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More cash promised for "Putin's Skolkovo"

0 6 November 2013

This week Vladimir Putin welcomed a delegation from his hi-tech brainchild, the “Internet Initiatives Development Fund” (FRII in Russian), to his country residence at Novo Ogaryevo.   

While Dmitry Medvedev made his name as Russia’s “hi-tech” President, embracing e-government, social media and setting in motion the Skolkovo project, Putin’s reluctance to fully embrace modern technology is perhaps best reflected in the Kremlin’s decision earlier this year to revert to typewriters to avoid security leaks. 

However, the President is not unaware of the fact that Russia now has Europe’s largest internet audience, and that its e-commerce sector is on its way to becoming one of the top-5 globally, and so last year he set in motion the FRII project. 

It’s on a much smaller scale than Medvedev’s multi-billion dollar Skolkovo project, with a current budget of just $190 million over the next three years. However, Putin is impressed by its progress so far, and indicated that this could certainly be increased if necessary. 

"6 billion is not bad for starters, but when you look at all the proposals, even 60 billion might not be enough." - Putin

FRII offers Russian startups the chance to spend 3 months in a Moscow incubator, where they can take advantage of an educational program and $25,000 to cover their costs. In return, it takes a 7% stake in its projects. At the end of each three month program a DEMO Day will be held. Teams will present their projects and successful ones could receive as much as $450,000 from the fund. 

The first 32 startups entered the incubator at the beginning of October, while a few dozen more joined the online program, which runs simultaneously and offers online mentoring and education, as well as the chance to pitch for investment alongside the resident startups at the DEMO Day.

Over the next three years FRII plans to use $190 million from the state budget to finance more than 400 projects. Beyond that, it is hoped that it will start to finance itself through its stakes in successful participating startups. 

FRII's director, Kirill Varlamov, along with representatives of 27 resident startups came to see Putin at Novo Ogaryevo, his suburban residence. The President expressed his satisfaction with the project, saying that “it’s very pleasing to see that the Fund, in its structure and content, is working just as we had envisioned”. 

He also promised additional funding, if required, saying that the 6 billion rubles ($190 million) currently pledged is “not bad for starters, but when you look at all the proposals, even 60 billion ($1.9 billion) might not be enough”. 

He added that he originally had the idea of investing “a lot more” money in the fund, but was told that it wasn’t required at the moment, and to wait until they had gathered together more projects with genuine potential. He did however make absolutely clear that, if necessary, funding will be increased. 

The promise did, it should be added, come with a proviso. In the wake of revelations that $4 billion of state funds committed to the Skolkovo project are at risk of being misspent, Putin stressed that the selection process at FRII must be "just as transparent, effective and democratic as the Internet itself".  

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