This document summarizes a startup village project in Moscow in 2013 that brings together two small innovative companies to commercialize their patented oil production technology and equipment. The companies formed an investment partnership called Synergy NS to provide oilfield services using their energy saving technology and wear-resistant pumps under complicated oil production conditions. They estimate the Russian market for their segment at $1 billion and have received recommendations and reviews from major oil companies validating their innovations. The partnership is seeking 25 million rubles in investments to fund research, acquire assets, marketing, and working capital to launch their commercialization efforts providing a 20-50% profit return over 5 years.

1. Startup Village – Moscow – 2013
Energy saving technology and
equipment for the oil production
under complicated conditions.
Stupen Ltd. is a managing partner of the
Synergy NS investment partnership.

2. Our product shall be used for rendering the oilfield services under the
complicated oil production conditions by using the electric centrifugal
submersible pumps. Two small innovative companies (the developer of
patented oil production technology and the developer of patented wear-
resistant pump) have been associated to commercialize their inventions. The
prototypes of the above mentioned equipment and technology have been
successfully field tested and recommended for implementation by major oil
companies. The experts give high appreciation of our innovations but the use of
them is hampered due to the lack of effective organizational form of
cooperation.
Neft XXI Century Ltd. and Stupen Ltd. have become the managing
general partners in Synergy NS investment partnership which is the closest
analogue of the English Limited partnership for the commercialization of its
developments by rendering the oil field services. The recently adopted law of
the Russian Federation allows us to do it.

3. The volume of the largest Russian market of services for the submersible
oil production equipment is about $2 billion. We estimate the volume of the oil
production market segment under the complicated production conditions at $1
billion. Our patented power saving oil production technology and wear resistant
construction of the oil field equipment have been tested by the oil and service
companies. The major Russian oil companies publish information on the cost –
effectiveness of our patented technology.
Our competitive advantages:
1. Know-how in the oil production technology
and equipment.
2. Recommendations of the largest Russian oil companies
to use our technologies and equipment.
3. The suggested organizational form of commercialization
as a Russian analogue to Limited Partnership.

4. The authors of the project are the winners of the Start Fund assistance
for the small enterprises in the Science and Technology Sector in 2007 and
2011 merged for a synergistic effect. Prior to the merger, they worked with
large companies. The Pros of the work: careful working out of the technical
risks. The Cons: inertia and bureaucracy, lack of mobility and motivation of
large organizations.
Our team includes the specialists of the innovation and technology
management, IT and engineers of different spheres. The specialists of our
partnership have a large experience of initiation and project management in the
oilfield services and the production of automotive
components.

5. To implement the project we need investments in the
amount of 25 million rubles.
Approximate distribution of funds:
1. Research and development expenses……20%
2. Acquisition of fixed assets………………… 55%
3. Marketing…………………………………… 10%
4. Working capital………………………………15%
We have to acquire the necessary equipment to make the original
component parts and special tooling.
In our Synergy NS investment partnership we offer a venture investor
the share to 49.9%. The profit is 20-50%. The investment horizon is 5 years.
Return on these investments is expected from the beginning of the third year of
co-operative work. The developed technology reduces the oil production break-
even by 20-25% and has positive customer reviews. So, we believe that we
have significantly reduced the major innovation risks: the risk of lack of demand
and low sales profitability.