News / Economy

    High Risk for Venture Capital in Russia

    Russian President Dmitri Medvedev met Tuesday with a group of American venture fund managers in a bid to increase foreign investment in his country's fledgling high-tech industry. The Kremlin leader spoke frankly about the risks facing investors in Russia, including a less than ideal tax system, ineffective legal safeguards, and a meddling bureaucracy.

    Speaking with 22 managers of American venture funds at his residence outside of Moscow, Russian President Dmitri Medvedev said the venture capital market in Russia is very poorly developed.

    The Kremlin leader says there is a clear tendency in Russia of spending government funds on research and scientific development, and a shortage of venture capital. Mr. Medvedev notes there are about 20 venture funds in the country with combined assets of roughly $2 billion. He says that is virtually nothing compared to the United States and other countries.

    Mr. Medvedev criticized Russia's top-down management approach, noting that many of the country's development projects traditionally have prospects only if they are undertaken by the country's top leader. He proposed a flat tax for investors, but cautioned the country's tax system is less than ideal.

    The president said Russia has good business legislation, but noted it is not often observed, particularly in the courts. Mr. Medvedev also criticized the Russia bureaucracy for meddling in business affairs.

    But business is demanding more. The director of the Rus Rating firm in Moscow, Richard Hainsworth, told VOA Mr. Medvedev needs to back his words with action.

    "I think there needs to be some significant movement in actually punishing some of the bureaucrats who are working against the well-being of the Russian businessman," he said.

    Corrupt Russian bureaucrats have a reputation for demanding bribes and conspiring with courts to steal business firms.

    Richard Hainsworth says the inherent risk in the venture capital world is compounded by a heavy bureaucratic reporting burden in Russia.

    "The next risk that a business runs in this country is that if you demonstrate that you are successful and that you have an extremely good business, you begin to attract the attention of the business sharks, who then want to have a piece of the action," added Hainsworth.

    Corrupt bureaucrats are suspected in last November's death of attorney Sergei Magnitsky, who died in pre-trial detention after allegedly being denied urgent medical attention for pancreatitis. He was held for tax evasion, charges seen by human-rights activists as trumped up.

    Magnitsky represented the London-based Hermitage Capital Management Fund, formerly the largest foreign investor on the Russian stock market. Its chief executive, William Browder, alleged Russian Interior Ministry officials colluded with tax authorities to steal $230 million from the national treasury. President Medvedev sacked 20 prison officials after Magnitsky's death, but no one has been prosecuted.

    Russia is seeking venture capital to build its own version of Silicon Valley, the high-tech innovation center in California. The Kremlin is encouraging construction in the town of Skolkovo outside the Russian capital.

    Professor Natalya Volchkova, of the New Economic School in Moscow, notes that innovation involves intellectual property, which she says does not enjoy adequate legal protection in Russia.

    Volchkova says there are innovative Russian companies, but they sell most of their products abroad. These companies, she says, have foreign investments and foreign management, but few sales in Russia, so in this regard, intellectual property rights are not much of an issue; the owners are concerned how their rights are protected elsewhere.

    But Volchkova concedes the problem of pirated intellectual property is a problem for American companies that sell their goods in Russia.

    Mr. Medvedev told the U.S. venture fund managers that businesspeople create jobs, provide products for the economy and generally serve as the foundation of a flourishing society. But he said many Russians maintain a negative image businesspeople that has carried over from Soviet times.

    You May Like

    In Britain, The Sun Still Doesn’t Shine

    Invoking Spitfires and Merlin, Leave voters insist country can be great again, following surprising 'Brexit' vote last week

    Double Wave of Suicide Bombings Puts Lebanon, Refugees on Edge

    Following suicide bombings in Christian town of Al-Qaa, on Lebanon's northeast border with Syria, fears of further bombings have risen

    US Senators Warned on Zika After Failing to Pass Funding

    Zika threats and challenges, as well as issues of contraception and vaccines, spelled out as lawmakers point fingers

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeasti
    X
    June 29, 2016 6:15 PM
    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeast

    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video Clinton Leads Trump, But Many Voters Don't Like Either

    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video New US Ambassador to Somalia Faces Heavy Challenges

    The new U.S. envoy to Somalia, who was sworn into office Monday, will be the first American ambassador to that nation in 25 years. He will take up his post as Somalia faces a number of crucial issues, including insecurity, an upcoming election, and the potential closure of the Dadaab refugee camp in Kenya. VOA’s Jill Craig asked Somalis living in Kenya’s capital city Nairobi how they feel about the U.S. finally installing a new ambassador.
    Video

    Video At National Zoo, Captivating Animal Sculptures Illustrate Tragedy of Ocean Pollution

    The National Zoo in Washington, D.C., is home to about 1,800 animals, representing 300 species. But throughout the summer, visitors can also see other kinds of creatures there. They are larger-than-life animal sculptures that speak volumes about a global issue — the massive plastic pollution in our oceans. VOA's June Soh takes us to the zoo's special exhibit, called Washed Ashore: Art to Save the Sea.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9017
    JPY
    USD
    102.66
    GBP
    USD
    0.7443
    CAD
    USD
    1.2990
    INR
    USD
    67.600

    Rates may not be current.