Sitting on 400 hectares of the most expensive Russian real estate outside central Moscow, Skolkovo is intended to be one of the biggest tech innovation centres in the world. In 2010, then-president Dmitry Medvedev gave orders to create an innovative centre from scratch – this in a country where all tech parks and scientific centres have been inherited from the Soviet past. “We have money but don’t have our Silicon Valley,” he said on his visit to Silicon Valley, after earlier stressing it was a project “that should become the largest test ground for Russian new economic policy.”
But at the moment plans for an internationally renowned tech hub a half-hour’s drive from Red Square are still a dream. The fantasy starts with the idea that it takes half an hour to drive there through Moscow’s notoriously heavy traffic; on a weekday it takes a few hours. When you reach there you are greeted with signs saying “Skolkovo - we are making the future today”, but beyond the perimeter fence lies a couple of cranes and an excavator digging the foundations of this future fantasy. Several hundred metres away stands the only finished building, called Hypercube; it is supposed to be an example of the eco-friendly principles intended for Skolkovo. Looking at the building from the dusty and polluted highway, however, makes you wonder just how green the enterprise will truly be.
Three years after its announcement by President Medvedev, Skolkovo still raises more questions than answers. Getting Skolkovo off the ground has not been cheap, with billions of oil dollars spent, and yet more to be allocated. There are doubts that the Russian government – now headed by Vladimir Putin – has the conviction to keep going. The investments are impressive though. The road to be built to Skolkovo and around the area is said to cost $2 billion. However, the biggest questions facing start-ups that have, or want to, set up shop there is where they are going to work and live. The whole site is supposed to be finished by 2020.
One source close to Skolkovo said that the project is modeled on tech centres such as Sophia Antipolis in France, Cyberjaya in Malaysia or Masdar in UAE. While the start-ups wait for the so needed infrastructure to be finished in 2015-16, they are being sent to other scientific centres to carry on their projects. Skolkovo’s vice-president for external communications and advertising, Alexander Chernov, has tried to assure the press everything is fine and will be finished soon. “It is a usual trend with construction business in Russia. Two years shift is not that bad but we will welcome our residents in 2015. If not, we will look like losers.”
Russia has a long history of scientific and technological breakthroughs, but it is suffering from a hangover from recent decades. The Cold War and the Iron Curtain played a key role in maintaining a competitive and innovative spirit in closed science cities of the Soviet Union, such as Akademgorodok in Siberia.
But after the Cold War, everything changed. The new Russia found itself with the remnants of the once powerful Soviet scientific machine and a huge brain drain in the direction of the US. Innovative ideas started to matter very little in a new capitalist society focused on selling Russia’s vast natural resources and cashing in US dollars. It took two decades for a project like Skolkovo to emerge from the Kremlin’s corridors.
So what will Skolkovo concentrate on? There are five core areas: information technology, nuclear technology, energy efficiency, biomedical innovation, and space and telecommunications. Companies receiving resident status can work on their projects and attempt to bring them to market. Skolkovo’s grants and construction are mostly backed up by the money from the Russian government. The investment is supposed to reach over $15bn (£10bn) by 2020.
Over the past couple of years, Skolkovo has received over 10,000 online applications. Applicants range from companies and startup groups to scientific centres, universities, student groups and distinguished scientists. Most applicants fail to become residents. “The main challenge here is either a project doesn’t fit into the five clusters or it hasn’t been worked through. Sometimes companies overestimate their abilities or their idea has already been developed in the market,” says Chernov.
Currently, more than 900 Skolkovo residents or startup companies are working on projects across the five clusters. Many of them have already received grants from the Skolkovo Fund said to expect to be worth $2bn (£1.28bn) by 2019.
One of the grant recipients is Fruct founded by Russian and Finnish universities together with Nokia. Although they won the money last year, they should receive the $300,000 (£191,000) grant this autumn to develop a mobile device which monitors eight key diagnostic markers such as cardiovascular, pulmonology and endocrinologic readings, to help monitor potential health problems such as arterial hypertension arrhythmia, asthma, and diabetes.. Asked about how they will spend the money, the head of Fruct, Sergey Balandin, says: “The challenge was to make investors believe in our project. We will put more emphasis on the research now. We will try to improve the weak sides of our project with the help of Skolkovo Fund’s specialists and prepare the product to enter the market.”
Other hopefuls have not been so lucky. Bravo Motors applied for the grant to finance its project for an ultra-light electric vehicle called the e-Trike. The main challenge for Bravo now is to find $1.4 m (£890,000) in investment to complete the development of the e-Trike, carry out bench and field testing, and start production. But to get tax incentives, the company had to change the e-Trike’s colour from red to green – the same colour used on Skolkovo’s logo. Being part of Skolkovo may mean compromises.
Skolkovo has not been without rumours of corruption, either. Medvedev tried to avoid corruption by appointing Russian oligarch Victor Vekselberg as the President of Skolkovo. But 2013 started with several cases. Skoltech University is being created to educate in-house innovators of tomorrow. MIT is heavily involved with the project, helping Skoltech with the structure, educational and research programs. The university hasn’t been built yet – but already it has created a corruption scandal. The state audit office found out recently that millions of dollars allocated to Skolkovo’s Skoltech, went, instead, to finance programs and grants at MIT. The government tried to bury the story, but Russian newspaper Izvestia got hold of the case documents
Then there is the political situation to contend with. Even Skolkovo’s biggest cheerleaders understand start-ups like the e-Trike won’t be able to make a return on the multi-billion-dollar investments poured into the project. Russian politicians, in general, are distrustful of innovations they don’t understand such as a recent discussion at Skolkovo on the creation perpetuum mobile.
A source close to Skolkovo who wished to remain anonymous, says: “The success of Skolkovo should be assessed on the basis of whether it manages to create a huge and successful business like Yandex [Russia’s biggest search engine] and Mail.ru [Russian email].”
The challenge for Skolkovo is to prove it can make money, rather than just spend it. It has been created from the very top of the political spectrum - with huge investments – but the buildings remain unconstructed, and the ideas that could make it profitable remain untapped. The question is, will this always be the case?