Could St Petersburg become Russia’s answer to Silicon Valley? An EBRD loan is helping to establish a science and technology park where high-tech companies can flourish.
Russia’s second-biggest city certainly has the expertise to succeed in its bid to become a major technological centre. Its prestigious universities offer a rich pool of scientific talent, in keeping with a long-standing Russian tradition of excellence in mathematics and physics.
Until now, however, St Petersburg has lacked the kind of hub needed to nurture young entrepreneurs, harness venture capital and turn fledgling ideas into successful business ventures.
That’s where Technopolis is hoping to make a difference. With the help of a syndicated €31.6 million loan from the EBRD, the Finnish company is establishing Technopark Pulkovo, the first science and technology park in Russia to operate on a fully commercial basis and to offer the full range of services that high-tech companies need in order to flourish.
“Technopark Pulkovo is unlike any other science and technology park in Russia,” says Sergei Gutnik, a senior banker in the EBRD’s Property and Tourism team. “Technopolis really has the necessary network of contacts and access to venture capitalists to create an innovative ‘ecosystem’, as the company calls it.”
Match-making: connecting companies with investors
As well as providing office space and basic facilities, Technopolis offers its tenants extensive match-making services that put growth companies in touch with investors or with bigger businesses looking to outsource their activities.
It also runs a business incubation programme – the largest of its kind in Europe – which identifies promising high-tech start-ups and helps them grow into viable companies with support from business angels and venture capitalists.
The €63.2 million development will be the first facility of its kind in the country to operate commercially, with entrepreneurs at its helm instead of government officials.
“The Russian authorities are keen on promoting science and technology parks and there is no lack of funding for these programmes,” Gutnik says. “But they lack the experienced professionals who can run these parks on a commercial basis.”
A tried and tested model
Under an established business model which Technopolis is hoping to replicate in Russia, rental income accounts for some 80 per cent of the company’s revenue while business development services make up the remaining 20 per cent.
Technopark Pulkovo’s first tenants include international Russian companies, with a focus on software development for internet and mobile content, communications and electronics. Start-ups will represent some 10 per cent of occupants.
Technopolis provides flexible terms with regard to leases, spaces and services, allowing occupants to expand and contract according to their economic circumstances – a key consideration for new companies who, by definition, face a great deal of uncertainty.
Strength in diversification
The EBRD’s investment in Technopark Pulkovo – the first phase of which is nearing completion – ties in with the Bank’s goal of helping Russia to reduce its economic dependence on commodities such as oil and gas and develop value-added industries.
“Russia has companies with strong expertise in the high-tech sector, from software to aircraft manufacturing,” says EBRD principal economist Alexander Plekhanov. “But overall this sector accounts for a rather small share of the country’s exports: vehicles, machinery and equipment, pharmaceuticals and electronics together only represent around 4 per cent of Russia’s merchandise exports.”
“Russia has plenty of human capital, including many talented software developers. The challenge is to capitalise on this advantage,” he adds.
Technopark Pulkovo also fits in with the EBRD’s commitment to helping businesses in the region consume less energy: the development follows the stringent energy-efficiency standards of the Finnish construction industry and exceeds Russian energy performance standards.
While the EBRD is the lender of record for the full €31.6 million loan to Technopolis, a €10 million portion of the loan is syndicated to two Finnish commercial banks: Nordea Bank Finland PLC (€7.7 million) and Pohjola Bank PLC (€2.3 million). Because of the pioneering nature of the project, Technopolis has provided a full loan repayment guarantee for the entire life of the loan.