Urals | Finance, business | Technology & innovation
Venture fund launch fails in Tyumen; Russian VCs criticized for heavy-handed approach
2 Nov '12
Russian VC investors are overly stringent in their business tactics, making their approach too hard for innovators to stomach and causing systemic problems in Russiaís overall VC market - an opinion expressed by Alexei Sannikov, the chairman of the Committee for Innovation of the Tyumen region in Russiaís West Siberia, reported earlier this week by East-West Digital News, the international resource on Russian digital industries.
Commenting last week on the reasons behind the closing of the Tyumen regional venture fund earlier this year, Sannikov said the Tyumen region had failed to find a suitable company to manage the fund.
ďThe region had committed about 140 million rubles, about $4.7 million, [to the project]. None of the large VC firms agreed to work with the amount, however; they had expected it to be in the billions. We couldnít shell out that much. The venture fund ended up returning the money to federal and regional coffers,Ē he explained.
Elaborating further on the woes of VC investing, the Committee chairman said that venture capitalists tend to come into a project at a later stage when a prototype is developed and ready for serial production. Their money and managerial experience could still provide much help, but VCs trickle in slowly. Sannikov also complained that the Russian and Ural business angel associations the Tyumen region collaborates with also face difficulties bringing investors on board.
On the other hand, sometimes it is an innovatorís wariness that stalls projects, Sannikov emphasized. With venture capitalists routinely claiming controlling stakes and imposing their own management, developers may feel an investorís heavy-handed approach poses a threat to their project and try to shun contacts with the venture capitalists, seeking government support instead or scrambling on their own.
On the upside though, an increasing number of high net worth individuals in the Tyumen region with vested interests in areas other than ventures have been spotted investing in early-stage innovation projects they find appealing, the regional official noted, adding that unlike professional VCs, these investors tend to treat project developers in a more considerate manner.