Russia

Looks Like Russia Is Building its Own Silicon Valley

Looks Like Russia Is Building its Own Silicon Valley

Russian Prime Minister Dmitry Medvedev (center) at the 2014 Open Innovation Forum in Moscow, Russia.

Image credit: Michael Pochuev | TASS
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On the eve of Russia’s Open Innovations Forum and Exhibition, in a beautifully refurbished event space overlooking the Moskva River in what used to be the Red October candy factory, Dmitry Repin answers my question with another question: “If not here, then where?” he inquires. “There’s foreign media, there’s industry, there’s government—it’s all here.”

Repin is the CEO of Digital October, a kind of hybrid tech-sector networking community and media company that facilitates technology entrepreneurship and dialogue within Moscow’s nascent technology scene. I’ve come to Moscow to attend the third annual Open Innovations Forum, an extravagant two-day event that is designed to bring startups, traditional industry, government, and the public together to cultivate growth in Russia’s tech community and stanch the brain drain that sends a large part of Russia’s ample engineering and programming talent in search of work elsewhere. Now a major event on Moscow’s business calendar, the forum and exhibition is an attempt to force into being what has failed to emerge organically in Russia: A Silicon Valley, right here in the Russian capital. And, somewhat clumsily, I ask Repin a question that’s been on my mind since attending last year’s Open Innovations: If Moscow’s tech corridor has already failed to take root on its own, what is the point of all this?

Held annually in October, Open Innovations is unlike the more traditional trade shows and industry confabs that typically take up temporary residence in convention centers around the globe. Attendees include high-ranking government ministers from around the world, bootstrapped startups from across Europe and Asia, major Russian state-owned corporations, global conglomerates, universities and researchers, venture capitalists, and a diverse cast of costumed exhibitors—many of whom seem to be channeling the high-heeled, form-fitting fashion stylings of mid-century Pan-Am flight attendants. In a span of minutes one can overhear panel discussions on extremely niche opportunities within highly specific segments of the technology marketplace and macro policy discussions between heads of state. (This year’s keynote: “The Emerging Global Innovation Map,” a platitude-rich discussion between Russian prime minister Dmitry Medvedev and Chinese premier Li Keqiang.)

Open Innovations and the associated Skolkovo Innovation Center, a massive high tech research campus and home for startups and industry just outside of Moscow proper, was developed with the help of Russia’s Medvedev, who has taken on the development of Russia’s technology and innovation economies as something of a pet project. He’s used his clout to turn Open Innovations into one of Russia’s premier annual business functions. Among the participants this year are three Nobel laureates, a smattering of government officials from around the globe (particularly from Brazil, India, and China), and 14,000 attendees and exhibitors. And, of course, Mssrs. Keqiang and Medvedev.

As with most things in the Russian Federation, the presence of key government figures is what lends Open Innovations its heft. “In Russia, it’s important to see government officials behind something,” says Dmitry Chikhachev, co-founder and managing partner of Russian venture capital fund Runa Capital. “Especially for young people choosing careers.” But Russia’s current tech sector challenges go beyond convincing young programmers and engineers to cultivate their ideas on Russian soil. Venture capital has largely dried up in Russia—partially because there was so much venture capital activity in the last few years (activity between 2012 and 2013 was 10 times that between 2010 and 2011, Chikhachev says) but also due to some problems inherent in the Russian economy. As one American-born Russian venture capitalist told Fortune: “Guys in their 40s are still working on their first fortunes, and the guys in their 60s running the big traditional industries don’t have a taste for this young, risky, entrepreneurial stuff.”

Russia’s new geopolitical reality isn’t helping. Western sanctions against Russia in the wake of its annexation of Crimea in Ukraine have driven the ruble to record lows for the decade and led to a cooling of the larger Russian economy. Between its risk-averse investment culture and variables like Russia’s unpredictable foreign policy under President Vladimir Putin, venture capital investment remains on shaky ground. Interest from Western countries seems, generally, to be cooling as well. Last year’s Open Innovations was well-attended by Western media from across Europe and North America; this year only a handful of Western reporters bothered to show up.

Undeterred, Open Innovations aims to put all the right pieces—big traditional industry, high tech startups, government ministers, foreign and domestic investors, global media—all in the same room in an effort to alter these larger realities. On the exhibition floor, industry giants like Rostelecom and GlaxoSmithKline exhibit steps away from months-old startups showing off drones, virtual reality tech, telepresence robots, and micro satellite technologies. Russian automaker LADA displays its latest sport utility vehicle concept adjacent to an area populated with university teams demonstrating electric motorcycle technologies. There is no “typical” attendee. Entrepreneurs, investors, government ministers, research institute reps, and titans of Russian industry wander the hall in between panel discussions, dodging telepresence robots and bands of unruly schoolchildren marked by their matching scarves.

On the whole, Open Innovations is tough to put into a box. Events include a challenge where startup ideas are pitched and critiqued by a panel of judges. There are also panel discussions ranging from the sci-fi (Bionic Organs: Prostheses to Cyborgs) to the practical (Innovation in the Aviation Industry) to the banal (Regional Tech Development Priorities and International Collaboration). As with other business conferences, there are ancillary events: dinners, cocktail parties, a concert. Unlike your average tech startup conference, Open Innovations serves as the backdrop for major international trade deals, like the dozens of agreements totaling billions of dollars inked by China and Russia while Premier Keqiang’s was in town for the forum.

“Open Innovations is less startup-ish than TechCrunch [Disrupt] and those like it. It’s more fundamental,” Runa Capital’s Chikhachev says. “Here we’re discussing innovation on a higher level. We talk policy, macro things. I can transmit my ideas to the right people, and that discussion itself has certain value.”

Whether or not putting big government and small startups in the same room will result in Moscow’s Silicon Valley on the Moskva remains to be seen. The sprawling Skolkovo Innovation Center is still working to construct and fill its space with startups and industry partners (which include names like Boeing and the Massachusetts Institute of Technology). And Russia’s macroeconomic problems appear no closer to resolving themselves. Of more than 300 exhibitors, half of those present are startups eager to link up with investors or clients to help them take their ideas to the next level.

“The show is still developing,” says Alexander Berenov, head of business development for Ranberry, a maker of mobile “networks in a box” that was one of dozens of small tech concerns hoping to boost business and investment by exhibiting at Open Innovations. “The result is still an open question.”


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