rus
Sberinvest management company manages six regional venture capital funds, as well as Nanomet – metallurgy sector joint venture capital fund and the two real estate funds. In addition, the subsidiary company manages Nanoenergo – an international joint venture capital fund for the development of new technologies in the energy sector of the Russian Federation. Unlike most other venture investors, Sberinvest focuses on the financing of the development of industrial technologies.
Mr. Dyachenko, how do you assess the position of Sberinvest in the Russian market of venture capital investments?
In this business it is difficult to build a unified rating scale to accurately determine the position. For example, it makes no sense to evaluate the stated amount of assets, because there is no real money in some venture capital funds. Simply speaking, they first gather the projects, and only then raise funds. The market leaders in terms of real assets are some venture capital funds created by major oil and gas companies and banks, such as Gazprom Venture. I think that we are in the Russian top ten on this indicator, but has not yet reached the top five.
The market leaders in terms of number of projects are the venture capital funds created by the leading IT-companies: Apple, Microsoft, Google, Yandex, Mail.ru. Every year, each of them fund on average 50 new developments. In terms of number of industrial projects we are the leaders.
Who are the main investors of the projects?
The main investors are the banks, because they manage about 90% of all financial assets. It’s no secret that every major Russian financial-industrial group includes the subsidiary bank for placement of operating and investment funds. Therefore, we use the model that is favorable to banks. In the first phase, when we form a venture capital fund, the bank can use the money as working capital. In the second phase, the projects are created, which are served by bank. In the third phase, the projects begin credited and the bank earning some money–in fact, we help him to grow its customer base. In the third stage the projects begin to borrow, and the bank earns on this. In fact we’re helping him build up a customer base. Moreover, when a company stands up and starts to make a profit, the Bank often buys it.
In some of our venture capital funds up to 20 % of the capital is owned by investors, who have come through the stock exchange, but basically it is the speculators, which are attracted by the good level of profitability.
Why you chose industrial sector as the main object of investments?
The market analysis showed that this niche is free, because most of our colleagues prefer to invest in information technology, biotechnology and service projects. At the Federal level there are several companies that invest in industrial development, such as Leader and VTB Capital, but in the regions except us actually nobody works. That is, we have the opportunity, without pressure from competitors to choose what we are interested in, to implement projects from initial phase to obtain a unique niche products.
But it is generally accepted, that in the industry the risks are higher...
It is mistake. We analyzed 20 years of experience of venture capital investment in approximately ten leading technological countries of the world, and it turned out that in the field of information technology 97% of projects are unprofitable, in the field of biotechnology 70% of the projects are unprofitable, and in industry 65% of the projects become successful.
Here are a few examples. Our project company Chemtech Engineering produces non-toxic plasticizer dioctyl terephthalate, by processing of environmentally harmful waste of terephthalic acid. For manufacturers of polymers, for example, Sibur, these wastes were a problem, but now we process them and sell dioctyl terephthalate to the manufacturers of plastic. By the way, these same customers buying polyesters and polypropylene. What can be the risks?
Another of our company, Krasnodar Silicon Dioxide, recycles waste from rice production to generate electric energy, oxide-carbon powder and silicon dioxide. Electricity is sold back to the factory, processing rice, oxicology powder–to the metallurgy, silicon dioxide–to tire manufacturers. And again no risk, because the needs of the industry in oxide-carbon powder and in the silicon dioxide exceed the capacity of our plant.
Of course, difficult to start such projects, because of possible errors in technological solutions. For example, when we started the project to create the manufacture of composite pipes, the first two technological solutions were wrong. Then the project was divided into five blocks: the equipment production, the binder production, the subbase production, technology development and development standards to be applied. For two years we have performed more than 50 R&D and has developed about 30 standards for petrochemical, coal miners, power engineers, builders... We can now offer a complete solution, including all necessary regulatory documentation for the most promising fields of application. Our pipes on the basis of glass and basalt fiber are cheaper than most analogues, 10 times lighter than steel pipes and 2 times lighter than polyethylene pipes, suitable for all liquids, have energy-saving effect and have a durability of not less than 50 years.
Thus, in the industry the level of risk is relatively low, plus there is no competition and you can choose the most interesting directions. To compete in the field of IT with Apple or Google is unpromising. Of course, in the initial stages of industrial development we have 3-4 years of "suffer", because working with our scientists and engineers is very, shall we say, peculiar, but the results justify all. Currently, we are implementing 32 projects and more than 20 have already brought to the commercial stage.
What are the project selection criteria?
We don’t select projects, we generate them. We have more than 100 orders for technology projects from large industrial groups, therefore in the beginning we look for scientists. For example, composite pipes develops Kharkov aviation Institute, Research Institute of Glassplastics and fiber, Institute of macromolecular compounds of Russian Academy of Sciences and Lomonosov Moscow State University. When the project is generated, we provide funding.
It is favorable to regional authorities to work with us because, creating the venture capital fund, we offer a complex of the developments, which are already brought to the commercial stage, and the competences in creating of a new projects for the needs of local customers. As a result, they are provided with investment, new jobs, tax revenues and political dividends.
How is the cooperation with development institutions?
Because we are conducting a project from research to the stage of mass production, we interact with all Federal development institutions and relevant ministries. For example, three of our projects were financed by RVC Seed Fund, also we work with other structural divisions of RVC, five of our companies have become Skolkovo residents, and two of them have already received funding. In addition, we are involved in projects of Rusnano and the Ministry of economic development, we get grants from the Ministry of industry and trade and the Ministry of education, and cooperate with other venture capital funds.
If we consider the task of raising funds at different stages of projects, with funding of R&D usually there are no problems. When creating industrial production tools are also missing–loans, leasing, Federal and regional programs, but preceding the start of a small series without venture capital funds would be "dead valley". At the stage of creation of the industrial production also there is a sufficient number of financial instruments–credits, leasing, federal and regional programs, but preceding stage of start of a small series production without venture capital funds would be "dead valley".
What hinders your work?
At all stages of development of projects the main problems are anyway connected with people–businessmen, scientists, engineers, politicians. Unfortunately, on the mentality most of people in Russia are pessimists, and it interferes with our work. Our scientists work very slow, and we constantly should hurry them up. The skills of general managers do not always correspond to their positions’ requirements, and this is not a national peculiarity, but rather a global problem. I think that not more than one percent of people have the necessary qualifications to be a general director of the industrial plant, because it must be able to assemble and motivate a team, that is to be the good psychologist, to understand the finance, technology, commerce... Such people are very few.
Which of your project companies develop nanotechnology?
Moscow-based company New plasma technology, a project of Nanomat venture capital fund, develops and produces equipment the creation of a self-lubricating nanostructured hard coatings on cutting tools and parts, and also offers services for applying such coatings. The company uses such technologies as vacuum ion-plasma coating and electron beam melting, cutting and welding.
Voronezh-based company Techpromlit produces the castings for pipeline valves from corrosion-resistant high-strength austenitic steel, reinforced with nanoparticles of nitrides. Such valves can be used in housing and communal services, chemical industry, oil and gas industry. In this project developments of Bardin CNIItshermet are used.
Already mentioned Krasnodar silicon dioxide will manufacture high-purity polysilicon–nanomaterial for electronics and solar energy.
To reinforcement of our composite pipes, in the fiberglass can be added multiwall carbon nanotubes, their concentration is determined, depending on customer requirements to the characteristics of the pipes.
Thus, we make the contribution to development of nanotech industry.
What are the prospects for partnership with the government of the Samarskaya Oblast’, which was announced at the Open Innovations Forum?
We won an open tender for the right to become the management company of the fund of long-term direct investment, which is formed in the Samara region. The volume of venture capital fund will amount to 400 million rubles, with the possibility of further increase to 1 billion rubles. Also the seed fund with an initial amount of 100 million rubles will be created. Within three years it is planned to increase this amount to 300 million rubles. We attract half of the funds, and half will come from the budget of the region.
I will note that in the Samarskaya Oblast’ good conditions for development of industrial innovations are created. Already exist technology parks for chemical industry, agrobiotechnologies, aerospace and automotive components, business incubators, the nano-center will be created soon. We already generate projects for Tolyattisintez technopark. As usual, we will obtain funds from both private investors and development institutions, as well as from other investment funds.
Thank you for the interesting interview.
The interview was taken by Dmitry Gudilin
In this business it is difficult to build a unified rating scale to accurately determine the position. For example, it makes no sense to evaluate the stated amount of assets, because there is no real money in some venture capital funds. Simply speaking, they first gather the projects, and only then raise funds. The market leaders in terms of real assets are some venture capital funds created by major oil and gas companies and banks, such as Gazprom Venture. I think that we are in the Russian top ten on this indicator, but has not yet reached the top five.
The market leaders in terms of number of projects are the venture capital funds created by the leading IT-companies: Apple, Microsoft, Google, Yandex, Mail.ru. Every year, each of them fund on average 50 new developments. In terms of number of industrial projects we are the leaders.
Who are the main investors of the projects?
The main investors are the banks, because they manage about 90% of all financial assets. It’s no secret that every major Russian financial-industrial group includes the subsidiary bank for placement of operating and investment funds. Therefore, we use the model that is favorable to banks. In the first phase, when we form a venture capital fund, the bank can use the money as working capital. In the second phase, the projects are created, which are served by bank. In the third phase, the projects begin credited and the bank earning some money–in fact, we help him to grow its customer base. In the third stage the projects begin to borrow, and the bank earns on this. In fact we’re helping him build up a customer base. Moreover, when a company stands up and starts to make a profit, the Bank often buys it.
In some of our venture capital funds up to 20 % of the capital is owned by investors, who have come through the stock exchange, but basically it is the speculators, which are attracted by the good level of profitability.
Why you chose industrial sector as the main object of investments?
The market analysis showed that this niche is free, because most of our colleagues prefer to invest in information technology, biotechnology and service projects. At the Federal level there are several companies that invest in industrial development, such as Leader and VTB Capital, but in the regions except us actually nobody works. That is, we have the opportunity, without pressure from competitors to choose what we are interested in, to implement projects from initial phase to obtain a unique niche products.
But it is generally accepted, that in the industry the risks are higher...
It is mistake. We analyzed 20 years of experience of venture capital investment in approximately ten leading technological countries of the world, and it turned out that in the field of information technology 97% of projects are unprofitable, in the field of biotechnology 70% of the projects are unprofitable, and in industry 65% of the projects become successful.
Here are a few examples. Our project company Chemtech Engineering produces non-toxic plasticizer dioctyl terephthalate, by processing of environmentally harmful waste of terephthalic acid. For manufacturers of polymers, for example, Sibur, these wastes were a problem, but now we process them and sell dioctyl terephthalate to the manufacturers of plastic. By the way, these same customers buying polyesters and polypropylene. What can be the risks?
Another of our company, Krasnodar Silicon Dioxide, recycles waste from rice production to generate electric energy, oxide-carbon powder and silicon dioxide. Electricity is sold back to the factory, processing rice, oxicology powder–to the metallurgy, silicon dioxide–to tire manufacturers. And again no risk, because the needs of the industry in oxide-carbon powder and in the silicon dioxide exceed the capacity of our plant.
Of course, difficult to start such projects, because of possible errors in technological solutions. For example, when we started the project to create the manufacture of composite pipes, the first two technological solutions were wrong. Then the project was divided into five blocks: the equipment production, the binder production, the subbase production, technology development and development standards to be applied. For two years we have performed more than 50 R&D and has developed about 30 standards for petrochemical, coal miners, power engineers, builders... We can now offer a complete solution, including all necessary regulatory documentation for the most promising fields of application. Our pipes on the basis of glass and basalt fiber are cheaper than most analogues, 10 times lighter than steel pipes and 2 times lighter than polyethylene pipes, suitable for all liquids, have energy-saving effect and have a durability of not less than 50 years.
Thus, in the industry the level of risk is relatively low, plus there is no competition and you can choose the most interesting directions. To compete in the field of IT with Apple or Google is unpromising. Of course, in the initial stages of industrial development we have 3-4 years of "suffer", because working with our scientists and engineers is very, shall we say, peculiar, but the results justify all. Currently, we are implementing 32 projects and more than 20 have already brought to the commercial stage.
What are the project selection criteria?
We don’t select projects, we generate them. We have more than 100 orders for technology projects from large industrial groups, therefore in the beginning we look for scientists. For example, composite pipes develops Kharkov aviation Institute, Research Institute of Glassplastics and fiber, Institute of macromolecular compounds of Russian Academy of Sciences and Lomonosov Moscow State University. When the project is generated, we provide funding.
It is favorable to regional authorities to work with us because, creating the venture capital fund, we offer a complex of the developments, which are already brought to the commercial stage, and the competences in creating of a new projects for the needs of local customers. As a result, they are provided with investment, new jobs, tax revenues and political dividends.
How is the cooperation with development institutions?
Because we are conducting a project from research to the stage of mass production, we interact with all Federal development institutions and relevant ministries. For example, three of our projects were financed by RVC Seed Fund, also we work with other structural divisions of RVC, five of our companies have become Skolkovo residents, and two of them have already received funding. In addition, we are involved in projects of Rusnano and the Ministry of economic development, we get grants from the Ministry of industry and trade and the Ministry of education, and cooperate with other venture capital funds.
If we consider the task of raising funds at different stages of projects, with funding of R&D usually there are no problems. When creating industrial production tools are also missing–loans, leasing, Federal and regional programs, but preceding the start of a small series without venture capital funds would be "dead valley". At the stage of creation of the industrial production also there is a sufficient number of financial instruments–credits, leasing, federal and regional programs, but preceding stage of start of a small series production without venture capital funds would be "dead valley".
What hinders your work?
At all stages of development of projects the main problems are anyway connected with people–businessmen, scientists, engineers, politicians. Unfortunately, on the mentality most of people in Russia are pessimists, and it interferes with our work. Our scientists work very slow, and we constantly should hurry them up. The skills of general managers do not always correspond to their positions’ requirements, and this is not a national peculiarity, but rather a global problem. I think that not more than one percent of people have the necessary qualifications to be a general director of the industrial plant, because it must be able to assemble and motivate a team, that is to be the good psychologist, to understand the finance, technology, commerce... Such people are very few.
Which of your project companies develop nanotechnology?
Moscow-based company New plasma technology, a project of Nanomat venture capital fund, develops and produces equipment the creation of a self-lubricating nanostructured hard coatings on cutting tools and parts, and also offers services for applying such coatings. The company uses such technologies as vacuum ion-plasma coating and electron beam melting, cutting and welding.
Voronezh-based company Techpromlit produces the castings for pipeline valves from corrosion-resistant high-strength austenitic steel, reinforced with nanoparticles of nitrides. Such valves can be used in housing and communal services, chemical industry, oil and gas industry. In this project developments of Bardin CNIItshermet are used.
Already mentioned Krasnodar silicon dioxide will manufacture high-purity polysilicon–nanomaterial for electronics and solar energy.
To reinforcement of our composite pipes, in the fiberglass can be added multiwall carbon nanotubes, their concentration is determined, depending on customer requirements to the characteristics of the pipes.
Thus, we make the contribution to development of nanotech industry.
What are the prospects for partnership with the government of the Samarskaya Oblast’, which was announced at the Open Innovations Forum?
We won an open tender for the right to become the management company of the fund of long-term direct investment, which is formed in the Samara region. The volume of venture capital fund will amount to 400 million rubles, with the possibility of further increase to 1 billion rubles. Also the seed fund with an initial amount of 100 million rubles will be created. Within three years it is planned to increase this amount to 300 million rubles. We attract half of the funds, and half will come from the budget of the region.
I will note that in the Samarskaya Oblast’ good conditions for development of industrial innovations are created. Already exist technology parks for chemical industry, agrobiotechnologies, aerospace and automotive components, business incubators, the nano-center will be created soon. We already generate projects for Tolyattisintez technopark. As usual, we will obtain funds from both private investors and development institutions, as well as from other investment funds.
Thank you for the interesting interview.
The interview was taken by Dmitry Gudilin
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