Founded in 2017 and intended by Vnesheconombank to provide a one-stop solution for innovation project support, VEB Innovations will help Russian start-ups with not only venture capital financing but also special treatment in obtaining financial products from Vnesheconombank Group. This will offer Russian innovation companies tailor-made financial support solutions to suit their needs, including in respect of entry into international markets.
The deal to invest up to 200 million roubles in Kompo, a producer of electronic shelf labels for retailers, can allow VEB Innovations to show how to be successful in this area. The project to help the Russian retail business to go digital can also receive support from Vnesheconombank’s subsidiary VEB-Leasing, which will enable Kompo to lease its products to future customers on favourable terms.
“Our financial product portfolio is able to appeal to innovation projects at various stages in their development,” Kirill Bulatov, General Director of VEB Innovations, said. “While negotiating with a company, we look for the best instrument of support on a case-by-case basis and decide how to structure our cooperation, including involving other entities of Vnesheconombank Group.” According to Kirill Bulatov, VEB Innovations aims to not only invest but also offer a high-technology business all available options for support, including tailored leasing programmes.
“The main advantages of leasing over other forms of financing are that it provides increased flexibility and substantial economic benefit,” Yuri Danilenko, Managing Director of VEB-Leasing said. “In contrast to lending, for example, lease financing has a longer repayment period, a custom-designed payment schedule, a grace period for principal payments in the investment phase, possible accelerated depreciation and so on.”
The focus area of VEB-Leasing is to carry out projects related to infrastructure, industrial production, innovation and export. VEB-Leasing can rely on Vnesheconombank’s resources to provide export financing for Russian companies planning to enter foreign markets. Such projects are already under way in Kazakhstan.
“In the context of support for an innovation business at any stage in its development, it is common practice to concentrate on investments. There can, however, be a wide variety of ways to help a growing business, and we are active in creating them,” Kirill Bulatov said. “Different mechanisms are available for each stage in a company’s development. For example, start-ups are offered acceleration programmes and competency centres to build up their ecosystems. At a later stage, businesses are provided with venture capital financing and a wider range of financial products and assisted with IPOs and entry into international markets.” For instance, at the Gaidar Forum in January 2018, it was announced that VEB Innovations would join the initiative of the Moscow Exchange and the Russian Ministry of Economic Development to select potential issuers of shares and bonds from among innovation companies for future IPOs. Kirill Bulatov believes that it is important for an innovation business to go public to expand significantly, including entering foreign markets.
VEB Innovations was established by Vnesheconombank in 2017 as part of the reform of activities related to financing for innovations. The new subsidiary is intended to provide a one-stop solution for applications for innovation project support from Vnesheconombank Group: VEB Innovations can provide Russian technology companies with not only venture capital financing mechanisms but also access to a wide range of Vnesheconombank Group’s financial instruments.
VEB Innovations priorities include financing projects of the National Technology Initiative and the Digital Economy of the Russian Federation programme and helping Russian innovation companies to gain entry into international markets.