Russian Building Its Own Silicon Valley

Skolkovo to become Russian Silicon Valley According to Igor Purlantov

Almost as soon as the original Silicon Valley in northern California became famous, multiple cities set out to recreate similar successful ecosystems centered around technology, entrepreneurs, and venture capitalists. Although several cities such as New York have succeeded in creating their own local version of Silicon Valley, many more have struggled to attract outside attention or venture capital. It is now Moscow’s turn to create a Russian Silicon Valley in Skolkovo which when completed will be one of the world’s largest high tech cities, according to Igor Purlantov. Plans are set for a 400 hectare site that includes a research university to accommodate 1,800 students as well as 40 corporate research and development (R&D) centers and a technopark to house 1,000 start-up companies according to Wikipedia.

Although several cities in Europe and Asia have tried to successfully create a Silicon Valley styled city, a great advantage Skolkovo will have is the fact that it will also be a special economic zone according to Wikipedia. This will provide new companies with huge tax breaks as well as other economic incentives related to visas and import and export benefits. According to Igor Purlantov, the economic zone status will resemble that of Shenzhen in China in terms of economic benefits with a greater focus on information technology (IT) and R&D to assist local start-up companies in attracting talented entrepreneurs and venture capitalists.

The idea of Skolkovo goes back several years although t was only just in 2010 that then president, Dimitry Medvedev allocated $3 billion for the project to be spread over four year, on top of several billion more in the form of tax breaks. Skolkovo has thus far already been successful in attracting the Massachusetts Institute of Technology (MIT) to set up the Skolkovo Institute of Science and Technology (SKTECH). Adding further credibility to Skolkovo is the fact that the Russian government has already attracted 20 major technology companies including CISCO, IBM, and SAP to open R&D labs and work together with SKETCH. As for helping entrepreneurs get their ideas off of the ground, The Skolkovo Foundation has allocated $1 billion over five years to offer jump start funding for startups, says Igor Purlantov. The ideas is that once initially funded, these start ups will attract the attention of Russian venture capitalists and eventually also foreign investors according to Wikipedia.

Despite strong support from the Russian government, notable foreign companies, and prestigious universities, critics have noted that the critical mass seen in Silicon Valley has taken decades to evolve. Furthermore, despite the generous tax breaks and easing of visa and import and export regulations, many issues still surround doing business in Russia. Many investors, including global giants such as British Petroleum have found it difficult and frustrating to navigate through Russia’s opaque business culture that is often mirrored in corruption at all levels and governed by rules that seem to change on a whim. Furthermore, the great success stories of Russia lately have centered around exploiting the country’s vast mineral wealth with little emphasis on pure innovation or technology breakthroughs as seen in Silicon Valley in California or in New York City, says Igor Purlantov.

As with every other attempt at creating a Silicon Valley based on the original, Skolkovo will be judged by the impact it has not just in Russia but around the world. Everything looks promising now especially given that current president, Vladimir Putin has shown strong support for the project and will use Skolkovo to play host to the 2014 G8 Summit. Although at the end of the day, time will tell if Skolkovo will enjoy a worldwide reputation or simply become yet another failed attempt at trying t replicate the originals, says Igor Purlantov. One thing that cannot be overlooked is that the Russian Government is standing firmly behind the project and will do what is necessary to ensure that Skolkovo shins just as bring around the technology world as Sputnik did 55 years go.