South West | Finance, business | Technology & innovation
Russia seeks to develop start-up industry in Crimea
30 Apr '14
The Internet Initiatives Development Fund (IIDF, or FRII in Russian), a government-backed fund supporting start-up development, will open a remote regional accelerator in Sevastopol, Crimea, as soon as this summer, East-West Digital News, the first all English-language online resource dedicated to Russian digital industries, reported last week, citing the Russian business daily Kommersant.
The fund is expecting to support five to seven projects, which will be evaluated on the local and national levels. Funding will be received based on the results of three months’ work in the accelerator.
“There is no venture industry in Crimea in the usual sense, but several companies are engaged in outsourced software development,” Kommersant quoted the fund’s director Kirill Varlamov as saying. “Some of them, SoftServe, for example, intend to close their offices here because of the political situation, while local specialists (programmers, engineers) with recognized skills are left without work. The fund is a good alternative. With our help, the guys can start their own projects.”
The Russian government seems to be open to other suggestions to stimulate venture activity in the area, from tax breaks to relaxed customs procedures for engineering models.
Developing start-ups from scratch?
FRII will have to work hard to find good projects in the area. “Crimea has very weak and limited capacities in this field,” Yevgen Sysoyev of AVentures Capital, a major Kiev-based venture fund, told East-West Digital News. “Of the 1,200 applications which we received from Ukrainian start-ups over the past two years, ten at most came from Crimea.”
In addition, “international investors are unlikely to support companies from this area as long as Russia is occupying it,” Mr. Sysoyev believes.
An initiative of President Vladimir Putin of Russia, FRII was launched in 2013 with the ambition to “create a full-fledged, nationwide industry of new online projects” of “commercial or social value.”
The fund, which targets individual entrepreneurs at the seed stage, received no less than $170m at today’s exchange rate to be invested in 400 projects over three years.
FRII usually gives approximately $23,000 as a capital injection and $17,000 worth of acceleration services in exchange for a 7% stake in the project.
However, projects will be able to participate in the Sevastopol accelerator for free.
The Sevastopol accelerator is following those opened by FRII in Yekaterinburg, Novosibirsk, Krasnodar, Kazan and St. Petersburg.