Business associations have created the coordinating council of technological entrepreneurs of the Russian Federation “Attracting investments and entering the stock market”.
Three business associations representing the interests of the technological sector of the Russian Federation – APKIT, RUSSOFT and the Association of Fast-growing Technology Companies “National Champions” decided to create a Coordinating Council of Business associations for Technological Entrepreneurship of the Russian Federation “Attracting investments and entering the public exchange market”.
The Council includes the heads of associations – Nikolay Komlev (APKIT), Valentin Makarov (RUSSOFT) and Oleg Fomichev (National Champions). At the first meeting on December 13, 2022 the Council elected Kirill Varlamov, Director of the IIDF (Internet Initiatives Development Fund), as Chairman, and Gennady Margolit, Co-Chairman of the Investment and Exchange Council of APKIT and RUSSOFT, as Executive Secretary.
The Council was created in response to the challenges faced by the Russian IT industry in 2022. In the context of the geopolitical crisis, the sanctions war, and exit of global players from the Russian market, the importance and role of the Russian innovation and technology sector is significantly increasing to ensure the smooth and efficient functioning of the economy. There was already very little investment money in the industry, and now traditional sources of long–term financing have significantly decreased, whether it is bank financing or fund investments.
At the same time, there are numerous private investors in the Russian market, whose investment opportunities potential have sharply narrowed after the market shocks of the last year.
We believe that rapidly growing Russian technology companies are an interesting object for investment, especially public ones with stable cash flow, access to which is simplified by using the high-tech infrastructure of the Russian stock exchange and technological financial intermediaries.
Effective coordination is needed to connect the two sides – supply and demand.
The main purpose of the council, in addition to coordination, is to improve the ecosystem necessary to attract investment, develop the regulatory framework and exchange infrastructure, as well as adapt it to work with growing technology companies, work with investment banks, brokers, funds, consultants and lawyers.
“Developing the market for tech-companies to enter the Russian public market, like any difficult task, does not have one answer. It is necessary to act in several directions at once, two of which I would single out as key. The first, oddly enough, is educational activity, because companies need to understand why they need an IPO and want to enter this market. The second direction is the preparation of proposals for the regulation and development of measures and support tools, as well as the optimization of the regime of entry into the stock market for IT companies,” Kirill Varlamov said.
“The progressive development of the IT market in Russia has been replaced by a period of uncertainty, risks and at the same time great opportunities. Difficulties with the usual sources and supply channels form a growing demand for servers, computers, gadgets, hardware and software complexes, software, and other high-tech goods. The longer and stronger the sanctions, the more Russian manufacturing and service companies are in demand. It’s time to help such companies with entering the stock exchange, to help the development of domestic exchanges, to help investors. The Coordinating Council can become a catalyst for the development of the IT sector, which has a huge potential,” Nikolay Komlev said.
“The issue of attracting external financing is particularly significant for the segment of fast-growing technology companies. Due to the outstripping growth rates, such companies provide a significant contribution to ensuring import substitution of the economy. Exchange–traded financing is a promising source of material resources necessary for the sustainable development of technology business in conditions of uncertainty. Many tech-companies are not familiar enough with the stock market, so having a kind of program to support “newcomers” will allow them to be supported in their first steps on the securities market. I am sure that through joint efforts we will be able to facilitate access to the stock exchange for tech-companies, as well as popularize the stock market as a publicly available financing source,” Oleg Fomichev said.
“The events of 2022 have dramatically changed the situation, including in the software development industry. There were obstacles to business in the form of primary and secondary sanctions, but there were also new opportunities in the form of import substitution programs in Russia and the opening of a market for technological independence in friendly countries. Both overcoming problems and opening new markets require investments. Under these conditions, the stock market can be a tool that can provide businesses with a serious resource and help them take advantage of new opportunities. The Investment and Exchange Council will have to set up this tool and make it useful to all parties involved — the state, investors, and IT companies,” said Valentin Makarov.