Russia's Economic Development Minister, German Gref, has defended his decision this week to use public money to fund struggling high-tech companies, and why he thinks the state is needed to kick-start Russian innovation.
On Monday German Gref announced the private firms which will manage a massive new hi-tech venture fund. The state will bankroll 49% of the fund with the rest coming from private investors. Three hi-tech venture experts won a tender to manage the fund – VTB Bank Group, Bioprocess Capital and Israel's Tamir Fishman Group. On Tuesday Gref defended his decision to spend public money on private companies.“Every innovative country in the world subsidises private business. Over 10 years the Israeli Government has created a colossal investment sector, one of the greatest innovation industries in the world, precisely thanks to this scheme,” affirmed German Gref.And Russia was a sorry comparison. “This is the weakest link in the Russian economy, we could never commercialize the results of our scientific work. I hope that with venture capitalists we can learn to do this,” stated Mr. Gref.Gref admitted that some of the Government's investment would come to nothing, but claimed this was an inevitable consequence of investment in innovation.“Venture capital is called venture capital because it is high-risk. But the risk-takers will first of all be private companies interested in maximum returns,” the Economic Development Minister continued.German Gref has set a timetable of two years to see the fruits of his investment. Whether the new state involvement in Russia's economy is right for the country remains to be seen.