Interview: “We have chosen Nanostart as experienced partner”
Moscow, September 19, 2011. Alexander Kondrashov, Managing Director of Russia's largest nanotechnology investment company RUSNANO, talks about the modernization drive of the Russian government and the role of RUSNANO.>>
Source: Nanostart Newsletter, September 2011
RUSNANO was founded in 2007 and provided with USD 10 billion in order to make Russia a leading nanotechnology country. This includes informing and enlightening the population about nanotechnology, carrying out market analyses and forecasts, launching training initiatives for appropriately qualified young talent and of course the promotion and commercialization of promising products and methods. How does all this tie up and where do you see the particular advantages of Russia for executing such a mammoth program?
Kondrashov: In 2011 we split our activities into investments and non-profit projects. RUSNANO acts as a typical investment fund. Additionally we have founded a subsidiary called non-profit infrastructural fund RUSNANO. This non-profit fund is responsible for educational programs, changes of legislation, the promotion of new technologies and the establishment of centers of collective use and centers of excellence. The role of the non-profit fund is to facilitate investors and companies to implement new technologies. The fund co-finances educational programs and deals with legislation barriers like e. g. technical regulation issues. RUSNANO is one of the investors who makes joint activities with the non-profit fund. RUSNANO’s main objective is to create a new cross-industrial bunch of companies that make business based on new technologies and invest a lot in R&D.
RUSNANO was founded in 2007 as a state holding company and later converted to a stock corporation. So far the Russian government has been the only shareholder. Are there plans to sell shares on the market? What strategy is RUSNANO pursuing as a company?
Kondrashov: The government plans to sell 10 per cent of RUSNANO shares next year. Whether this will be pursued via an IPO or a private placement has not yet been decided. RUSNANO’s main strategy is to hold all non-profit development activities in the non-profit fund which will be kept state-owned. RUSNANO as investment fund should have private investors and private money.
In your view what are the greatest challenges that RUSNANO and Russia must face in order to become the leading nanotechnology country?
Kondrashov: In my view, the greatest challenge is to create a business-friendly environment. For companies, the access to capital is quite easy. The challenge is to find a smart money provider. RUSNANO is a smart money provider. We open the doors to the Russian market and its opportunities and bring strong business strategy experience on the table. But our goal is to bring all these competences together with international opportunities. We invest globally, we think globally and at the end we want to build multi-market business opportunities for new technological companies.
You are cooperating with partners from throughout the world in implementing the program. What are the benefits for foreign partners of working with RUSNANO? What makes it attractive for them to become active in Russia?
Kondrashov: Russia is a large country, not only from a geographical point of view, but also with regard to its business opportunities. RUSNANO brings smart money and in addition offers great market opportunities. The Russian market needs new technologies and new tech-companies and products are welcome and actively supported.
The US is very probably still the world leader in nanotechnology. The principle of venture capital, something that is of major importance for young technology companies, also has a long tradition there. Where can the US serve as a role model for the development of nanotechnology in Russia? What is or should be done better in Russia than in the US?
Kondrashov: I see two key success reasons in the US: the access to capital and the access to the market. These are exactly the things that we want to build as well. In Russia, venture capital is offered by a bunch of seed and venture capital funds. Additionally R&D grants are made available by Skolkovo and other governmental institutions and the president’s modernization approach stimulates leading national corporations to be innovative. We already have the financing in Russia. Now we are bringing the market. You will see that today you will meet much less barriers and less regulations, but instead a more comfortable environment in Russia than anywhere else.
Today nanotechnology can already be found in virtually every industry and forms the basis of innovation. In which areas/sectors do you see the greatest need for Russia to produce innovations? Are there fields of nanotechnology applications that RUSNANO is focusing particularly on – maybe in connection with the immense crude oil and natural gas reserves?
Kondrashov: Indeed the Russian oil and gas market is huge and it is not a secret that every new product that is accepted by the big players in this market is very likely to achieve high sales volumes. But with our investments we do not concentrate on one singly industry. We target various industries such as e. g. consumer goods, pharmaceuticals, medical devices, electronics and machinery. We are looking at every opportunity while trying to find synergies with our current portfolio.
Where do you see the Russian economy in ten years’ time?
Kondrashov: I am quite optimistic about Russia’s future economic development. The country has a large domestic market that will for sure become larger and larger, and I am not only talking about the retail market. Of course, Russia has a strong need for investments and the country currently puts a great focus on investing, especially in infrastructure projects like transport, roads, stadiums and power grids.
I think that apart from the huge domestic market, in ten years the Russian economy will also have a new and large industry base and many new technology companies. And I am sure that RUSNANO will be co-owner of the most successful of them.
One German company RUSNANO is holding a stake of is ItN Nanovation AG where you are a member of the Supervisory Board. The company’s patented nanoceramics make innovative applications possible in the form of coatings for power stations and foundries as well as for water filtration. Could you say something about the strategic reasons for your investment in ItN?
Kondrashov: ItN Nanovation AG is holding a world class new material technology. We see a huge potential to convert patents and IP into breakthrough products in the fields of water purification, metals and power plant industries. ItN already started JDW and tests with RUSAL – the biggest Russian aluminum player – and several energy companies. We see great market opportunities for ItN’s products in Russia.
Since 2009 you have been counsel to the Governor of Perm, where a fund is to be launched that will invest in regional nanotechnology enterprises. The Governor of Perm and Nanostart AG are partners of RUSNANO. Why do you consider Perm to be a very well suited region for such a fund? Why did you select Nanostart from the pool of applicants as partner and fund manager?
Kondrashov: Perm offers a great combination of large companies from industries like oil & gas, metals, mining and chemicals and well recognized R&D centers. Two federal universities and a huge amount of state-owned and corporate R&D centers and centers of excellence are located in Perm. Governor Oleg Chirkunov and the regional government actively support companies that implement new technologies in order to establish a working mechanism of innovation commercialization that ranges from R&D in the laboratory to market entry and international expansion. Financial sources like public funding, venture capital and corporate financing are needed to pursue this strategy. Additionally an experienced partner is needed to make the investment decisions and to manage the venture fund. Therefore we have chosen Nanostart AG.
Thank you Mr. Kondrashov.
