The headlines out of Russia focus on the protests against corruption and the seemingly endless reign of Vladimir Putin as de-facto leader. However, the news has overshadowed Russia’s entry into the World Trade Organization, an event that has taken 18 years to come to fruition. In terms of stability and acceptance of Russia as a legitimate investment location, things are looking decidedly upbeat, according to a recent article in VentureBeat.
The time is ripe they say for Russia to emerge as a center for innovation and entrepreneurship. And venture capital firms are taking notice. A number of VC firms have done deals in Russia, including global firms such as Accel Partners, Bessemer Ventures, and Index Ventures.
Venture capitalists have been “cloning” successful start-ups from the West. The most prominent Russian clones include vKontakte (Facebook clone), Ozon.ru (Amazon.com clone), OdinOtvet.ru (Quora clone), VitaPortal (WebMD clone), RentHome.ru (HomeAway/AirBnb clone), AlterGeo (Foursquare/Yelp clone), Sapato.Ru (Zappos clone), Domgeo.ru (Trulia clone), Privat Trade Ltd. (Gilt Clone), Babyboom.ru (Zulily clone), and BigLion (Groupon clone).
In addition, government-sponsored initiatives such as Rusnano are aimed at building Russia’s nanotechnology industry. Then there is Skolkovo, a science park on the outskirts of Moscow that is being dubbed “Russia’s Silicon Valley.” Skolkovo features a Western-style business school, Skolkovo Moscow School of Management, and an “Innovation City”, an office space complex for science-based startups. The idea is to create a hub of innovation and technology.
As of November, 2011, Skolkovo is home to 200 startup companies and there are plans for 10 corporate R&D centers, including those funded by Siemens, Nokia, IBM, GE, and Dow, and a corporate venture arm of Johnson & Johnson.
The VentureBeat article goes on to discuss what could still be done to improve the climate for business and innovation in Russia. Suffice it to say, there’s a wealth of science, mathematics and engineering talent in Russia. What they lack is a track record of developing successful entrepreneurs and managers. There are other hurdles, including corruption, the notoriously cold winters, high cost of living in Moscow, and a certain anti-Western bias which may prevent Skolkovo from becoming a truly international hub of entrepreneurs, much like Silicon Valley.
What’s your take? Would you consider a venture capital job or opening an office in Russia? What have you heard? Add your comments below.
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