Skolkovo: Multi-billion dollar Russian Silicon Valley

Multi-billion dollar Russian Silicon Valley

Russian Government allocated 85 billion rubles ($2.8 billion USD) in total for Skolkovo Hi-tech hub. Skolkovo (Russia’s Silicon Valley) is focused on 5 key research areas: energy, information technologies, communication, biomedical research and nuclear technologies. Head of Skolkovo Foundation estimates that the project will need up to 200 billion rubles ($6.6 billion) over the next three-five years.

Actively involved partners:

Highlights:

Intel joins the Skolkovo Foundation and will focus on innovations in cloud computing, parallel and multicore computing and MeeGo mobile platform development. Intel will provide its expertise by establishing and supporting existing research laboratories in Russia’s leading universities.

Cisco commits $1 billion for multi-year investment in Skolkovo to drive entrepreneurship and sustainable innovation in Russia. The investment comes with a five-phase collaborative plan, which will see Cisco support the Skolkovo Project, establish a second global headquarters for Cisco’s Emerging Technologies Group in Skolkovo and foster developments in innovation and technology.

Siguler Guff & Company, a US-based private equity firm with over $8.5 billion of assets under management, is investing $250 million in Skolkovo

Google: Eric Schmidt, Chairman & CEO of Google has become a member of the Innovation Centre Trust Fund in Skolkovo. Google venture fund is about to invest in Russian companies per statement made by Vladimir Dolgov, CEO of Google Russia.

IBM to build a “smart city” in Skolkovo. The project envisages the improvement and modernization of urban infrastructure, providing for new services and increased security. The project rests upon energy efficiency.

Microsoft signed an MoU with Skolkovo Foundation and is planning to develop the following 5 areas:
- Establishment of a Microsoft Software Development Center at Skolkovo
- Collaborative research projects cooperation with Russian and foreign universities
- Extended Russian innovative start-ups assistants program
- Establishment of a Technology Center to provide collaborative access to IT technologies in Skolkovo
- Support of the creation of the Technological University at Skolkovo

Nokia committed to open an R&D center in Skolkovo Innovation Center to become a part of the Company’s global innovation network. The scale of the center and the scope of objectives shall be comparable with the scale and scope of Nokia’s largest R&D centers in British Cambridge and Swiss Lausanne.

Siemens signed a MoU with the Skolkovo Foundation and joined the foundation’s management council. Siemens Russia vice president Martin Gitsels said that Siemens will most likely do its initial projects at the Skolkovo technology hub in the areas of bio or nuclear medicine, and could show results by late 2011.

Philips is also in creating the Skolkovo innovation hub and will assist in the development and production of high-tech medical equipment in Russia.

MIT (Massachusetts Institute of Technology) has agreed to collaborate in education and research in Russia.

Boeing, together with Russia’s engineering services company Progresstech and information technology company Luxoft, will set up a division of Boeing’s Moscow Design Center at Skolkovo

Maxmakers Ltd (Switzerland) leads the development of the Town Planning for Innograd (Skolkovo)

Russian Research Center “Kurchatov Institute“ provides its base for the implementation of participants’ research projects and assists in bringing scientific and educational resources necessary for the realization of promising projects of Skolkovo Foundation.

LUKoil, Russia’s major oil company, will become one of the core investors of the technology hub in Skolkovo and will locate its research center there beginning in 2014 (draft of agreement)

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So what is “Skolkovo Foundation”?

As part of the Skolkovo Innograd project a Foundation for Development of the Center of Research and Commercializing of New Technologies was officially registered in Moscow. It is a nonprofit organization purposed to provide socially useful results in the development of innovations. The Foundation was established by Russian Academy of Sciences, state corporation “Bank for Development and Foreign Economic Affairs” (Vneshekonombank), “Russian Corporation of Nanotechnologies” (Rusnano), Bauman Moscow State Technical University, the Russian Venture Company and a Fund for Assistance to Small Innovative Enterprises in the scientific and technical area. In the system of the corporate and scientific management of the Foundation a Council, a Board of Trustees headed by President of Russia Dmitry Medvedev, and a Scientific Advisory Council are being formed. The President of the Foundation is Viktor Vekselberg.

Viktor F. Vekselberg is key shareholder and Chairman of the Board of Directors of Renova Group, a large Russian conglomerate. The Forbes magazine estimated his net worth at $6.4 billion in March 2010 and ranked him #113 in Forbes list of world’s billionaires.

The Foundation Board Skolkovo is headed by two co-chairs, Craig Barrett, the former head of Intel, and Viktor Vekselberg, head of the Supervisory Committee of the Group of companies Renova, President of Skolkovo Fund. The Foundation Board includes: Vagit Alekperov, President of OAO Lukoil, Anatoly Alexandrov, Provost of Bauman Moscow State Technical University, Esko Aho, executive vice president of Nokia; Martin Bouygues, co-owner of the French industrial group “Bouygues”; Alexander Galitsky, managing partner of “Almaz Capital Partners”; Mikhail Kovalchuk, director of the Russian Research Center Kurchatov Institute, Peter Loescher, president and CEO of “Siemens AG”; Vladimir Rashevsky, CEO, President of OAO Siberian Coal Energy Company (SUEK), Ratan Tata, chair of Tata Sons; John Chambers, Chairman, Chief Executive Director, Cisco Systems Inc; Anatoly Chubais, CEO of the state corporation “Russian Corporation of Nanotechnologies” (RUSNANO), Eric Schmidt, chairman and CEO of Google.

In September 2010, Dmitry Medvedev, President of Russia signed federal law on Skolkovo Innovation Centre. The law provides for the creation of favorable conditions for companies engaged in research in the Centre’s territory. These conditions include reimbursement of customs duties paid for the import of goods required for research activities.

Legislation: Approved Package of Bills to facilitate successful development and growth of Skolkovo hub:

Introduction of a new concept of “a scientific business” to the legislation
Substantial tax reliefs through amendments to existing legislation, including the Tax and Budget Codes. Companies based in Skolkovo will be exempt from taxes and customs duties during the first 10 years. Companies having up to $10M annual profit and up to $30M annual turnover are exempted from VAT and Income TAX for 10 years.
Refund of import customs duties and VAT expenses paid during import to the Russian customs territory
Eased down migration laws for highly skilled specialists

The team: Skolkovo Foundation is led by an extraordinary team.

Location: Skolkovo is being built from scratch 20 km (12.4 miles) outside of Moscow. The research hub requires some 600 hectares of land in total. President Dmitry Medvedev has already ordered that the 375 hectares necessary before construction can begin be allotted to Skolkovo by the end of the year.