28-30 November 2018


Mikhail Rayak

Innovators Alter the Course

Industrial companies, investors and innovators constantly monitor the situation on the Russian market. The market dictates: it is necessary to back off from information technologies and develop other spheres. Mikhail Rayak, the Executive Director of St Petersburg Pre-Seed Investment Fund told about tendencies, advantages and disadvantages of sanctions and what innovators should do in present conditions.

Mikhail Evgenyevich, what are, on your opinion, the tendencies on the innovation market in the RF and in St Petersburg?

Gradually the vogue for IT passes away, and those innovations that facilitate import substitution become more and more demanded. The main tendency today is a more focused attention to innovations into the real sector of economy. If we compare St Petersburg and the Russia in general, we will not see any substantial differences in tendencies, there are only some regional peculiarities. For example, St Petersburg actively develops shipbuilding and industry in general, which is influenced by its territorial proximity to Europe.

How has the economic and political situation, sanctions in particular, changed the market? What is it necessary to do so that the process of investments into innovative projects would not stop?

The political situation in the country is rather stable, so one can't say that it evoked any changes on the market. What about economic situation and sanctions, it is a "two-edged sword". On one hand, of course, the negative economic situation influences the market of innovations: income of many businesses has been reduced, expenses have increased, and the number of people who would like to invest money and take risks has decreased. On the other hand, the demand for innovations has highly increased in the sphere of import substitution. In addition, thanks to plummeting exchange rates, investors who keep their assets or have income in foreign currency, have increased their possibilities for investments by 1.5-2-fold.

In general one can say that there are money for investments on the market, but it has become a bit more difficult to get them (concerning private investors). This may be partially considered as a positive influence: the number of investments is likely to reduce, but companies for investments will be selected more thoroughly. Only the most worthy projects will receive money.

Who is the buyer of ideas in Russia today, and who may innovators count on?

As a rule, nobody needs ideas as they are. Everybody wants a ready-made product – for resale or implementation. That's why first of all innovators should reckon upon themselves. At least on the starting phase of the project.

If we talk about external investments, we should draw attention to governmental development institutions, as private companies hesitate to make investments into businesses on the stage of idea development. Herewith, we should understand that governmental development institutions also don't buy ideas: their task is to stimulate project development and help to survive a so called "valley of death" at the start of the business. Nobody will develop an idea and implement a product instead of innovators.

And when the product is ready, it will be far more easy to find money for its further development or sell: here innovators may find support from governmental development institutions with their programs of business support at subsequent stages, or private investors, or real sector enterprises looking for respective products.

St Petersburg Pre-Seed Investment Fund is a constant participant of St Petersburg International Innovation Forum. What tasks have been set in 2015?

The Pre-Seed Investment Fund that is founded by and operates under the St Petersburg Committee for Industrial Policy and Innovations, traditionally takes active part in the work of St Petersburg International Investment Fund expert commission.

In 2015 we shall organize two round tables "Infrastructural Partnership in Investment Environment" and "Legal Problems within an Innovative Eco-System". In addition, the Pre-Seed Investment Fund will present 6 portfolio companies at its stand. I'm sure that these events will be useful for entrepreneurs and for those who only plan to start business. Round tables will help to orient in the general innovative infrastructure. At the Forum the Pre-Seed Investment Fund will present the latest projects of its portfolio companies. Participants of the event will have a possibility to make business contacts with industry representatives and investors who later may take part in foundation of an "investment elevator".

The Fund is one the key elements of St Petersburg innovative infrastructure, and, in essence, – a single governmental institution of the city development that provides substantial financial support to small innovative companies. For example, in 2014 companies backed by the Fund also received third party investments in the amount of 105 mln roubles, and the overall revenue of portfolio companies has reached about 80 million roubles.