The Skolkovo Foundation: fostering innovation and entrepreneurship in the Russian Federation

By Igor Drozdov, Chairperson of the Skolkovo Foundation, Moscow, Russian Federation

This year marks the tenth anniversary of the creation of the Skolkovo Innovation Center, a landmark initiative designed to create a sustainable innovation ecosystem and foster a culture of entrepreneurship to support the development and commercialization of advanced technologies in the Russian Federation and beyond.

Under the oversight of the Skolkovo Foundation, also established in 2010, the purpose-built high-tech innovation area in Skolkovo has become the country’s leading innovation hub. Its fully integrated and vibrant innovation ecosystem comprises a broad range of facilities and services to support innovation and entrepreneurship in the fields of information technology, biomedicine, energy, nuclear technologies and space technologies.

Europe’s largest Technopark set to expand

Skolkovo’s Technopark is the largest in Europe. Covering an area of some 100,000 square meters, it offers resident companies modern office space, including coworking arrangements, as well as laboratories equipped for rapid prototyping and testing of new technological developments.

In little over a year of its construction, the Technopark was completely filled with startups. It now houses over 400 companies operating in a wide range of technology sectors: from private space travel ventures to precision agriculture and digital medicine.

In response to demand, plans are in view to expand the Technopark site; the space available for startups will practically double within five years. Importantly, companies wishing to benefit from the Skolkovo’s facilities do not have to be physically located within the Technopark itself. Research teams simply need to submit an application and an outline of their research project via the Skolkovo website. Once their project is approved by a panel of independent experts with specialist knowledge in their area of work, they will gain Skolkovo resident status. In this way, international teams willing to work in the Russian Federation, and to set up a business under Russian law, may apply for residency at the Skolkovo Innovation Center.

Every day, the Skolkovo Foundation receives around ten residency applications. While they don’t all make it through the review process, on average, 500 new residents join the Skolkovo Innovation Center every year. At present, close to 2,500 companies, including subsidiaries of foreign companies located in practically all regions of the country, hold Skolkovo residency status.

Residents of the Skolkovo Technopark enjoy significant benefits both in terms of earnings and business growth. In 2019, for example, the total earnings of Skolkovo Technopark residents exceeded USD 1.5 billion, representing a year-on-year increase of more than 40 percent.

Medical tech is booming

Many companies with Skolkovo residency status have become global leaders in their field of technology. Medical biotech, a particularly vibrant area of activity, continues to witness the greatest demand for patent rights. The value of a patent for a molecule can reach tens of millions of dollars. In 2019, over one hundred of the patents granted by IP offices outside the Russian Federation – more than half of all such patent applications – were granted to Skolkovo residents for medical technology solutions.

Examples of innovative medical tech companies include Hepatera, which developed the world’s first drug to treat hepatitis D, a previously untreatable illness. The company’s drug, Myrcludex, was registered in the Russian Federation in late 2019 and in the European Union in 2020 and has been designated a “breakthrough therapy” by the United States Food and Drug Administration (USFDA).

Similarly, the biotech company Viriom has developed a drug to treat patients with the human immunodeficiency virus (HIV); the drug was registered in Russia in 2017. The company is currently working on improving the drug’s formula with the aim of reducing dosage frequency.  A new version of the drug is expected by 2022.

Expertise in other advanced technologies

Skolkovo startups are also successful in other spheres of technology. Take for example, CRT‑Innovations, one of the world’s leading developers of innovative speech synthesis and recognition technology systems. The company’s technologies are used in 75 countries. Under a contract with the Mexican government, CRT-Innovations created the first nationwide voice identification system in the world.

Similarly, quantum communications experts at T8 are developing telecommunications equipment for optical communications networks. In terms of its economic and technical features, T8 rivals global leaders like Huawei and Nokia. The company’s share in the Russian market is currently around 20 percent.

In the area of space technology, Sputnix is the first private Russian company to put a microsatellite into orbit and has plans to launch seven microsatellites in 2020, including on behalf of companies from Tunisia and Saudi Arabia.

And in the area of additive manufacturing, AMT is a world leader in 3-D printing for construction. A printer developed by the company created Europe’s largest 3-D printed residential building – a fully-fledge house in the Russian city of Yaroslavl – using this technology.

These are just a few examples of the long list of groundbreaking achievements of startups emerging from Skolkovo. Around 250 of them have already entered foreign markets.

Skolkovo makes headway in building a culture of intellectual property (IP)

As a general rule, patent protection is key to attracting investors and boosting sales, and enabling business growth when a company enters a new market, whether at home or abroad.

Unfortunately, however, Russian companies have some way to go in terms of securing patent protection in markets beyond the Russian Federation. Data for 2019 show that applicants from the Russian Federation filed just 1,102 international applications under the Patent Cooperation Treaty (PCT) administered by the World Intellectual Property Organization (WIPO). Of these, 159 international applications (14.5 percent) were filed by companies connected with the Skolkovo ecosystem. In 2019, Skolkovo startups were granted 205 foreign patents, of which 35 percent were granted by patent offices in Western European countries and the United States. That’s a pretty good result!

Many of the technologies developed by Skolkovo startups have already gone into mass production and are market leaders in Russia.

Cooperation with industrial partners

In general, cooperation with major industrial partners is an important factor in a startup’s success. That is why the Skolkovo Foundation facilitates links between Skolkovo startups and major companies, with a view to making it possible for startups to scale up their technologies in those companies. This is an important area of our work, as it is the only way, in practical terms, that startup technologies can have a substantial impact on the economy and everyday life.

Many of the technologies developed by Skolkovo startups have already gone into mass production and are market leaders in Russia, in particular, in the areas of the Industrial Internet of Things, banking security and remote banking, and waste disposal and recycling.

Major international companies join Skolkovo’s innovation scene

Many major companies have also opened their own research centers on the grounds of the Skolkovo Innovation Center. Such companies include Boeing, Enel, Huawei, Hyundai, Koninklijke Philips, Nokia, Orange Business Services, Panasonic, Syngenta, and Telnet, among others. These research centers are enriching innovative activity at Skolkovo by helping to create a favorable environment and a concentration of intellectual capital. These are important factors in creating the conditions for scientific research and business collaboration to take off.

Skoltech: promoting science, technology and entrepreneurship

The Skolkovo campus also includes the Skolkovo Institute of Science and Technology (Skoltech). Established less than ten years ago, Skoltech offers a range of master’s degree and other post-graduate programs.

From the very outset, Skoltech brought education, science and entrepreneurial activity under one roof. Instruction at Skoltech is conducted exclusively in English and is currently free of charge, making it possible for talented students from across the globe to study at the Institute.

At present, around 1,100 students are enrolled at Skoltech. Foreign students account for more than 20 percent of the student population. The majority of the students at Skoltech are mature young people who have decided to devote their lives to science and technological entrepreneurship. Around 40 percent of enrolled students are following post-graduate programs.

Skoltech also employs close to 200 professors of which some 30 percent are from other countries. Another 30 percent are Russian nationals who, having spent 10 or 20 years abroad, have returned to work in Russia and at Skoltech, in particular.

Skoltech hosts more than 20 scientific centers and laboratories. All of the Institute’s professors and students engaged in educational programs are also employees of those centers. Many of the centers work with industry and a number of industrial laboratories have been created jointly with foreign companies, including Huawei and Oerlikon.

Commercializing scientific knowledge: a priority

Creating an effective system for the commercialization of scientific knowledge is also a priority for Skoltech’s professors and students. Around 70 companies that have been spun out from Skoltech have become residents of Skolkovo’s Technopark.

Over the past two years, Skolkovo startups as a whole have attracted annual investments of around USD 200 million.

Last year, Skoltech was the only University in the Russian Federation to feature among the Nature Index 2019’s top 100 young universities. In terms of the number of journal publications per professor, Skoltech is on a par with the top three young universities in the 2019 Nature Index ranking, namely, Nanjing Technology University (China), Hong Kong University of Science and Technology (Hong Kong SAR), and the Korean Institute of Advanced Technologies (Republic of Korea).

Facilitating access to investment

Investors are a further priority for the Skolkovo Innovation campus. The appetite among investors to plough funds into high-tech startups in the Russian Federation remains low. However, over the past two years, Skolkovo startups as a whole have attracted annual investments of around USD 200 million.

While the investment trend is moving in a positive direction, the Skolkovo Foundation recognizes that there is still great scope for improvement. That is why the Foundation is actively working with venture capital funds and business angels to boost the investment environment for Skolkovo startups. The Foundation also offers mentoring and other business incubation services to support the development of Skolkovo startups and enable them to pitch their work effectively to Russian and foreign investors. 

IP and Skolkovo’s Intellectual Property Center

The emergence of new technologies inevitably raises questions relating to IP; first, in terms of protecting those technologies with IP rights, including patents; and second, with respect to mergers and takeovers, which typically involve the exchange of valuable business holdings, including IP assets.

IP is a startup’s most valuable asset, particularly in the early stages of its development. That is why it is so important to ensure that the startup has in place an effective IP strategy that supports its business development goals. Recognizing the crucial importance of advising and supporting startups on matters relating to IP, one of the Foundation’s first actions was to create the Intellectual Property Center.

Our ambition is for the Skolkovo model to be replicated across the Russian Federation and beyond and for our campus to become a magnet for talent from around the world.

The Center’s patenting services are now available to Skolkovo residents under market conditions, although some of the associated costs may be recovered, at least in part, through various grant programs.

Patents obtained by Skolkovo residents with the help of Skolkovo IP Center’s patent attorneys are regularly included among the top 100 best inventions in Russia and are ranked highly at international exhibitions.

The Center is one of the leading providers of patent services in the Russian Federation. The number of international patent applications filed under the PCT by the Skolkovo IP Center on behalf of Skolkovo residents, or companies with a connection to Skolkovo, account for around 14.5 percent of all such applications filed by applicants from the Russian Federation.

The Skolkovo Foundation works closely with WIPO. Indeed, the WIPO Russian Office, the only WIPO External Office in Eastern Europe, is located on the grounds of the Skolkovo Innovation Center. Each year, Skolkovo and WIPO co-organize the IP Academy, the largest educational conference on IP in the region, bringing together more than a thousand participants from across Russia and neighboring countries.

Shaping national IP legislation for the future

At the national level, the Skolkovo Foundation plays a significant role in drafting and advancing amendments to IP legislation. Technological developments are outpacing legislative changes at a rapid rate. New phenomena require clarification of legal terminology and the regulation of new social relationships and business models.

In addressing these issues, the Foundation has contributed to draft laws that seek to better regulate the registration and sale of computer programs and relations among co-owners of IP rights. It has also been examining the possibility of using blockchain technology to register and record IP rights. The Foundation also contributed directly to the drafting of a law on regulatory sandboxes – experimental legal regimes for drones, telemedicine, etc. That law was adopted by the Russian Parliament at its first reading and it is foreseen that such experimental legal regimes will be established at Skolkovo in the near future.

Artificial intelligence and big data

In recent years, major technological advances within the information technology sector have given rise to broad discussions, including at the international level, on the impact of artificial intelligence technologies and big data processing on IP policy and practice. The Skolkovo Foundation stands ready to work with WIPO and the international IP community to develop best practices and common approaches to ensure that the IP system continues to serve as an effective incentive mechanism to foster innovation and creativity in the digital environment.

Patents obtained by Skolkovo residents with the help of Skolkovo IP Center’s patent attorneys are regularly included among the top 100 best inventions in Russia and are ranked highly at international exhibitions.

While much has been accomplished over the last decade, there is still a great deal to achieve. The Foundation is already implementing the large-scale expansion of the Skolkovo campus to further strengthen this dynamic innovation ecosystem. Over the next five to seven years, we anticipate a four-fold increase in the number of Skolkovo residents. We also expect two major technology companies, Sberbank, a state-owned Russian banking and financial services company, and Yandex, the Russian-owned technology company, and the country’s leading web search engine, to build large campuses at Skolkovo.

Our ambition is for the Skolkovo model to be replicated across the Russian Federation and beyond and for our campus to become a magnet for talent from around the world. That will be our focus over the next decade.