The TechnoSpark technology park is not seeking startups, it creates them. What is venture development all about? What progress have you made in the last 6 years? Is there a way a third party investor can participate in the up-and-coming projects?
The facility flooded with yellow light and fitted with a great deal of cutting-edge equipment is a full-blown microelectronic factory. There is no way for an unauthorized person to get inside the “clean room” where the staff are seen moving around in their sterile uniforms. The Russian Center for Flexible Electronics has only recently opened. The first batch of flexible backplanes are to be released by the end of December. Being an alternative to silicon chips, they open up new spheres of application: flexible sensors for fingerprints, adhesive bandages to monitor the fetus development in pregnant women, product packaging with sensors that show all information not only about the product itself but also its storage conditions… These are among the solutions that are being worked out with the first potential clients of the factory. The front-line center represented by the TEN.Flecs Company makes part of the Technospark Group of Companies with its campus evolving around for the last 6 years in the suburbs of Troitsk. TechnoSpark uses a model of venture development that is yet uncommon in Russia – instead of looking for startups in the high tech sector, it creates them by its own, invests in them, introduces them to the market and then sells them. Its shareholders are private entrepreneurs and the Fund for Infrastructure and Educational Programs of RUSNANO (FIEP). Since 2013, TechnoSpark has created dozens of new startups every year that give jobs to well over 400 people.
“It used to be a dandelion field,” recalls the co-founder and CEO of the TechnoSpark Group of Companies Denis Kovalevich. Alongside other partners, he has been engaged in the tech sector for a long time – he worked in the power industry, was the director for innovations in Rosatom, headed the nuclear cluster in Skolkovo – so he could clearly see that there are very few good-quality projects in the market, and the high engineering level itself does not directly convert into business in any country of the world. That is why TechnoSpark builds its own startups in prospective areas, recruits teams that get transformed throughout the development of projects (here, for instance, there is a concept of the so-called designated founder, who is basically a hired worker performing the functions of the founder for whom it is much easier to decide that a given business hypothesis hasn’t worked out than for a startupper), provides their financing, brings the product to the market, and competes for the profits. The business model proved to be practicable: there have been over 100 startups some of which have matured to the point when they can attract external investment.
“Creating a startup in TechnoSpark is very much like Lego – everything is completely rational,”
How do ideas come to being? The first way is by copying. It doesn’t take a rocket scientist to watch the way Amazon is developing and see that logistic robots are going to be in demand in online trading and wherever there is a substantial warehouse infrastructure. Ronavi Robotics created by TechnoSpark produces robots capable of handling pallets in an autonomous mode with short breaks for recharging (that take only 5 minutes). This year, the first batch was offered to clients based on the subscription model – to try out the unusual machines, one doesn’t have to buy them or bother about their servicing. The software that can efficiently control a fleet of robots of any model and integrate into any ERP-systems for warehouse logistics is developed by the RMS Company. In 2019, it lauched a pilot project to introduce its solution to SAP.
Additive technologies are on trend, too. TEN.MedPrint produces customized endoprotheses and implants: vertebral cages, cranioplates, implants for oral surgery (already used in 500 operations), while the Zdravprint makes items for fixation, unloading, rehabilitation and correction of functions of injured or broken joints and limbs (quite recently the company’s mask turned up in Vasily Utkin’s video blog when a player of FC Egrisi managed to hit the pitch despite the broken nose).
Another example is solar power. Solartek designs industrial technologies aimed to integrate flexible solar modules into roofs and windows (using photovoltaics and power electronics), with pilot projects launched in Moscow and Ryazan. In 2020, Saransk is to see the inauguration of the first ever Russian flexible solar cell factory.
The same scenario – with the underlying global trend and investment in the product for it – is unfolding with artificial materials. TechnoSpark has a startup that synthesizes gem diamonds (2 karat in 4 days), as well as CVD.Spark that makes synthetic diamonds using chemical vapor deposition (CVD) for industrial needs. For example, application of polycrystalline diamond coating to boring bits improves their performance by 30%; the company offers its industrial clients a finished product – ready-to-use technological lines for synthetic diamond coatings.
Simultaneously there are ongoing researches into new applications of diamond films in optics, power electronics and other spheres. “The deeper you immerse yourself into this or that area, the more opportunities show up for new businesses. Any intellectual response to whether a technology is going to be in demand is a failure. All hypotheses have to be tried and tested in practice,” says Denis Kovalevich.
The second way to generate new projects is to build chains of gaps embedded in emerging technological industries that are difficult for large corporations to bridge. For example, after we got deep enough into the sphere of ophthalmology, we started a joint company with the French-Israeli company Luneau Technology to localize production of the top-notch equipment for eye diagnostics. Eventually in 2019, the Visionix Russia startup obtained the registration certificate for its first product – autorefractometer.
“We are evolving within a broad range of material technologies,” points out Kovalevich. Zero-alternative directions in TechnoSpark in terms of prospects are sorted out into following domains: flexible electronics, solar surfaces, genomics, artificial diamonds, robots, technologies in sport, etc. In case a hypothesis doesn’t prove right, the relevant startup may be “frozen” for a while.
Denis Kovalevich notes that without the FIEP it would have been impossible to create TechnoSpark within the business model of venture development. First of all, it requires long-term investment with a horizon standing at 10-12 years. Secondly, the fund provides it in the form of convertible loans. “Everything is pledged – from equipment to shares in startups. It stimulates us to live up to the business objective, while keeping the motivation strong – private shareholders still hold the majority of shares in the TechnoSpark project,” explains Denis Kovalevich. Thirdly, thanks to RUSNANO, we are connected to state companies that make up a huge market for both new tech products and (in the future) sale of the startups themselves.
“Activity of our venture development companies, such as TechnoSpark, generates the ‘material’ for consequent investment from large funds and corporations, including RUSNANO. In our nano-centers, we start from scratch and develop startups that are later needed by large-scale business for its technological development. The most illustrative example in this respect is OCSiAI, the world’s largest producer of single wall carbon nanotubes, that has recently become one of the very few Russian unicorn companies,” says Ruslan Titov, the Deputy CEO for realization of infrastructural projects of the Fund for Infrastructure and Educational Programs.
In 2019, TechnoSpark from Troitsk has first opened the investment opportunities in some of its companies to let in external investors. “Now such opportunities are expected to appear each year,” promises Denis Kovalevich. In 2020, TechnoSpark itself is planning to attract new investors into its own capital, which means the business model of venture development has been tried and tested and is now ready for a scale-up.
Photo by Alexander Korneyev, Pavel Blagikh
The material was prepared in collaboration with Arina Dubrovina
Date: December 9, 2019