Innopolis fine-tuning: IT hub developing experimental legal regime for ventures
Investors expect a capital margin of at least 50% and a planning horizon of up to 5 years
“Now Moscow (the innovation cluster around Skolkovo) is “vacuuming” most IT companies. The state should be interested in having many IT clusters, not one for the whole country," Renat Khalimov, head of the Innopolis SEZ, said during the “zero day” of the Russian Venture Forum on 9 April. The disparity in tax preferences between the Skolkovo Innovation Centre and the regions may be eliminated by the end of this year. The Association of Innovative Regions is going to take the initiative to introduce an experimental legal regime for venture funds, which will ensure their return on personal income tax on capital. Read more in the Realnoe Vremya article.
50% on capital, or What venture funds want
Innopolis SEZ, which attracts high-tech IT companies as residents, may also become a separate enclave for attracting venture capital. The Association of Innovative Regions of the Russian Federation (it includes 19 subjects of the country) and the authorities of Tatarstan are developing a legislative initiative to establish an experimental legal regime (EPR) in the field of venture innovation. This revolutionary idea was announced by Roman Shaikhutdinov, Deputy Prime Minister of Tatarstan, at a panel discussion on the role of regional clusters and economic zones in shaping the flow of venture transactions.
“We need Fine-tuning to increase the profitability of investment capital in venture capital. This is the main thing," he said, referring to the introduction of tax deductions for direct investments and seed financing through funds.”
According to Shaikhutdinov, in order to interest an investor, the capital margin should be at least 50%, and the investor should see a 4-5-year horizon.
Venture capital is increasingly being invested in startups, which are being created, among other things, under the wing of the Innopolis SEZ. “Many people test advanced developments first in our area, and then present them at different sites and find investors. They carry out the commercialisation of projects," Roman Shaikhutdinov said. “What is interesting about Tatarstan? He does not give money directly, but provides a “fishing rod” for earnings. Most of the high-tech companies that are residents of Innopolis SEZ have access to large companies in Tatarstan that implement them at their enterprises," he said.
Tatarstan corporations are among those who can be counted among the strategic investors of advanced technologies. In general, after the withdrawal of Western companies, this market has changed a lot. Today, three players dominate here — the state and large state-owned companies, private corporations and business angels themselves. Thus, the Industrial Development Fund, operating under the supervision of the Ministry of Industry and Trade of the Russian Federation, provides seed financing for domestic engineering. And the Russian Information Technology Development Fund, under the supervision of the Ministry of Digital Development, is financing IT projects for various sectors of the economy, Roman Shaikhutdinov noted.
He cited SIBUR as an example of the activity of private corporations. The petrochemical corporation is actively investing in “dry” research in the field of chemistry in order to “test the hypothesis of a new chemical formula”.
Damir Galiev's priorities
The Tatarstan Investment and Venture Fund plays an important role in the development of startups. Last year, the IVF supported 34 projects worth 1.5 billion rubles, including co-investments, said Damir Galiev, director of the non-profit organisation. The priority is mechanical engineering, chemistry and new materials. They accounted for about 80% of the supported projects. A striking example is “Anatomics”, which give the opportunity to create new surgical instruments. There is medicine, new materials, and bionic systems. Another example is the Cation project for softening water hardness.
This year, the IVF is going to support 35-40 projects, and investments will increase by 15-20%. The trend towards mechanical engineering will continue, but there will be a slight asymmetry towards new materials. For this purpose, a new structure is being created within the IVF. Some of the portfolio projects contain a commitment to localise projects in Tatarstan.
Skolkovo “vacuums” with benefits
But it is becoming more difficult to “give blood” to new IT programs in the regions. One of the reasons is that the regions have a weaker package of tax preferences than the Moscow giants. It is more difficult for regional SEZs to compete for venture funds than for the federal innovation centre.
“Skolkovo has stronger tax preferences, and we compete through services, additional support measures," said Renat Khalimov, head of Innopolis SEZ.
Due to this, it is possible to move 80% of companies from other regions. The Moscow innovation cluster subsidises almost everything — urban pilots, the export of IT technologies, the return of personal income tax, as in Skolkovo. Budget to hire strong, competent professionals. The difference in support budgets is huge.
“Now Moscow (meaning the Moscow innovation cluster around Skolkovo) is “vacuuming” most IT companies. And the state should be interested in having many IT clusters, not just one for the whole country," says Renat Khalimov, head of Innopolis SEZ. “If a single standard of support were introduced, it would be fair.”
Innopolis will develop the EPR for funds
To equalise tax regimes, Roman Shaykhutdinov suggests introducing an experimental legal regime for venture innovations. So far, he has not disclosed specific tools, as discussions with venture funds about “easing” are still to be held, he said, answering a question from Realnoe Vremya.
According to him, Innopolis can become a platform for extraterritorial jurisdiction for venture capital interactions. “Potential technology recipient companies, venture funds, and venture startups can participate here. This is aimed at a faster venture turnover in the field of investment," he said. In other words, Innopolis is going to enable venture funds to become a remote resident.
