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100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
100930 Skolkovo executive summary
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100930 Skolkovo executive summary

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  • 1. Moscow, September 30th 2010 Skolkovo Innovation Center Executive Summary
  • 2. The current effort has begun focusing on defining an overarching strategic vision and an initial view of the operating model Key Deliverables  Definition of the mission and vision for Skolkovo Focus of Current Effort Vision & Mission  Definition of desired outcomes and specific targets Define preliminary vision for  Development of an approach that addresses the Skolkovo, including Approach specific needs and requirements of Skolkovo – Initially during start up  Potential Operating and – Eventually during steady-state Business Model  High-level description of functional elements of  Organizational Structure the ecosystem across core functions with regard to purpose, requirements and interactions  Incentives for stakeholder  Detailed description of key units of the participation Business & ecosystem such as Skolkovo Foundation,  Desired outcomes & potential Operating Model university and research institutions, business incubators, VC / PE institutions, business measures of success services units, non-business services units  Attraction & solicitation  Development of a roll-out strategy for Skolkovo requirements ecosystem  Physical and intangible  Development of a “high level” implementation Preliminary plan including responsibilities and milestones requirements Implementation Plan  Development of implementation initiatives grouped by priority Preliminary  Development of high level budget for initial Budget for phase of operations 2010-2012 Skolkovo Foundation 1
  • 3. Clusters promote innovation and stimulate new business formation Innovation Cluster Success Factors By Michael Porter Clusters - key characteristics  Open and vigorous competition  Clusters are geographic among local rivals  Government concentrations of interconnected  A local context that Context for Other  Opportunistic companies, specialized suppliers, encourages investments and Strategy  etc service providers, R&D institutions etc. sustainable upgrade and Rivalry in a particular field, self-sustainable and with a decisive sustainable competitive advantage  A core of sophisticated  Clusters foster high levels of Input Demand local customers productivity and innovation, Conditions Conditions  Unusually high stimulate the formation of new local demand in businesses and lay out the Availability of: specialized implications for competitive strategy  Physical Infrastructure sectors and economic policy  Human Resource Related  Availability of  Capital Resource and sophisticated locally  Clusters are typically based on  Information Infrastructure Supporting based suppliers and comparative advantage of the  Administrative Industries related firms geography or local knowledge base, Infrastructure  Natural Resources e.g. have geographically advantageous  Scientific and position for certain type of business or Technological strong academic and research Infrastructure capabilities as a core  Academic Institutions Source: M. Porter, Clusters and the New Economics of Competition, HBR, 1998 Skolkovo Foundation 2
  • 4. The President and key political leaders have defined the preliminary vision and goals for Skolkovo Vision Goals “Establish a high-tech center for research, development and commercialization of 1 “Jump start” innovation and venture creation in the knowledge based economy innovative technologies in five presidential priorities: Energy, IT, Space, Biomedical 2 Support high-tech R&D by leveraging Russia’s and Nuclear” inherent strengths in science & engineering and President Dmitry Medvedev attracting “world class talent” “Skolkovo Project should become an 3 Select, promote and commercialize most promising high-tech innovation in an entrepreneurial ecosystem open platform with shared access to research, where new technological 4 Become the test-ground for national economic reforms products will be created” Vladislav Surkov 5 Become self-sustainable after 10-15 years 6 Diversify Russia’s economy from being dependent “Regulations in Skolkovo is a test of upon natural resources as the engine for economic ideas for the country as a whole to growth change the regulatory framework and improve the administrative regime ” 7 Modernize the Russian economy to be more competitive globally Arkadi Dvorkovich Skolkovo Foundation 3
  • 5. Further work is needed to define the Clusters where Skolkovo should prioritize its efforts Substantiation process: ILLUSTRATIVE  The presidential priorities for Skolkovo development are defined broadly Clusters  To make Skolkovo a success, the Presidential  Computational Foundation needs to determine where Priorities Biology Russia has the right to win and then  Energy  Smart utilities prioritize its efforts on select sizeable  IT  Nuclear Medicine clusters Substantiation  Space  Artificial Intelligence  Clusters are subsets of the presidential  Biomedical  Satellite priorities  Nuclear Telecommunication  To define the clusters, a filtering exercise  etc. to identify and determine the most attractive clusters needs to be undertaken Skolkovo Foundation 4
  • 6. Skolkovo’s function is to serve as catalyst to accelerate idea creation and commercializing them into marketable products and services Skolkovo - Value Creation Overview Build self-sustaining eco-system to support developing local Attract world-class Enable efficient access to advanced R&D business and scientific capital and expertise; ensure talent; take advantage of strong IP protection Russian talent Skolkovo Success Measures  Number of successful new Entry Points commercial ventures  Number of IP patents generated  Number of successful product Commercialization Research Development Exit Operations launches Early stage - Late stage - Pre-market Market entry  Job creation  Growth in private capital Early Stage, Advanced, Advanced, Basic Focused Technology Prototype Prototype Market formation and investment Development Production Launch Research Research Development  GDP growth and global market share in targeted clusters  Revenues and profits generated Exit Points through Skolkovo Build global leading business, Help to generate external regulatory and venture support Create a home for independent market demand environment stakeholders: academic, corporations, researchers, venture finance, etc. Skolkovo Foundation 5
  • 7. Skolkovo Participants and Services - Structured Along Innovation Value Chain Skolkovo Management Required and Enabling Capabilities Core Engine for Skolkovo’s Value Creation Infrastructure Support Planning and Research Development Commercialization Exit Operations Services Development Academic & Research Real Estate Services Commercialization Support Basic Infrastructure Institutions (SIT) Cluster 1 Development Start-Ups Corporations Business Services Shared Research Developing Companies Cluster 2 Infrastructure Development Education Services Corporate R&D Centers Third Party Grants Government Contracts Cluster 3 Business IT / Telco Services Agencies Support Infrastructure Development Seed Financing (e.g. Export Support Business Incubation) Municipal Services Cluster X VC Equity Investments Non-business Infrastructure Debt Development Other Services Corporate Financing Financing Skolkovo Foundation 6
  • 8. Five core principles are guiding the design of the operating model 1) Skolkovo should be attractive for world-class talent, institutions and businesses 2) Skolkovo ecosystem should become self-sustaining over time Foundation should strive to maximize private participation, stimulate competition and only 3) assume responsibility for the activity if it can not be performed by private businesses Physical and network-based (virtual) components of Skolkovo should be developed 4) simultaneously 5) Conflicting functions should always have separate governance Skolkovo Foundation 7
  • 9. Skolkovo will provide cluster agnostic and cluster dedicated support along the innovation value chain Skolkovo Foundation Monetary Support 1 Research Development Commercialization Early stage - Pre-market Late stage - Market Launch Foundation Support Cluster SIT Seed Early Stage Mezzanine (Cluster Endowment Endowment Support VC Support Support Agnostic) Private Sector Participation VC Business VC Business (Cluster Funds Incubators Funds Incubators Agnostic) Business Cluster Incubators Skolkovo Skolkovo Exit Cluster Business Business Dedicated VC Funds Operational Dev. Funds Incubators Incubators Funds Support Project Participants SIT Start-ups Start-ups Value Chain Developing Operating Companies Companies Corporate R&D Centers Corporations Legal, Business Services, GR, Export, Government Contracts Commercialization Municipality, Real Estate Services, IT, Education, Health Infrastructure Grants Access to shared research infrastructure Skolkovo (Public) Entities Loans and equity capital (which could be 1)Public participation prevails in upstream and decreases in downstream Equity Private Sector Entities converted to low interest loan) Skolkovo Foundation 8
  • 10. Skolkovo will operate with a matrix organization of functions and clusters Matrix Structure of Skolkovo Foundation Functional Support Along Value Chain Cluster Development  Skolkovo ecosystem will be divided into four vertical  Cluster Development (CD) will evaluate clusters along functional areas corresponding to the segments of the their value chain to identify opportunities where Russia innovation value chain: research, development, early has a Right To Win in the global economy by and late stage commercialization developing new innovative enterprises  Institutions operating within each function area will be  Each CD will be led by a Cluster Development Officer supported by development organizations and (CDO) who will oversee Cluster Development endowments/funds Endowments (CDE)  The endowments/funds aim to accelerate new venture  The CDE will support “upstream” development of a creation: cluster by providing: – SIT Endowment will support organizational, – Research grants to SIT labs working on cluster infrastructure and graduate program development of related research Skolkovo Institute of Technology – Development grants to BIs to finance start-ups which – Seed Support Fund will provide early stage equity aligned to cluster objectives and loans to BIs  CDO will also support downstream development of the – VC and Operational Support Funds will provide cluster by providing guidance on investment decisions equity and non-recourse loans to incentivise private made by Skolkovo VC and Operational Support Funds VCs to invest and reduce their costs and risks – As investments proceed closer to market  Each Endowment/Fund will be led by a Skolkovo commercialization, it is essential that the role and Manager and supported by a development organization stake owned by private VCs increase Skolkovo Foundation 9
  • 11. Skolkovo organization evolves over time Phase 1: „Start-up“ Phase 2: „Permanent“ Migration Oct. 2010 - Q3/2011 Q4/2011 - onwards Organizational Principles Organizational Principles  Systematically recruit mgmt. / exec. talent into the  Complete ramp-up of organization organization  Management processes and governance instruments are  Organization will contain project based elements as in place and in full swing the „nucleus“ for driving the operations  Success of operations is primarily defined through  Flat and lean management hierarchy - operations organizational and individual KPIs along annual planning primarily defined by milestones according to the and 3-years outlook masterplan („fit for purpose“)  Gradually reduce project management instruments  Limited number of key stakeholders defined, towards more systematic management processes and supported by „interim managers“ to drive ramp-up governance - however, keep flexibility and high degree of  Organizational and institutional development effectiveness (processes, governance, structure) in parallel  Ramp-up of adjacent support services being given to  Grow the overall organization in a pace that independent operating entities reduces need for ensures appropriate integration and identity dedicated Skolkovo staff No. of No. of FTEs: 87 FTEs: 50 Skolkovo Foundation 10
  • 12. Skolkovo launch organization (Oct 2010 - Q3 2011) President Total: 87 Communications 10 Advisory & GR Chief of Staff General Counsel Audit Board Secretariats 10 10 10 13 14 Academic Chief Operating Chief Financial Site Chief 20 Cluster Officer Development Officer Officer Development Administrative development Officer Officer officers Technology International transfer and Project Cooperation business Support Team Development services  Develop cluster  Develop value  Develop network of  Plan and control  Conduct due-  Develop master  Develop and strategies proposition, attract and academia and budget allocation diligence plan for Skolkovo provide necessary  Originate and govern regulate: research institutions and spending analysis campus services to projects – BIs, VCs and other  Initiate planning and  Treasury  Prepare  Select Foundation: financial set-up activities  Facilitate materials for the architecture EPC – HR  Provide research and institutions Skolkovo Institute of establishment of Fund providers – IT development grants – Corporate Technology and SRI Skolkovo funds committees  Special Economic – General partnerships  Coordinate  Financial and Zone services affairs – Business and operations of legal – Statutory technology transfer investment structuring, reporting service providers committee executing and – Government – Shared Research  Management supporting the financing institutions reporting deal  Manage tenant affairs Skolkovo Foundation # - Количество штатных единиц - Временная / проектная функция 11
  • 13. Committees will coordinate the activity in the organization Title Description  Approve overall strategy for Skolkovo, cluster development strategies, Skolkovo Institute of Technology Strategy Panel development strategy  Headed by the Skolkovo Foundation President Executive  Coordination of various units within the organization in order to ensure innovation process execution Committee  Headed by the Chief Operating Officer. Includes Cluster Development Officers, Academic Development Officer, Chief Financial Officer, General Counsel Investment  Ensure investment process execution, approve investment decisions Committee  Headed by Chief Financial Officer Site Development  Approve the park development plans aligned with strategies of other units (university, clusters etc.) Committee  Approve budgets for site development Tendering  Approve procedures for various tenders for the Foundation Committee  Approve tendering strategies and tender commissions  Headed by the Chief Financial Officer Disciplinary Expert  Analysis of the compliance of applying projects to the selection criteria Panels  Formed by the Foundation on the basis of recommendations of the Scientific Advisory Board Skolkovo Foundation 12
  • 14. Project support team will drive immediate investment opportunities at Skolkovo  Skolkovo foundation will jump-start the program by deploying funds available in 2010 to selected projects before the end of the year  Project Support Team (PST) will be assigned to drive screening, due-diligence, decision making, deal execution and development support process  A transparent, criteria-based process will be installed to approve the investments. It will include review by investment committee Investment Process for Early Initiatives Funds Cluster Cluster Investment Development PST PST Development Committee Officers Officers Government  Originate project  Conduct due-  Review results of due-  Execute the deal  Govern project leads diligence analysis diligence analysis: development Corporations  Identify success  Legal and strategy and criteria for Early financial investment memos Initiatives (subject structuring prepared by PST to board approval)  Prepare materials  Make strategic and an  Screen the project for the investment investment decision against the success and strategy criteria committees review Skolkovo Foundation 13
  • 15. Proposed reference structure Control and Skolkovo Foundation and its Institutions Registration Chamber Chief Site Development Skolkovo Institute Clusters General Chief Financial Administration Officer of Technology Development Cluster Heads Administration Officer Officer Institutional Functional layer layer Director - Director Site Shared Research Director - Director Strategy Treasury & Planning Infrastructure General Affairs & Planning Investments Industrial & Project take-on Director Research Director - Teaching and Construction & Consolidated Legal Council Research Director Development Business Planning Research Grants Incubators & Accreditation Financial Director Institutions Financial Director - Municipal & SEZ Director Project Controller Corporate Affairs Services Management Technology Transfer & Compliance Services Director - Director - Communications Corporate IT and GR Tariffs Director - Govern. Financing & Statutory Reporting Institutional development Skolkovo Foundation 14
  • 16. Skolkovo will be build in three phases. Network-based and physical Skolkovo will be developed simultaneously Plan Phase Build Phase Run Phase Today Scale Up (3-6 Months) (2011-2012) (After 2013) Early Initiatives Migrate to Network-based Skolkovo once it is operational Network-based Master Plan Develop and Ramp-up Operate Migrate to Skolkovo Master Plan, Prepare for Build Phase campus once it Physical-based is built Build Infrastructure and Real Estate Ramp-up the Park with Project Participants 2010 2011 2012 2013 2014 Skolkovo Foundation 15
  • 17. Key milestones 2010 till 2011 PRELIMINARY 2010 2011 Milestones Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Early Investments into early initiatives made Initiatives Master plan and Operating model finalized Initial organization launched Network- Initial cluster strategies developed and signed-off Based Skolkovo Value propositions for Corporations, BIs and VC developed Academic relationships established and first university program launched Park architecture competition initiated Park concepts are submitted Physical Skolkovo Territory planning completed First volume object planning completed BM 11.10.10 Skolkovo Foundation 16
  • 18. The overall budget requirement until 2015 equals to 172 bln RUR 172 Total Budget and Budget Drivers PRELIMINARY Cumulative by 2015 18 8.6 0.5 12 17 56 SRI SIT Seed VC Early Stage VC Late Stage 6 Bln allocated to Skolkovo GPs for Cluster development needs 10  250 Professors  100 Early stage  35 Late stage companies  200 Start-ups in portfolio  300 Post doctoral companies in portfolio in portfolio  6 Business incubators  1000 Graduate Students  10 Early stage VC funds  7 Late Stage VC funds Cluster  Average spent per start- supporting supporting up $ 0.1 m per company  $ 200 mln Invested in  Average investment $ 3  Average investment $ 7 for 2 years research operations mln per company mln per company 44 30 14 12 100 713’000 m2 280’000 m2 194’000 m2 Basic Real Estate Residential Campus and Business and Infrastructure Housing Labs non-business 4 1.5 5.5 Foundation Operations Internal Outsourced Services x Funding requirement in Bln RUR x Subtotal Funding requirement in Bln RUR Skolkovo Foundation 17
  • 19. Budget requirements from 2010 till 2015 Budget Requirements PRELIMINARY Foundation In Bln RUR Clusters Seed + Early and Late Stage VCs SIT + SRI Real Estate 43 41 1 1 40 1 1 1 1 5 4 4 5 5 10 (3%) 9 29 5 (17%) (3%) 21 1 19 1 172 3 1 99 1 34 (57%) 5 29 26 26 7 (20%) 7 0 0 6 13 7 5 0 0 2010 2011 2012 2013 2014 2015 Skolkovo Foundation 18
  • 20. Foundation needs to raise 87 Bln rubles to cover the budget gap Budget Requirements and Government Support PRELIMINARY In Bln RUR by Year (Left), Total (Right) 43 40 41 22 18 24 21 87 85 19 172 (49%) (51%) 6 7 22 22 17 19 15 9 -2 2010 2011 2012 2013 2014 2015 The Budget Gap / Surplus ( - ) Committed by Government Foundation needs to find 87 Bln to cover the budget gap. Potential sources include:  Government (No commitment made for 2015 yet)  Private equity investments and loans Skolkovo Foundation 19

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