Program for Creation of Investment Instruments (FIRST PROGRAM)
The Investment Vehicle Creation Program is aimed at creating investment products contributing to development of the venture capital market of the Russian Federation to meet the needs of its participants.
One of the major goals of the program is to attract private participants in the venture capital market to segments that have not attained a sufficient level of development and maturity, and are not capable in the short term of ensuring stable growth of investment and business activity on their own (without involvement of state support tools and development institutions).
RVC's investment vehicles created as part of the Program will focus on attracting domestic and foreign capital in the innovative segment of the economy of the Russian Federation, compensation of the slowdown in the Russian venture capital market, overcoming the stage and industry "distortions" and "disproportions", and improving the quality of the innovative project flow.
Activities of the financial vehicles created in the framework of the Program will contribute to the commercialization of indigenous technologies that have the potential to bring new types of goods and services to the market.
Creation and/or participation in financial instruments focused on attracting third-party capital to the venture market and support of technological projects in various stages of development
In order to solve this problem RVC is considering as a priority ones (taking into account the progress of the Russian venture capital market) the initial stages of development of technology companies, where the current offer of private capital and investment instruments is in general insufficient due to high risks. The financial instruments created within the framework of the Program will help to reduce the risk of private investors and correct the imbalances, including by increasing funding from RVC-invested funds to investment at seed and early stages. The said activity will also make it possible to fill a number of "gaps" that have formed in the Russian venture capital market impeding the transition of innovative companies from the early stages of development to the more mature ones.
Activities within this area will also involve development and provision of investment instruments in the market, promoting commercialization and increase in the value of innovation intellectual technology companies at various stages of development, as well as serial technology entrepreneurs.
As part of the Program, RVC will also pay special attention to creating and delivering products of financial support to national "technology champions" - Russian companies at mature stages of development, innovative products and services which have the potential to significantly increase sales and capitalization on the global market. The solution of this subtask will also contribute to import substitution and ensuring the security of the Russian Federation technology in strategically important areas by supporting rapid development and globalization of businesses of Russian management companies - both professional investors and technology companies. RVC will also consider the appropriateness of partial placement of temporary free funds of the Company in bonds of Russian innovative technology companies.
Creation and/or participation in financial instruments also focused on correcting the venture capital market in priority industry sectors)
Based on state priorities in science, technology and innovation, as well as in accordance with the technological component of RVC Development Strategy, the Program activities will include creation of or participation in investment funds with mono- or diversified industry focus.
This includes RVC-invested vehicles focused on industrial sectors, in which, for whatever reasons, private capital is poorly represented, but which are important for balanced innovation development of the country, as well as promising cross-sectoral (related and interdisciplinary) segments emerging at the intersection of various technology and industrial markets.
Support of corporate venture investment vehicles, including in collaboration with major corporations and publicly owned companies
To solve this problem within the framework of the program of work will be done on the formation of financial vehicles to facilitate creation of public corporations and state-owned companies, which have approved and implemented innovative development programs (IDP), corporate venture funds, and joint industry (and inter-sectoral, if appropriate market conditions are available) funds, as well as increased use of other forms of venture capital investments by large state companies, including investments in vehicles of development institutions.
The above activities will be carried out in coordination with other activities of RVC (including these implemented within the framework of an investor development program) aimed at development of corporate venture funds, investing in industry funds, as well as stimulating acquisition of innovative companies in programs for innovative development of the largest public corporations and state-owned companies.
In carrying out the above tasks, RVC OJSC will be guided primarily by the principles of economic feasibility of the measures and vehicles used, their compliance with the respective best investment practices, and implementation of a portfolio approach across the entire portfolio of RVC OJSC in order to ensure long-term financial stability of RVC OJSC.
These tasks will be performed based on due diligence by RVC's own experts and foreign investment and financial partners (experts, expert teams, management companies, and investors).
Spread of the practice of formation of investment instruments within or with the use of the Russian jurisdiction
As a result of adoption of Federal Law No. 220-FZ "On Amendments to the Federal Law on Investment Partnership" dated July 21, 2014, the efficiency of investment partnership agreements used for creation of venture capital funds has increased. However, despite the positive developments in the legislative environment outlined above, the practice of interaction of RVC OJSC with independent management companies suggests preservation of the cautious attitude to the form of investment partnership agreement (IPA) in participants of the investment market. In addition, private investors note a number of outstanding issues of application of IPA relating to, inter alia, financial and tax of partnership members and common affairs of the partnership, and the lack of accumulated enforcement practice. These factors determine the relevance of continuing development of RVC-piloted IPA enforcement practice as a promising collective investment form for the Russian venture capital market.
The program will continue in both creation of new financial vehicles in the form of RVC-funded IPA and in accumulation and replication of the best practices of funds generated in the form of an investment partnership agreement.
A separate subtask to be given special attention is integration of Russian forms of collective investment in international investment practice, including based on pilot investment vehicles with compound (mirror) jurisdictions.
Detection and analysis of any possible terms and conditions to attract international capital to the Russian venture market in current economic conditions
This problem will be solved in the framework of the program for creation of investment vehicles through the following subtasks:
- Integration of investment experts of RVC OJSC, partners, and funds with the participation of RVC OJSC in professional international investment community, including institutional investors in the private equity and venture capital investment markets;
- Establishing direct and regular interaction with institutional investors and funds, investment mandates and strategies of which may include investments in the Russian market of equity and venture capital investments or in entities associated with the Russian market;
- Creation of investment instruments, providing opportunities for international investors to invest in growing segments of the Russian market of equity and venture capital investments, as well as contributing to the growth of capitalization of Russian technology companies and companies focused on development of the Russian technological market.
The above activities will be carried out in coordination with the activities of RVC implemented under a program of globalization of the Russian innovation industry (task 1 - Supporting exports, search for technology and strategic partners, and search for the later stage investors; task 3 - "Promotion of transfer to the Russian Federation of "breakthrough" foreign technology and advanced international business competencies"; task 4 - "Ensuring international component in addressing the challenges facing other RVC programs"), as well as taking in account the activities undertaken by the program to promote innovation in framework for addressing task 5 - "Popularization of Russian venture industry abroad and increasing investment attractiveness of the Russian venture capital market in the international arena."
Implementation of the program for creation of new investment instruments will be carried out in close coordination to address the tasks associated with the involvement of private investors in RVC-invested funds and/or new funds managed by management companies and teams in partnership with RVC OJSC (including RVC Biofund, RVC Infrafund, RVC Seed Fund, and MIC CT), taking into account the prospects for the creation of asset management companies on the basis of management teams of RVC's affiliated funds.