursement of expenses on infrastructure for industrial parks and technoparks, adopted
on October 30, 2014, identied four key departments
dealing with the creation and development of tech-
RUSSIA-DIRECT.ORG
noparks. They are the Ministry of Economic Development, the Ministry of Education and Science, the
Ministry of Communications (responsible for hightech technoparks), and the Ministry of Industry (in
charge of industrial technoparks). Thus, the rst step
has already been taken towards creating an entry
point inside the government for resolving issues with
technoparks and submitting and discussing proposals for improving efficiency.
The next step should be to set up a single authorized
body at the level of the government to coordinate
the activities of the federal center and the regions
in the creation and development of technoparks.
The absence of such coordinator with broad powers
is hampering the development of program-based
actions, as well as the formulation and approval of
budgetary expenses, including at the level of Russian
Federation constituent entities.
It is also necessary to overcome the departmental
fragmentation on matters pertaining to technoparks.
It must be said in their defense that this disunity of
technopark curators is not so much their fault as
the unfortunate consequence of the prolonged lack
of a common government strategy in this area.
As a result, each department tries to create its
own rules of the game and use its own set of tools
to tackle industry-specic tasks. One is focused on
developing business incubators, another on promoting techno parks and techno-innovation special
economic zones (SEZs). Collectively, they essentially
perform one and the same task creating mechanisms to commercialize innovative projects. But ultimately their efforts and government resources are
spread too thin.
The first step has already

been taken towards creating
an entry point inside the
government for resolving
issues with technoparks and
submitting and discussing
proposals for improving
efficiency.
We have often stated from various platforms that

in order for technoparks to meet with their intended
purpose, they require legislation on preferential tax
treatment and other privileges currently offered to
industrial parks. The activity of the latter is governed
by a separate law under which they receive state
support, including interest rate subsidies on loans,
measures to support private industrial parks through
the Ministry of Economic Development, etc. Without
creating a similar environment for techno parks, they
will not be able to generate new innovative companies. In their present form, techno parks are simply
unable to carry out this key role.
Public investment
in the development
of technoparks
currently totals
about $1 billion.
For its part, the Association of Techno Parks in the

sphere of High-Tech has produced a number of proposals aimed at improving legislation in this area of
activity. In particular, it is proposed that the RF law
On technoparks and the Development strategy
(creation) of technoparks be drawn up and adopted
by 2020. It is also necessary within the framework
of the Interdepartmental Commission for the implementation of the Innovation Development Strategy of the Russian Federation to 2020 to dene the
place, role and function of technoparks in the national innovation system with a view to actualizing
this document.
SERGEY FADEICHEV/TASS
WHAT OTHER MEASURES

ARE REQUIRED TO SUPPORT
TECHNOPARKS?
12 - 13
REPORT
EXPERT COMMENT
CEO,
Russian
Venture
Company
Igor
Agamirzian
Software technologies today
have become the platform for
technological
development.
Information technologies are
at the foundation of all current
industrial breakthroughs (from
traditional industries to new industries). It seems that Russia
has great human potential here
as mathematics has always
been one of the main fields of
focus in Russia. And it is mathematics that provides the basis
for software development and
information systems management worldwide.
The leading countries in mathematics are the U.S., France
and Russia, which is evident
from the number of winners of
the Fields Medal (considered
by many to be the Nobel Prize
of mathematics). The Russian
leadership in this area has a
long history, back to the pioneering Swiss mathematician
and physicist Leonhard Euler,
who spent almost half his life in
Russia and essentially became
the founder of the Russian
mathematical school.
In the 20th century, the main
achievements of Russia were
not in the area of applied sciences, but rather in theoretical
sciences in math and physics.
This background should be leveraged by todays higher education institutions, thus helping
Russia to boost its technological development and join in the
global technological growth.
CAN THE GEOPOLITICAL CRISIS HELP REJUVENATE

RUSSIAN INNOVATION?
The Russian economy faces the formidable task of becoming competitive in the
new technological paradigm and simultaneously upgrading manufacturing in the
old. This can be achieved only through modernization of production.
A couple of years back, many Russian companies bought up not only equipment in Europe and Asia, but also other companies and rms, acquiring in the
process modern R&D centers and new market niches.
The ensuing crisis and political ramications actualized the topic of import
substitution, including in the segment of R&D and the production of innovative
products. Here, too, the value of technoparks as a tool in the unassisted frontline development of next generation fundamental technologies on the basis of
scientic and technological groundwork unique to domestic industry is multiplying. After all, the economy is built on a specic model: R&D followed by implementation and production on an industrial scale.
Logic suggests that all phases of this essentially single process should be united by a common system and methodology of control, and a single algorithm
that provides a clear sequence of actions and effectiveness at each stage. Ideally, startups nurtured in technoparks should grow in stature and expand into
industrial parks, where the current state support package will enable them to
carry out industrial-scale production of high-tech products. That is the knowledge economy in a nutshell.
In no way does import substitution imply autarchy, or economic self-sufficiency. Russian industry thrives on collaboration with foreign investors and joint
large-scale international projects.
As technoparks develop and residents become sufficiently large-scale to move
into industrial parks and clusters, the ability to partner with foreign investors
seems set to rise to a qualitatively new level.
RUSSIA-DIRECT.ORG
14 - 15
REPORT
THE MINISTRY OF TELECOM AND

MASS COMMUNICATIONS OF THE
RUSSIAN FEDERATION
T
DMITRY ASTAKHOV/TASS
How to create
a favorable
environment for
technology hubs
in Russia
Today Russia has about 200
registered technoparks. Thanks to
new government initiatives, that
number may increase in the near
future.
he Russian government today attaches great

importance to the development of advanced
technologies. This is seen in the gradual creation of favorable conditions for Russian companies
via new legislation and in the provision of nancial
support for centers carrying out innovative research.
The government is also taking measures to simplify
conditions for foreign players to operate in the Russian market. Supporting technoparks (technology
parks) in this connection is one of the Russian governments key priorities in the near future.
THE BUILD-OUT OF RUSSIAS

TECHNOLOGY PARKS
Today in Russia there are many technoparks, innovation clusters and special economic zones for developing the countrys future high-tech businesses. And, at
the federal level, a series of measures is being implemented to support the establishment of additional
technology parks. Previously, the Russian Ministry of
Telecom and Mass Communications oversaw an integrated program called Establishment in the Russian Federation of Technology Parks in the Sphere of
Advanced Technologies. It operated for eight years
from 2007 to the end of 2014.
At the end of this programs implementation, 12
technology parks had been established in 10 Russian regions, which today accommodate more than
775 companies and have created almost 19 thousand
jobs. The annual income for technopark companies
in 2014 was more than 40.5 billion rubles ($712.7 million). Investment from the federal center comprised
13 billion rubles ($228.6 million), while the regions invested 18 billion rubles ($316.8 million). This is arguably one of the most effective programs for creating
an innovation infrastructure with support from the
federal budget.
In 2014, the Russian government developed a
new support mechanism for establishing technology parks. It is intended to give Russian regions the
opportunity to reimburse part of the financial cost
spent on establishing the technology park infrastructure using federal taxes paid by companies located in technoparks. It also creates the opportunity
to reimburse some of the expenses for the payment
of interest on loans, which had been taken for the
construction of facilities and their infrastructure.
RUSSIA-DIRECT.ORG
A LEGAL FRAMEWORK FOR THE IT

INDUSTRY
Besides infrastructure, it is important to establish attractive conditions for running an IT business in Russia.
At the present time the Ministry of Telecom provides
the following benets for accredited IT companies:
Reduced rates for insurance contributions (contributions to pensions and medical insurance) up
to 14 percent of payments for individuals (compared
to 30 percent common rate in Russia);
The opportunity to use a simplied process to
recruit highly qualied foreign specialists;
The right to include in expenses the cost of electronic computing technology as material expenses in
their full amount;
Reduced to 15,5 percent prot tax for companies
in Novosibirsk and Penza regions (compared to 20
percent common prot tax rate in Russia).
The total number of IT companies accredited by
the Ministry of Telecom is currently more than 5
thousand. Those paying a lower insurance rate during 2011-2014 had more stable growth in revenue and
federal tax payments at a higher rate than the average for the economy as a whole.
The total amount of tax on personal income, listed
by these organizations for 2014 exceeded 17.8 billion
rubles ($313.4 million), excluding tax deductions, the
amount of income accredited companies reached
311.6 billion rubles ($5.5 billion), the average salary
of employees was 84,000 rubles per month ($1,480).
1
This is several times greater, than the average income in Russia, and shows that developing the IT
industry is a serious starting point for balanced, scientic growth in the countrys economy.
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archive
One of the main problems in

developing the IT industry in
Russia remains the lack of staff.
There are steps being taken
by the Russian government to
narrow this gap.
percent, rising from 25 thousand to more than 42.5
thousand scholarship positions in universities.
BRICS AND RUSSIAS FUTURE

TECHNOLOGICAL DEVELOPMENT
Today, one country and just a few companies monopolize the global software market. That could change
as Russia expands its role within the BRICS. This year
it is the chairman of the BRICS. On July 9-10, the annual summit of these countries will be held in Ufa. Since
the start of the year, the head of the Ministry of Mass
Communications Nikolay Nikiforov has personally
held negotiations with minsters from Brazil, India, China, and South Africa, and they all are concerned about
the current situation. Nikiforov suggested that BRICS
should join forces to develop computer software. This,
in particular, guarantees access for Russias future development in the appropriate BRICS markets, which
account for half of the worlds market.
_____________
[1] The average monthly wage in Russia at the end of
April 2015 was 32,805 rubles ($579). Rosstat.
Russian tech hubs by area

of specialization
THE TALENT GAP

On the other hand, as before, one of the main problems in developing the IT industry in Russia remains
the lack of staff. There are steps being taken by the
Russian government, though, to narrow this gap.
As a result of joint work between the Ministry of
Telecom and the Ministry of Education and Science,
the number of budget places in universities for IT
specialists for the 2016-17 academic year will be increased by 31 percent in comparison with the 201516 academic year.
In 2014, institutions managed to increase training
for IT professionals from September 2015 by 34 percent. Over the past two years, government demand
for IT professionals has grown by more than 70
16 - 17
REPORT
Can Russia become an

innovation leader?
The government must do more to make Russia a welcoming place
for innovators and their new technologies.
SERGEY PYATAKOV/RIA NOVOSTI
OLEG BUKLEMISHEV
he oft-repeated pronouncements about modernizing the Russian economy and overcoming Russias dependence on raw materials in
favor of new technologies have been almost a mantra for years.
All kinds of innovative technoparks, clusters, incubators and start-ups have been discussed at the
highest level of government, and the promises of full
support for domestic scientic and technological developments have not bypassed a single government
program.
But what lies behind the sound and fury? Is Russias innovation economy really moving in the right
direction?
RUSSIA AND OTHER GLOBAL

INNOVATORS
If you believe the official statistics compiled by
Rosstat, over the past decade the proportion of high
tech and science-intensive industries has increased
by 2.3 percentage points to nearly a quarter of GDP.
Every tenth organization in the country is putting
various innovations into practice. As a result, in
2013 innovative products, works and services were
implemented to the tune of 3.5 trillion rubles (about
$63 billion at todays currency exchange rate).
But there are lies, damned lies and statistics. How
does one know if the village is real or a facade?
RUSSIA-DIRECT.ORG
Unfortunately for Russia, it is most likely just a

faade. The picture is far less encouraging both in
terms of statics and dynamics when Russian science
and innovation is compared internationally.
For instance, according to the Russian Academy
of Sciences spending on science per capita in Russia is 5-6 times lower than in the leading countries.
The number of researchers per thousand employees
is three times higher in Finland than in Russia, and
more than two times higher in Korea, Japan, Denmark, the United States and Sweden.
Russias share of global spending on R&D is less
than two percent (the United States accounts for
almost a third), and the gure is about the same in
terms of patent applications even lower than Russias slice of global GDP.
Moreover, the current level of R&D funding in real
terms is about half the level of 1990 (the Soviet Union spent about 5 percent of GDP on R&D).
RUSSIAS INNOVATION ADVANTAGES

The average Russian scientist, as acknowledged by
President Vladimir Putin, is now 48 years old, and in
some branches of knowledge (for example, the toppriority nuclear industry) much older than that. The
road map of Russian science to 2020 may well envisage an increase in the proportion of employees
aged 39 or under to 41.5 percent by 2018 (currently 33
percent), but how it can be done at wages lower than
in almost any other profession is unclear.
It is no coincidence that polls over the past decade
by the non-governmental research organization Levada Center on parents preferred careers for their
children have shown a steady decline in the popularity of science and engineering, and even the still prestigious job of computer programmer is beginning to
lose its shine. According to Levada Center, for example, only 15 percent of Russians in 2014 wanted their
children to pursue careers in computer programming
or other high technology elds.
At the same time, Russia can still draw on a reserve
of important groundwork needed to break into the
innovation vanguard, namely, the well-earned reputation of Russian science and the countrys still active
cutting-edge schools and technological know-how in
several key areas. There are still talented young people who, despite everything, continue to be drawn to
fundamental science and applied research; energetic
Russian businessmen who still manage even in extreme investment conditions to achieve success;
and the untapped potential of harnessing university
science to the practical needs of the national economy in terms of scientic and technical developments.
THREE WAYS TO CAPITALIZE ON

RUSSIAS INNOVATION ADVANTAGES
There are three important ways that Russia can transform these natural advantages into a genuine breakthrough in the eld of innovation.
#1. Introduce new government policies that encourage innovation
First, it needs to be understood at the state level
that economic modernization and diversication is
urgently required for the countrys development, and
is not simply a half-forgotten political slogan from
the time of Dmitry Medvedevs presidency. Without
a doubt, science and education is the cornerstone of
successful modernization.
The budget cuts to research and education must
stop, and Russias top scientists and talented youngsters who choose this challenging pursuit should be
offered competitive base salaries, allowing them to
focus on scientic work.
However, material stimulus alone seems insufficient. Scientists in the Soviet Union enjoyed prestige
not just because of the decent salary, but also because the image of researchers as doing something
interesting and important was actively promoted in
movies and on television. The same could be true
today if TV stations in Russia swapped the endless
tear-squeezing melodramas and stories of duels
between ugly criminals and wise policemen with a
good-quality serial about Russian scientists and the
diverse, engaging work they do. The possible dip
in ratings with the unscrupulous audience would
be well compensated by the positive social effect,
which is needed now as never before to support the
industry of science and knowledge.
#2. Ensure the protection of property rights, including intellectual
Second, property rights need to be properly protected, along with freedom of entrepreneurship,
something that innovative industries need even
more than traditional ones. And introduction of new
technologies cannot emerge as a clear competitive
advantage when everyone knows that hunting for
government orders and privileges proves to be far
more benecial for a company than any number of
innovations.
Of course, one can create a dozen or two technoparks and incubators and give tax breaks or subsidies normally available only to those innovators able
18 - 19
REPORT
DONNAT SOROKIN/TASS
to hire special well-paid lawyers and lobbyists.

And one can certainly be proud of what has been
achieved at the Skolkovo Innovation Center outside
of Moscow, where entrepreneurs and researchers get
by a little bit better than the rest of the country. But
it would be much better from an innovation point of
view if the efforts were spent primarily on progressively improving the business climate and promoting
competition not only inside special isolated zones,
but everywhere. Only then can high tech output be
actively commercialized, and such incubators and
subsidies become genuinely productive.
Otherwise, the rest of the country will miss out on
this positive experience, and the small number of islands of prosperity will sooner or later sink into the
surrounding swamp.
#3. Abandon isolationism
The last but not the least, in the interests of modernization, the policy of isolationism and xenophobia
needs to be abandoned once and for all. As shown
too often in the course of human history, it is incompatible with progress in the eld of science and innovation, and with progress in general.
Above all, it hinders the ght against pseudoscience, which, despite the best efforts of the scientic
community in recent years to expose false dissertations and inated degrees, continues to ourish.
Locked-in syndrome is a typical feature of many
Russian scientic communities, and the lack of real
competition and clear-cut comparisons between
genuine and phony science allows them to stand in
the way of the next generation of Russian talent.
If someone wants to build a modern Russian innovation paradise on the basis of the sharashkas [the
hard-labor experimental design bureaus vividly described by Alexander Solzhenitsyn in his 1968 novel
In the First Circle], you can be assured that nothing will come of it. When there is now a stigma attached to accepting a grant from a foreign organization, there will be an inability to attract the best and
the brightest to science. Like it or not, but a diverse
global marketplace of research ideas and results has
already taken shape, and Russia is only a small and
hardly the most advanced player.
No one can erect a barrier in the way of peoples
desire to succeed through realizing their skills and
talents. Therefore, Russias only chance to win the
global competition is not to create a new Iron Curtain
that only will accelerate the existing brain drain, but
to create the best environment for Russias young
talent to thrive, so that armed with new knowledge
and experience from study and internships abroad,
they always want to return home.
However, the case of the non-prot Dynasty Foundation, recently declared a foreign agent, shows
that in spite of everything, the Iron Curtain mentality and sharashka-style modernization are alive and
well, and continue to march triumphantly across the
country. Yet, it is precisely this foundation, set up by
one of the nations most prominent tech entrepreneurs, Dmitry Zimin, that did so much to discover
and nurture young scientic talent in Russia. The fact
that Zimin thought it wise to leave Russia sends a
very loud and clear signal that drowns out the official
mantra of modernization.
Whatever happens in the long run, it will take a
considerable amount of time and effort to expose
the prevailing xenophobic notions that are patently
false and deeply detrimental to the future of Russian
science and innovation. But nothing less is required
if we want to see Russia become a leading innovative
power in the twenty-rst century.
15%
of Russians in
2014 wanted
their children to
pursue careers
in computer
programming
or other high
technology fields.
(Levada Center)
RUSSIA-DIRECT.ORG
20 - 21
REPORT
Case study: Three centers for

Russian innovation
#1: Skolkovo Innovation Center
#2: Bauman Moscow State Technical University
#3: The Troitsk Technopark
GETTY IMAGES
ALEXEI SITNIKOV
he idea to wean Russia off its dependency on

oil and gas exports is as old as the Russian
market economy itself. Russian government
throughout the 1990s and 2000s have been experimenting with several turnkey solutions to the problem. A number of free economic zones, high-tech
hubs and incubators emerged throughout Russias
territory. All received government funding and had
one purpose to stir high-tech development and
production. Yet against the background of high and
rising oil and gas prices, these new creations were
nowhere on the list of priorities for private investors.
Then the 2008 nancial crisis happened. The devaluation of the ruble began to deplete the governments hard currency reserves, unemployment levels
started to impact consumer demand, and big corporations found themselves near default on their dollar
and euro-denominated debt. If before the crisis there
was a belief that Russia had been the island of stability in stormy waters, the dynamics of the crisis have
eroded this belief completely.
Skolkovo didnt have a name rst. The idea was to

create a science and technology enclave with special
legal and regulatory regimes, fuel it with a sizable
government subsidy and support research and development (R&D) and startups in one of two areas:
Russias segments of comparative advantage (IT,
space, nuclear) or high demand and large market (biomedicine and energy efficiency). Principles applied
to the enclave called for it to be globally competitive,
free of corruption and equally friendly to the startup
community and big transnational corporations.
Skolkovo Innovation Center has never been considered by its founding fathers as a toy project, just
a carbon copy of similar centers in other countries.
Rather, it was a direct answer to the challenges of
the 2008 crisis. The government could not afford to
spend more, so the economy needed to make more.
The goal of Skolkovo was never to restructure the
Russian economy; Instead, the goal was and is to
test new approaches to R&D, as well as new business practices to be applied outside of Skolkovo. The
Center today hosts about 1,000 startups. It has raised
nearly 60 percent of development funding from the
private sector. The startups came to Skolkovo from
nearly 50 regions of Russia and already have generated a turnover of about $1 billion.
These results show that the model works. Supporting high-tech research with the right set of regulations, some funding and mentorship work just as
well in Russia as in any other country. The experience of Skolkovo also shows that the main challenge
in developing the innovation center is not in the infrastructure, regulation or funding. It is in the ability
to source, engage and empower human capital. A
nationwide transformation will occur only and if the
models such as Skolkovo are fueled with the critical
mass of human talent, hungry for challenge and discovery.
RUSSIA-DIRECT.ORG
#2:
Bauman Moscow State
Technical University
EVGENY STAROZHUK
THE EFFECT OF WESTERN

SANCTIONS
The recent exacerbation of the political situation that
led to the introduction of sanctions against Russia by
a number of nations could not help but affect BMSTU.
SERGEY PYATAKOV/RIA NOVOSTI
he activities of Bauman Moscow State Technical University (BMSTU), a leading university for
engineering education in Russia, has for a long
time been aimed at the scientic and technical support of Russias defense industry and the superiority
of the country in the aerospace industry. For this reason, the universitys cooperation with private companies in the sphere of innovation has only recently
become a priority area for development.
Today, the leading role is given to cooperation with
Russian companies. However, the university is also
prepared to work with foreign companies. An example of this could be the recent agreement between
BMSTU, Kaluga Region, and the Austrian manufacturer of communications and navigation equipment,
Frequentis. The purpose of the agreement is to cooperate in a range of areas, including development
of micro-electronic components in the sphere of air
traffic management and ight safety.
Furthermore, BMSTU is collaborating with such international engineering giants as General Electric,
Siemens, and Mitsubishi Electric.
In many cases, BMSTUs partnerships with foreign
companies are based in areas where the university
traditionally has a high degree of expertise: in mechanical engineering, instrumentation and microelectronics. In the near future, priority areas for scientic and technical development and for expanding
international cooperation include additive technology,
composite materials, nanoplasmonics and complex
functional systems, ion-plasma technology, robotics
and supercomputers, information and communication technologies, and biomedical equipment. These
technologies are the precursors of future scientic
and technical progress in the world, and we cannot
allow ourselves to be left on the sidelines.
We cannot
allow
ourselves
to be left
on the
sidelines.
The most signicant changes were caused by economic instability. Prices increased for equipment purchased by the university, especially technologically
advanced scientic machinery.
Investors have become more careful, especially in
regard to expensive projects. This has aggravated
the situation even more in the area of venture capital
investments in advanced technology projects, which
in Russia are still insufficiently developed.
In regards to the effect sanctions are having on foreign companies cooperation with BMSTU, one must
take into account that business needs to develop
competitive advantages by developing technical innovations to prevail over unstable political trends.
Ultimately, if the mutual benets of cooperation between companies and the university are obvious to
both parties, the company will take the necessary
steps to establish cooperation.
Furthermore, it should be noted that the economic
policy that has been implemented in Russia is aimed
at replacing imported products with those from the
domestic market.
This cannot be achieved without the participation
of scientic-research organizations. The policies for
import replacement will lead to localization of advanced technological products in Russia. One can
hope that this will create the foundation for longterm development of Russias scientic-research and
educational organizations.
22 - 23
REPORT
As a result of the
reforms of the
1990s, almost 80
percent of industrybased applied
science was eliminated, engineering
bureaus perished,
pilot production
dried up, and the
RG
#3:
The Troitsk Technopark
manufacturing
sector was largely
SERGEI SHARAKSHANE
destroyed.
he economic transition toward innovation and

import substitution raises the problem of developing small innovative enterprises. The crux
of the matter is that, as a result of the reforms of
the 1990s, almost 80 percent of industry-based applied science was eliminated, engineering bureaus
perished, pilot production dried up, and the manufacturing sector was largely destroyed.
The only optimistic conclusion to be drawn is that
the country must learn to work in real-world conditions, i.e. to recreate a system that would enable many
achievements of academic research to be put into
practice.
Nevertheless, retracing the last centurys path of
applied science would be a mistake. New experience
is needed, along with fundamentally new organizational, scientic and commercial forms and interconnections between them.
The country needs a clear market-oriented model
of scientic and industrial infrastructure that covers
the initial phase of the innovation process, in which

small and medium-sized businesses (including startups) implement scientic ideas.
The testing ground for this solution is the Troitsk
Technopark at the Lebedev Physical Institute (LPI) of
the Russian Academy of Sciences. This world-class
scientic institution has produced seven Nobel laureates. The key component of the technopark model
lies in the search for ways to connect fundamental
research to practical applications.
THE RUSSIAN SILICON VALLEY?

Stroll around the technopark campus, created in
2008 outside Moscow, and every 20-30 meters you
will literally stumble across new innovative enterprises, known as residents. Despite being described as
small, they create products in high demand both at
home and abroad.
The reason for that is the organic bond between
the technopark and the research institution. Part of
this intrinsically new model is that the technopark is
a subdivision of the LPI, in which regard, new residents have to meet special criteria.
Every organization applying for residency is obliged
to state its case before the LPI scientic council and
RUSSIA-DIRECT.ORG
demonstrate the extent to which it is knowledge-intensive. As a result of the strict ltering process, half
of the resident employees registered here are themselves LPI scientists: they work on the implementation of scientic ideas up to and including product
commercialization.
What immediately catches the eye is the high level
of global competitiveness, the overtaking without
catching up ethos, and the great prospects for import substitution. There is no escaping the fact that
if production is based on imported technology, backwardness is built in from the start, which only intensies as the creator of the technology moves forward
in the meantime. But if innovation proceeds from a
fundamental research laboratory, a business incubator, it forces global competitors to play catch-up.
THE REQUIREMENTS FOR BUILDING A

WORLD-CLASS TECHNOPARK
It is worth noting that the Troitsk Technopark found its
feet in just seven years. Practice shows that the activities of this young venture are in tune with the countrys top priorities: rearmament, Arctic exploration,
and the creation of 25 million high tech jobs. Hence,
the Troitsk hub can serve as a model in the implementation of the governments strategic objectives.
On the topic of Troitsk Technopark, it would be
amiss not to mention its founder, Professor Vladimir
Nevolin, LPI deputy director, doctor of physics and
mathematics, and Honored Scientist of Russia. He
has visited a host of countries, including many factnding trips to technoparks in the United States,
Germany and Britain.
Based on this experience, Nevolin set about creating the Moskovrechye Technopark at the Moscow
Engineering Physics Institute generally considered
to be the rst technopark in Moscow. He took into
account the Soviet Unions rich experience of implementing technological innovations in industry. That
was where the concept of the science-educationindustry triangle took hold as the basis for shaping
an innovative infrastructure.
Here, then, are the basic requirements resulting
from this concept. For an industrial park set up under a scientic institution (as in the case of the LPI),
it makes no sense to create a symbiosis with an existing industrial enterprise. There is no large contingent of qualied employees, and no expanded production base. That is not a minus, but a plus. Many
technoparks in Russia (Kazan, Naberezhnye Chelny,
Pereslavl, and elsewhere) would be labeled industri-
al parks in Western terminology. They are generally

set up on the basis of former industrial enterprises.
However, the experience of Western Europe and
the United States shows that if technoparks are allowed to operate without constant communication
with the scientic founding father, they quickly
degenerate and die. A technopark will function better and more importantly longer if it maintains
contact with an academic institution. That is why the
entire Troitsk technopark is bound to the LPI through
the activities and research of the latter.
Not only the technopark benets, but also the institution, whose staff can work in transitional areas
from pure science to applied engineering. Their scientic ideas turn into technological solutions, and
become either devices or technologies that can then
be implemented in the wider industrial sphere.
Furthermore, the technopark is a kind of trinity: it
combines not only science and innovation, but also
training, providing an inow of young people into
science. For students at leading physics institutions,
the technopark has turned out to be a valuable training base.
LEGISLATIVE OBSTACLES FOR

RUSSIAS TECHNOPARKS
ACADEMY
OF SCIENCES
The Russian
Academy of
Sciences (RAS),
headquartered in
Moscow, is the
highest scientific
institution of the
country and the
leading center for
basic research in
natural and social
sciences. The
Academy includes
9 departments, 3
regional branches,
and 14 regional
scientific centers.
The LPIs technopark represents the most promising

model for the entire system of the Russian Academy
of Sciences, since despite all the upheavals of the last
quarter century, Russian science still possesses great
development potential.
Of course, in isolation, the research institute cannot shoulder the weight of such a technopark. Nevertheless, the LPI is the largest institute of the Russian Academy of Sciences, and home to very many
professionals carrying out research in different areas.
However, clusters of institutions, for instance, can
already adopt the practice of the LPI. One example
is the science city of Troitsk itself with its eight institutes under the Russian Academy of Sciences and
two non-academic research institutions.
Each houses a lot of interesting developments. The
LPI made them an offer: Lets create a Troitsk Scientic Center Technopark on the basis of the LPIs
Troitsk hub with due regard to its organizational and
methodical achievements. All agreed.
One legislative but remains. The executive authorities are fond of repeating that an academic institution
should be engaged in pure science, and if something
innovative comes from it, it should be taken from you
because its not part of your brief. For some reason its
24 - 25
REPORT
Top 6 innovations of
Troitsk Technopark
1
2
A micromachine with femtosecond lasers for

surface treatment of materials at the nanoscale;
A powerful
femtosecond
laser complex 10
terawatts (more than
the capacity of all
the worlds power
plants in the world
combined);
3
4
Coordinate-temporal eld generators for the

GLONASS system with the highest level of
precision anywhere in Russia;
Ultra-large capacitors an original LPI
brainchild. Charging such capacitor for 10
hours, the stored energy can power a smart home
for 10 hours, or start a haulage truck in Arctic
conditions at -50C;
Silicon carbide, which is used to store spent
nuclear fuel and create large gamma-ray
telescopes for studying black holes etc., and which
can also be used to view Earth from space at
ultra-high resolution. Roscosmos and Rosatom are
very interested in such products. Silicon carbide
is used to make so-called foam glass an
environmentally friendly thermal insulator used in
construction, superior to all other such products by
a factor of 10;
Tools with diamond cutting surfaces, and
milling cutters more than a meter in diameter
used to cut through and recycle huge disused
concrete structures. These can be applied to
replace the surface of runways for next-generation
aircraft; only this tool can remove such highstrength concrete. Several airports in Russia have
already been modernized in this way. The tool is
needed for different kinds of drilling, e.g. during the
construction of subway systems.
necessary to prove time and again that a generator of

high tech projects can only be created on the basis of
a major research institution.
Unfortunately, that widespread belief is reected
in a law adopted by the Moscow City Duma, in accordance with which a technopark can operate only
under the aegis of a commercial managing company. As a non-commercial organization, the LPI is
categorically opposed to the bottom line having primacy in the development of its scientic technopark.
The institute makes no attempt to maximize revenue
from resident companies, since it would quickly turn
A technopark will function better

and more importantly longer
if it maintains contact with an
academic institution.
into a wheeler-dealer seeking to sell its premises

to the highest bidder. The Troitsk hubs managing
organization, therefore, is the LPI itself, which has
proven its capacity to act as such. Regrettably, there
is no federal law on technoparks at present, although
attempts have been made to draw one up.
DEVELOPMENT OF THE INNOVATION

ECOSYSTEM AROUND THE RUSSIAN
ACADEMY OF SCIENCES
The Troitsk hub effectively shows how the innovation
ecosystem around the Russian Academy of Sciences
fundamental research institutes should develop. Moreover, the LPI is ready to point the way through disseminating organizational and methodological ideas, conducting seminars on the basis of the technopark, and
sharing best practices. In fact, the technopark is itself a
startup on the scale of tomorrows national economy,
and represents the embryonic phase of the transfer of
technology from the sector of science to the sector of
industry, design and implementation of new tech solutions. Today Russia boasts a number of innovative institutes, but their approach is too one-sided: They give
consideration only to ready-made projects. The LPI, on
the other hand, seeks to create an incubator of new innovations, i.e. a place where they are conceived and nurtured. Such technopark literally points the way forward
to becoming an innovative country.
RUSSIA-DIRECT.ORG
Russias long-term transition

to an innovation economy
There are growing signs that Russias
youngest entrepreneurs are creating
the basis for a new innovation-based
economy.
KENDRICK WHITE
In spite of the negative impact that sanctions have
had on Russias economy, there is in fact a certain
paradox at play here. In business plan competitions
across Russia over the past year, more and more opportunities were visible which involve domestically
developed new technology discoveries that are better
able today to attract local angel investors, as well as
interested corporate investors and partners.
The Lobachevsky State University of Nizhny
Novgorod, for example, has seen a dramatic increase
in interest on the part of the corporate and investment communities, including both domestic and international partners, seeking to cooperate and better understand what technology solutions Nizhny
Novgorod can offer.
Many local Russian enterprises were historically able
to make off the shelf purchases of high tech solutions
from Western suppliers. Today, these markets have
been closed to them. Theres evidence that they are
nally turning to the vast scientic community within
Russia to satisfy their technology demands. It is even
possible that the sanctions may be a sort of blessing in
disguise for much of the Russian research community
as funding will surely continue to support these efforts
as enterprises nd their traditional channels closed.
Those not afraid of the short-term unpredictability and risk inherent in Russias long-term transition
from a commodity driven economy to an innovationdriven economy must understand that this process
only started 22 years ago, and will require another 20
years to complete. Keeping the long-term nature of
this transition in mind is essential for any of Russias
partners to keep in mind.
There will always be periods of advancement and retreat in this complex transition, and for most foreign-
ers, it is not entirely clear why Russian leaders often

make the choices that they make. Russia is primarily
interested in protecting its independence, even if this
means that sometimes decisions can appear to be illogical to outsiders. This desire for independence extends to banking, telecoms, minerals and mining, and
many other spheres.
While it may appear to be self-defeating, there is certain logic in Russias approach to development, and
for any sincere partners willing to take these nuances
into consideration, there can be great rewards for the
long-term development of business partnerships in
Russia.
There is reason to believe in the future of Russias
younger generation of innovation driven entrepreneurs. If all goes according to plan, they will eventually establish Russia as a leading innovation economy
in the global economy.
For example, there are great opportunities in Russias
biomedical and diagnostics segments. Advances in 3D
modeling, early-stage cancer detection, on the spot
wound healing and resolution enhancement represent
signicant breakthroughs worthy of being introduced
into global markets in the nearest future.
TOP U.S.-RUSSIAN HI-TECH FORUMS

#1: Open Innovations Forum and Technology Show
This five-day forum dedicates each day to a different aspect of technologys impact
on human life, with guest speakers and demonstrations showcasing cutting edge
innovation. When/Where: October 28 November 1, 2015, Moscow, Russia.
#2: Russian-American Innovation Technology Week (RANIT)
The 20th annual meeting of RANIT seeks to build mutually beneficial partnerships
between the U.S., Eurasia, and Russia through the development of pharmaceutical and
biotech innovations. When/Where: June 11-25, 2015 in several locations in the U.S.
#3: Russia-U.S. Innovation Week
Russia-U.S. Innovation Week is an invite-only conference whose aim is to establish
American-Russian business cooperation in the sphere of innovation development. The
event brings together an elite group of business and government representatives from
both countries. When/Where: TBA.
#4: 2016 IASP Conference
The International Association of Science Parks and Areas of Innovation (IASP) World
Conference is a key platform for heads and senior officials of science parks of various
countries to meet and share experiences. When/Where: TBA.
26 - 27
REPORT
By Kendrick White
TOP 10 RECOMMENDATIONS FOR RUSSIAN INNOVATION ENTREPRENEURS
Entrepreneurs should consider their projects,

from the outset, to be driven by global market
demands. Experienced, smart money investors are
keen to see not just local market potential, but also
international market expansion potential.
Pay attention to your projects unique
intellectual property and ability to solve
specic problems with a unique approach.
Having a plan in place to protect ones intellectual
property, through either secret know-how or patent
protection alternatives, is also critical to maximizing
the value of any new innovation idea.
Be ready to tell potential investors about
your track record and past success stories
and lessons learned. Sometimes an entrepreneurs
greatest failures proved to provide the greatest
insights.
Talk about your partners and those that
currently are supporting you. In other words,
show that you have built a team around you that
supports what you are doing. There is nothing more
risky for an early stage investor than to back a lone
horse who tells that he can do it all, all by himself.
Prepare your business model canvas as the
rst step in your project development. Whats
your core value proposition? Whats your core
market of buyers? Have you already talked to
them and conrmed that your solution is actually
a key problem for your market? Whats your
business model? Whats your IP protection and
commercialization roadmap?
TOP 5 TWITTER ACCOUNTS

FOR RUSSIAN #INNOVATION
BOOKS AND ARTICLES

ON RUSSIAN INNOVATION
@nnikiforov Nikolay Nikiforov is the Minister of Telecom and Mass

Communications of Russia, which is one of the government bodies
fostering the growth of technoparks.
1.Loren Graham, Lonely Ideas: Can Russia Compete? Cambridge,

MA: The MIT Press, 2013.
Practice pitching your idea to your friends and

family and then keep developing your pitch
to potential partners, buyers, and investors. Your
pitch can be customized to your audience and you
should continuously get feedback on your pitch and
constantly update this.
Be prepared for your team to pivot. What this
means is that what you start out with as your
initial project idea is very likely to change many
times prior to your securing funding and start-up
capital. Even after that, you will likely alter your
business model and initial business plans many
times before you achieve a certain critical scale of
operations.
Entrepreneurs must seek out smart money
investors, meaning these who also know your
product and market segments, and who can help to
advise you, not just throw money at your project.
Dont be afraid of failure and mistakes. Way
too many entrepreneurs become afraid
that their projects might not be competitive and
therefore are afraid to start in the rst place.
. Seek out the local leaders of the innovation
ecosystem, and partner with them in order
to secure successful long-term opportunities.
Local business angel clubs, local universities, local
venture fund managers, local high tech enterprises
led by experienced Russian entrepreneurs. Global
enterprises should work to align themselves with
the future generation of innovation driven leaders.
10
EDITORS PICKS
@IASPnetwork Updates from the International Association of

Science Parks and Areas of Innovation (IASP).
@USRIC_en The U.S.-Russia Innovation Corridor connects start-up
companies and universities.
@EWDN_Russia East-West Digital News (EWDN) is an
international information company dedicated to Russian digital
industries.
@i_regions Tweets from the Association of Innovative Regions of
Russia.
2.Doren Chadee and Banjo Roxas, Insitutional Environment,

Innovation Capacity and Firm Performance in Russia. Critical
Perspectives on International Business 9 (1/2), 2013, pp. 19-39.
3.Zhanna Mingaleva and Irina Mirskikh, On Innovation and
Knowledge Economy in Russia. International Journal of Social,
Education, Economics and Management Engineering, 4 (6), 2010,
pp. 169-178. http://waset.org/publications/12397/on-innovationand-knowledge-economy-in-russia.
4.Chun-Yao Tseng, Technological Innovation in the BRIC
Economies. Research-Technology Management 52 (2), March-April
2009, pp. 29-35.

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r u s s i a- d i r e c t.

|#9 | JUNE 2015

to Russian hi-tech HUBS

New efforts to modernize the Russian economy have taken

04. Can high-tech hubs help

Western sanctions and recent volatility in global energy

08. A strategy for the

and insulate it from external economic shocks. Most im-

portantly, the commercialization of new innovations could

provide a long-term boost to Russian economic growth and

16. How to create a favorable

tor, now faces a number of critical strategic questions of

how to develop regional innovation ecosystems in a time of

18. Can Russia become an

increased isolation from the West and decreased funding

One major initiative to bridge the innovation gap has been

22. Case study: Three

to channel resources both financial and administrative

challenges of Russias modernization drive, with an em-

23. #2: Bauman Moscow

phasis on the role of the state in guiding and supporting

State Technical University

innovation efforts at the local level, primarily through the

creation of new technoparks. In addition to highlighting

24. #3: The Troitsk

ing the Skolkovo Innovation Center in Moscow the report

analyzes the most important factors in Russias long-term

27. Russias long-term

transition to an innovation economy and provides multiple

28. Top 10 recommendations

28. Editors picks

Send an email to:

In addition, Oleg Buklemishev of Moscow State University

Ekaterina Zabrovskaya, Editor-in-Chief

contact@russia-direct.org for general comments, subscription and distribution questions;

Russia Direct 2015 All rights reserved.

INSIDERS GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015

OLEG BUKLEMISHEV is an associate professor in the department of economics at

GEORGE GOGOLEV is head of the Innovation Ecosystem Development at

ALEXEI SITNIKOV is the vice president of Institutional Development and Executive

EVGENY STAROZHUK , Ph.D., is provost of economics and innovation at Bauman

KENDRICK D. WHITE is the vice rector for Innovation at the Lobachevsky

Can high-tech hubs help to

INSIDERS GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015

The most successful ecosystems in the U.S., for

HOW RUSSIA TRIED

government. Embracing open innovation is therefore

Technoparks are built as a catalyst

economic activity in the country.

THE CURRENT INNOVATION MODEL

INSIDERS GUIDE TO RUSSIAN HIGH-TECH HUBS | #9 | JUNE 2015

Academy of Sciences. 1978

Lately best practices have been proliferating in the

Faced with the challenge of global competitiveness,

INITIATIVES FOR 2015 AND BEYOND

A strategy for the development

ntil relatively recently, Soviet science cities were rightly considered by

Why does Russia need technoparks?

Insiders guide to Russian high-tech hubs | #9 | JUNE 2015

When people talk about the innovation storm, it should

Lastly, technoparks are built as a catalyst for the

THE GROWTH OF RUSSIAS

THE GOVERNMENTS ATTEMPTS TO

SERGEY PYATAKOV/ RIA NOVOSTI