The Russian venture capital market is yet to take proper shape whereas startup entrepreneurs and investors often feel disappointed in their expectations and financial realities. US citizen Kendrick D. White, who has dedicated the last 20 years of his professional life to bridging Russia with the global tech and venture markets, shared his views on these questions.
Russia’s VC market accounts for less than 1% of the global one. Are Russian and international high-net-worth individuals so reluctant to risk their money in it?
Russian high-net-worth individuals and business angels have a long history of working to make money through Russia’s natural resources which offers relatively short time horizon in investment horizon cycles, meaning that investors could invest their money in year one and perhaps see their project through in one or two years or possibly three years and then exit with substantial profits. This is historical heritage of Russia’s commodity based raw materials economy.
Shifting to the innovation economy is a major transition for Russia, because it’s a change in the mindset of investors on what type of horizons they should set as their expectations. High technology projects are not always going to be profitable in two or three years. If they advance high-tech science projects, the time horizon can be eight, or ten, or twelve years. And this is something new for Russian investors to understand.
Therefore, as long as Russian investors can make substantial profits on short-term real estate and commodity projects, they will continue to invest and prefer those types of investments over high-tech. When the opportunities for those quick profits disappear, Russian investors will like all other investors’ around the world look for more advanced superprofits through investing in high technology.
Kendrick White: “Shifting to the innovation economy requires a change in investors’ mindset”Read More
