RUSNANO's Constraints
Internal constraints
Nanotechnology: constraint or advantage?
While RUSNANO focus on nanotech is manifested in the relevant establishment law, definition of nanotechnology is not absolutely clear. The field appears to include a very broad spectrum of technologies and methods. The Institute of Nanotechnology describes this as an “area of scientific development which promises ‘more for less’. It offers ways to create smaller, cheaper, lighter and faster devices that can do more and cleverer things, use less raw materials and consume less energy.” (Institute of Nanotechnology 2007)
At the same time, “nanotechnology can be defined as ‘engineering at a very small scale’, and this term can be applied to many areas of research and developmentfrom medicine to manufacturing to computing, and even to textiles and cosmetics.” (Institute of Nanotechnology 2007) On the one hand, this breadth of the application of nanotechnologies and their relevance to multiple scientific disciplines can be seen as an advantage or as a differentiating factor that gives the investor a competitive edge in the global venture capital competition for lucrative tech deals. In practice, however, RUSNANO has had to create rigid standards as to the exact level of nanosophistication of the projects the corporation would be investing in. (Fay 2010) This rigidity has led the corporation to reject a number of economically viable projects with promising technologies simply because they were not “nano” enough to fit RUSNANO’s self-defined mold. (Tseitlin 2009) Strictly from an investment and business standpoint, this lack of flexibility and a very narrow focus on a certain type of nanotechnologies significantly limits the pool of potential projects for RUSNANO, which makes the concentration on nanotechnology an unnecessary and burdensome constraint.
RUSNANO clearly realizes that its legally binding focus on nanotechnologies is one of the major obstacles to successful investing in the tech sector: for example, in February, 2010, Mr. Chubais met with Premier Vladimir Putin and discussed the question of broadening the spectrum of technology for the corporation. However, the position of Mr. Putin and therefore of the government at large was rigid: he refused to accept the idea of providing RUSNANO with more flexibility in that domain, and recommended that Mr. Chubais and his corporation stay focused on nanotech investments. (Деловая газета "Взгляд" 2010) However, Russia does not simply let go of the economically viable projects that do not fit RUSNANO’s nano-content criteria. Increased collaboration between Economic Development Institutions, and particularly between RUSNANO and Russian Venture Corporation (RVC), allow for transfer of smaller or non-nano projects downstream for consideration and investment by RVC’s seed or early-stage funds. (Agamirzian 2010)
Due to the fact that investments in nanotechnologies have not yet provided significant exits to the venture capital firms who had focused on the field before, e.g Draper Fischer Jurvetson was quite active in the field in the early post-dot.com era (Tseitlin 2009) it is highly problematic to make any analogies or forecasts on the effectiveness of RUSNANO’s narrow focus strategy. In view of the upcoming privatization of RUSNANO (Деловая газета "Взгляд" 2010), it is safe to say that the corporation will try once again to find a way to avoid this range restriction. It seems possible that it will create a division that will make investment in non-nanotech projects or do smaller deals, perhaps focused on earlier-stage companies..
Continue to RUSNANO's External Constraints: project review mechanisms
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