Tag Archives: VentureLink Funds

Russia’s nanotechnology efforts falter?

The title for Leonid Bershidksy’s May 16, 2013 Bloomberg.com article, Power Grab Trumps Nanotechnology in Putin’s Russia, casts an ominous shadow over Rusnano’s situation (Note: Links have been removed),

The projects, known as Rusnano and Skolkovo, were meant to propel Russia’s raw-material economy into the technology age. They involved multibillion-dollar government investments, the first in nanotechnology and the second in a new city that would become Russia’s answer to Silicon Valley. They were supposed to provide the infrastructure and stability required to attract large amounts of foreign investment.

Now, both have become targets in Putin’s campaign to demonstrate that he’s being tough on corruption and mismanagement of government funds. As a result, their chances of succeeding are looking increasingly remote.

Trouble came in April [2013], when the Accounting Chamber, a body charged with auditing government spending, accused Rusnano of inefficient management in a report that received ample coverage on state-owned TV. It said that Rusnano had transferred about $40 million to shell companies and pointed out that a silicon factory in which Rusnano invested about $450 million was not functioning and was about to be declared insolvent. The report also highlighted the state company’s 2012 losses of 2.5 billion rubles ($80 million) and the 24.4-billion-ruble (about $800 million) in reserves Rusnano had formed against potential losses from risky ventures.

Anatoly Medetsky’s Apr. 29, 2013 article for The Moscow Times provides more insight into the situation,

The government’s Audit Chamber on Friday [April 26, 2013] accused state-owned Rusnano of multiple infractions in a blow to the high-tech corporation’s chief, Anatoly Chubais.

The chamber’s critical conclusions followed President Vladimir Putin’s reproof of the company during a live call-in show the previous day.

Auditors made their statement after examining Rusnano’s records in response to a request by Chubais’ political nemesis, the Communist Party.

“The audit’s materials attest that Rusnano’s performance was inappropriate to attain the goals that it was entrusted with, which are the development of the national nano industry,” the Audit Chamber said in a statement.

Auditor Sergei Agaptsov said separately that Rusnano is unlikely to achieve the goal of 300 billion rubles in annual sales of nano-tech products by the companies it co-owns in 2015 — the target that the government set for the company, Interfax reported.

I’m sorry to read about Rusnano’s difficulties especially in light my first piece about it where I compared the Canadian effort unfavourably to, what was then, a relatively new and promising organization in my Apr. 14, 2009 posting. About seventeen months later, officials with Rusnano signed a memorandum of understanding with John Varghese, CEO and Managing Partner of Toronto based venture capital firm, VentureLink Funds as noted in my Sept. 14, 2010 posting. Nothing further seemed to come of that agreement.

I have one last thought about Rusnano’s current travails, will they have an impact on US commercialization efforts? In my Oct. 28, 2011 posting where I was contrasting nanotechnology commercialization efforts by the US, Spain, and Rusnano, I mentioned this deal Rusnano had made with two US nanomedicine companies,

Then RUSNANO announced its investments in Selecta Biosciences and BIND Biosiences, from the Oct. 27, 2011 news item on Nanowerk,

BIND Biosciences and Selecta Biosciences, two leading nanomedicine companies, announced today that they have entered into investment agreements with RUSNANO, a $10-billion Russian Federation fund that supports high-tech and nanotechnology advances. [emphasis mine]

RUSNANO is co-investing $25 million in BIND and $25 million in Selecta, for a total RUSNANO investment of $50 million within the total financing rounds of $94.5 million in the two companies combined. …

The proprietary technology platforms of BIND and Selecta originated in laboratories at Harvard Medical School directed by Professor Omid Farokhzad, MD, and in laboratories at MIT directed by Professor Robert Langer, ScD, a renowned scientist who is a recipient of the US National Medal of Science, the highest US honor for scientists, and is an inventor of approximately 850 patents issued or pending worldwide. Drs. Langer and Farokhzad are founders of both companies.

Ripple effects, eh? Rusnano was very active internationally.

ETA June 14, 2013:  Nanowerk has a June 13, 2013 news item, which updates the situation with the news that Rusnano has opted out of presenting an ‘initial public offering’, aka, listing itself on a stock exchange in 2015 and will instead attract private investment.

Russian nanotechnology corporation (RUSNANO) develops joint Canada-Russian fund with VentureLink Funds

RUSNANO (Russian Corporation of Nanotechnologies) executives Mr. Alexander Losyukov, Mr. Kyrill Frolov and Mr. Rail Rafikov have signed an agreement with John Varghese, CEO and Managing Partner of Toronto based venture capital firm, VentureLink Funds. RUSNANO first visited and surveyed the Canadian nanotechnology scene in April 2009 (noted in my April 14, 2009 posting). From the Sept. 13, 2010 news item on Nanowerk,

During their visit [Sept. 7,2010], the delegation successfully concluded in-depth discussions with Mr. Varghese that commenced early in 2010. The goal of the meetings was to establish the basis on which to create a Canada-Russia Nanotechnology Venture Capital Fund co-founded by RUSNANO and Mr. Varghese in Canada. The Fund’s investment interests will mainly focus on nanotechnology based products and applications in the areas of information technology for Nano based applications, energy production and storage, (including renewable and clean energy sources), advanced materials, biomaterials, and other select sectors. The Fund will not be seeking out defense related projects.

Subject to certain conditions, RUSNANO has signed a ground breaking Memorandum of Understanding committing to be a very significant lead order and partner in this new Nano Fund. Final corporate approvals are expected prior to the end of 2010, allowing this Fund to be operational in 2011.

Richard Blackwell writing for the Globe & Mail newspaper notes (from his Sept. 13, 2010 article),

VentureLink managing partner John Varghese said Rusano is searching the world for advances in the field – a rapidly advancing technology that engineers materials at the atomic and molecular scale to create new products for medicine, electronics and energy production – and will provide most of the fund’s initial capital.

High net worth individuals in Canada will also be approached to invest, and the goal is to create a fund in the $100-million to $200-million range, Mr. Varghese said.

The advantage for Canadian companies in the sector is that Rusnano will help them find markets for their products in Russia.

According to the Nanowerk news item, Professor Roman Maev, at the University of Windsor (Ontario), was instrumental in developing this partnership. From Dr. Maev’s University of Windsor web page,

Dr. Roman Maev is the Chairholder of the NSERC/Chrysler/University of Windsor Industrial Research Chair in Applied Solid State Physics and Material Characterization. He came to Canada in 1994, through Inter-Governmental Canada-Russia technology exchange program. One year later Dr. Maev was appointed as a Full Faculty Professor in the School of Physical Sciences at University of Windsor and in 1997 he established the Center of Imaging Research and Advanced Material Characterization at University of Windsor.

In addition to some federal support, there appears to be substantive support from the province of Ontario (from the Sept. 13, 2010 news item on Azonano),

During their visit, RUSNANO also met with the Honourable Sandra Pupatello, Minister of Economic Development and Trade and with senior officials of the Ministry of Research and Innovation, to discuss this new initiative supporting the development of technology transfer partnerships between RUSNANO and Canadian companies. …

Those activities will be based upon regular consultations and coordination with various departments and agencies within the Federal and Provincial Government, including the Ontario Ministry of Economic Development & Trade and the Ministry of Research and Innovation.

“During our meetings, Minister Pupatello stated that Canada wants to go global. Well, Russia also wants to go global, thus we have a good platform to be partners. A partner that shares similar goals allows for unification of efforts. Political will, combined with the appropriate business environment and the right team makes this the ideal time to start this initiative” proudly stated Losyukov.

I was a little surprised that I found no mention of this development on the Nano, Nanotechnology Network of Ontario website as it seems quite a feather in the province’s, if not the organization’s, cap.