Sept. 22--Russia has its foreign policy and human rights differences with the United States. Yet once past the diplomatic dustups, a look inside the Russian economy finds a growing number of eager tech entrepreneurs trying to capitalize on the markets finding success online.
Russia has long been strong in math and science, but that doesn't necessarily mean Russian entrepreneurs will attract capital from American technology investors. Last week, members of Skolkovo -- a 3-year-old initiative to emulate Silicon Valley's success near Moscow -- toured the Bay Area to pitch for funding, but also to take feedback from investors on how to make their businesses successful.
Asked about the political differences between the two countries, the Skolkovo team dismissed any potential rift. "That's not an issue," says Olo Brukovskaya, co-founder of education startup Choister. "The biggest barrier we meet here, when we come to do business and introduce our projects, is the cultural barrier."
Moscow wants to be seen as friendly to entrepreneurs, and its efforts are paying off. Microsoft, Intel, Cisco and IBM have all sunk money into Skolkovo in recent years. There was some worry that President Vladimir Putin wouldn't be as forward-thinking as previous leaders and that Skolkovo could suffer.
"Theoretically I would agree with that," says Roman Karachinsky, CEO of media app News360. "But I haven't seen any effects."
Russia has long depended on natural resources to power its economy, so diversification efforts are much needed. But so is eradicating a business culture reputed to depend on graft and strong-arm tactics.
Igor Bogachev, Skolkovo's executive director, notes that Russian investors approach startup ventures very differently than most American investors. He makes the analogy that if a business is a train, investors in America are typically happy to buy a ticket on the train and -- while they will certainly chime in on the train's heading -- be content with periodic board meetings.
"In Russia, investors are usually buying the train," Bogachev says. "For visionaries, this is not good at all."
Karachinsky says that recently it's become fashionable for Russians who made a fortune in natural resources to start a venture capital firm. And that's not necessarily good either.
"They don't care about the money, really. It's a plaything. There's very rarely good people who manage it," he says. Though this is changing for the better, it's not happening fast enough for Karachinsky's tastes. He looks at other countries pulling ahead in the global markets, including China, India, Brazil and Chile, and worries that Russia is not doing enough to keep pace.
"There's a lot of money, but it's all very dumb," he says. "It's ruined many companies that could have been very successful."
Skolkovo's Bogachev estimates that 80 percent of the private funding for tech companies comes out of profits made in oil and gas. "This is why the government decided to invest into Skolkovo project."
Not that everything's been smooth sailing. Viktor Voronkov notes on the Skolkovo community blog that "rumors of corruption, waste and complacence have dogged (Skolkovo) since the announcement of its inception. There have been resignations and arrests, and in April its headquarters was raided by the Russian police" as part of an investigation into the alleged theft of $746,000.
Brukovskaya, who is now based in San Francisco, says one of the most important things is for other Russian entrepreneurs to help break Russian stereotypes. Russians don't spend their free time swigging vodka and eating caviar, and not all their money is tied up with corrupt Soviet-era oligarchs.
"That's why American people think Russia is wild country. Of course, there are some people with a bunch of money that don't know about business or venture capital," she says, noting the same thing happens in America. She says the more important metric is the rate of change. Skolkovo was formed in 2010, and makes meaningful waves on the startup stage.