During 2011 there were significant new developments in Russian involvement with the Massachusetts high tech sector, with more to come in 2012. RUSNANO, a Russian development agency, announced significant investments in local startups. MIT signed an agreement with the Skolkovo Foundation, another Russian development agency, to collaborate in the creation of the Skolkovo Institute of Science and Technology in a Moscow suburb. Early next year, a third Russian development agency, the Russian Venture Company, will open its U.S. headquarters in Boston. This December, Russia was admitted into the World Trade Organization opening new potential for Massachusetts industry exports. All in all, this was probably the most significant year for economic ties between Russia and the Massachusetts tech sector since the dissolution of the Soviet Union and prospects for next year are even greater.
RUSNANO, with government-backed capitalization of $10 billion, is a co-investor in large-scale nanotechnology projects to develop and diversify the Russian economy through nanotechnology. On October 27, 2011, RUSNANO announced high-profile investments in two Massachusetts biotech companies, BIND and Selecta. Each of these companies will receive a $25 million investment as part of a fundraising round that will include contributions from each companyâ€™s existing US investors and from new investors. As part of the investment agreement, each company will establish subsidiaries in Russia that will incorporate Russian scientific expertise and clinical experience. At a time of increasing difficulty in finding financing in the US, the RUSNANO connection provides the companies not only money, but expanded technical and market opportunity. RUSNANO is reportedly also examining an investment in a Massachusetts clean energy company.
At roughly the same time as the RUSNANO investment announcement, MIT officially signed a path-breaking agreement with the Skolkovo Foundation to collaborate in creating the Skolkovo Institute of Science and Technology. The new university will be a graduate-level institution combining world-class scientific scholarship and research with the innovative practical application orientation developed by MIT. The university structure will include education programs, collaborative research centers and a Center for Entrepreneurship and Innovation. It will take a multi- and inter-disciplinary approach to the technology focus areas of biomedical, space, energy, IT and nuclear technologies. The development of this new university and the role it is expected to play in catalyzing innovation and new technology in Russia will spotlight the broader innovation ecosystem in Boston/Cambridge/Massachusetts as a key partner for Russian technology development.
The opportunities in the Russian market have already caught the attention of leading Massachusetts companies like EMC, Genzyme, Nypro and IPG Photonics. Other companies are following their lead. Boxboro-headquartered Crossbeam Systems, Inc. is one such company with its May 19 announcement of a joint venture with the Russian Telecom Equipment Company to offer security solutions in Russia. The integration of Massachusetts tech economy with Russia is not a one-way process. Russian software giants like Acronis and Kaspersky Labs have made their home here, along with hybrid US-Russia software engineering companies like GGA Software Service, LLC and Auriga.
Looking forward to 2012, the ties between Russia and Massachusetts are expected to continue to grow. In early 2012, The Russian Venture Company, another of the Russian development agencies, will open n its US headquarters in Boston. With authorized capital of slightly less than $1billion, the mission of RVC is to contribute to the creation of a self-sustaining venture capital community in Russia to support innovation and to encourage the creation of private venture capital institutions. Under the umbrella of RVC, there are a number of specialized sector-specific investment funds, including new seed and infrastructure development funds. One of these RVC-created funds, the Maxwell Biotech Fund, will be co-located with the RVC Boston headquarters.
Russian markets are also opening to foreign goods. On December 16, Russia was formally invited to become a member of the World Trade Organization. Its ascension to membership will significantly decrease tariffs and increase transparency in the Russian market. If the US Congress repeals the out-dated Jackson-Vanik Act, then US companies will be able to operate under new WTO rules in the Russian market. This should create significant new export opportunities. In areas like medical equipment, instruments, clean tech, bio and others, Massachusetts companies should be able to find new opportunities in Russia, the worldâ€™s 11th largest economy.
The years 2011 and 2012 may well be the turning point for a much more robust business relationship between Russia and Massachusetts.
Daniel Satinsky is a founding Partner in the Russia Innovation Collaborative, LLC and a Connector with BWP. He has been a consultant for projects in Russia for more than 20 years, currently focused on new opportunities in the emerging Russian innovation economy and in the Russian Regions
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