Nanotechnologies: From Fantasy to Reality

10.04.2009 — Analysis

Boris Zyryanov, President of Micron Holding and President of the Innovation Technologies Non-Governmental Foundation, is sure that nanotechnologies are moving from the realm of fantasy towards reality. Russia has a vision of how to upgrade its economy.  An innovation support infrastructure is gradually emerging. The main thing now is to develop specific frameworks for the support of business people that operate in the high-tech sector.     

- In your opinion, is it realistic for Russia to get off "the oil needle" and develop a high-tech domestic production sector?

- The issue is not whether or not it is realistic. It is the only way out. The raw material economy model has run dry. We have no other way out but innovations, economic renovation and development of the non-commodities sector. The question now is more about application:  How are we going to do this? Which institutions should we engage? How should we use the money provided by the State in a targeted way?

Take for example the Federal Foundation for the Assistance to the Small Business Development in the Scientific and Technical Sphere, also known as “The Bortnik Foundation”. From this foundation, the Sverdlovsk Oblast receives nearly 70 million Rubles every year for the start-up funding of small business enterprises. These amounts are small – 500 thousand, 1 million Rubles; however, they’re quite sufficient for a “start-up". Furthermore, the State has allocated huge amounts of funds through the Rosnano* corporation. The use of private-public venture funds is also possible. There is the Sverdlovsk Venture Fund with the participation of the Oblast Government and Ermak Company. They select medium-sized – up to 40 million Rubles – projects for their investment. Thus, different segments and different needs are covered by different instruments. All of the activity is currently aimed at making this system work efficiently.

- Looking at Polson's or Obama’ plans for the USA to overcome the crisis, one can trace a very clear focus on innovation and scientific development. In the Russian anti-crisis measures that are currently being declared there is no visible support for the sciences.  Is this a lack of attention in principle, or is support being provided as needed, though it is not being emphasized and stressed?

- Sufficient attention is being given to support. Both the President and the Prime Minister have spoken on this topic; yet, the specific details still have to be worked through. The impetus from the country’s leadership is not reaching the inventors and business entrepreneurs. There are a lot of intermediate links, i.e., red tape, that must be dealt with to get the will of the government to the small and medium-sized business economies.

- Does the money simply get stuck in all the red tape?

- It’s not even that. It’s just that the very model is so new and underdeveloped… Back to America – they have a huge experience of supporting innovations there. There is the unique "Silicon Valley" – a unified system where the path from an emerging idea to its worldwide implementation is very short. In Russia, those at the very top have decided to pay attention to innovations. Huge budgetary funds have been assigned for this. Down below, no work was being done; no one was preparing the grounds for receiving this money.  Quite recently, everything was wonderful with us – oil was expensive, gas available, what else do we need?... Thus, a system of “business angels” is virtually non-existent in Russia. These are the very private-public structures that support business innovations at risk during the initial stage when an idea emerges.  Therefore, the main challenge, in my opinion, is focusing the efforts of various funds to support entrepreneurial activity at its early developmental stages.  By growing the initial level of business we obtain economical comprehension of small businesses in which more money can be further invested. Then they will be prepared for even greater investment.

- State money or "business angels" will move toward small business ventures, and they will develop. Fine, but how will things stand in relation to the structural renovation of system-building industries and companies – e.g. AVTOVAZ? It has received lots of money but we can’t see any technology changes in its production lines.

- The current crisis itself can push any industry into getting engaged in both structural renovation and enhanced energy efficiency. It will make them use, for the purpose of cost saving, some composite material instead of steel. The crisis is forcing industry to examine problem areas, be it low quality or high production cost. There is only one way to solve all these problems – looking for and implementing new innovations.  

- So far, it has only encouraged our corporate businessmen to ask the State for money that would keep them afloat until the crisis is over…

- There are reverse examples as well. The Urals Optical and Mechanical Plant receives large resources from Rosnano for the production of new generation lamps.  They receive funds from the State exactly for innovation.  

- With what products can the Urals conquer the external market?

- First and foremost, high-tech developments from the military industry sector are highly valued. They have a substantial image resource and are in demand. In general, we look like a country with high intellectual potential. 

- Are we not talking about yesterday? Isn't it true that the education level has substantially decrease as compared to the Soviet period, and the military industry sector keeps presenting the same developments of previous years. In addition to that, many of the military industry sector designers are well advanced in years.

- Nevertheless, the resources are available, and this image, as I talk with European business people, has been established. If they see that the country produces something that has to do with the military industry sector, this means that it is considered in advance a promising and successful market. As far as everyday consumer goods, this is the area where we traditionally lag behind.  

- Do foreign business people see any spheres suitable for investment in Russia?

- The investment issue is not on the agenda today – everyone wants to sell what they produce. It may be relevant for them to establish joint ventures with large Russian companies that have already have both their own resources and assistance from the State. If we are speaking about the opening of trade missions, they certainly can be based on small and medium-sized business.  

- Your foundation represents the interests of Rosnano in the Sverdlovsk Oblast; how have you established the process of working with those who have received specific funds?

- Our representative has been trained and was granted the right of performing the initial search for, and selection of, projects. First we eliminate projects that do not fit the criteria, those that are not nanotechnology or a break-through technology. We than follow up on the project until the very end – which is when the funds are provided. A minimum amount of Rosnano participation in a project is 300 million Rubles. Respectively, an applicant must have his own funds or co-investors.  The project must have a high degree of feasibility. This is no longer a "start-up". This is a kind of the last link of support for the project. It could have been funded from "The Bortnik Fund" at the beginning, then from a venture fund, and finally receive support from the state-owned corporation.  

- Have you already begun overseeing specific projects?

- We literally just received a letter from Rosnano a few days ago. We are already working on 2-3 new applications, and have another 8-10 in the preparation stage. 

- Which of them are the most interesting?

- In my opinion, the most interesting project is a new generation of microprocessor equipment that is called "a multi-cell processor". The project is being promoted by the Urals Architecture Laboratory jointly with the Zelenograd Technology Park. This is a break-through technology that many big organizations are interested in. The processor is new in principle since it works not with separate commands but with whole sets of commands. This new processor solves many problems that stand in the way of improving microprocessor technology. Up until now everyone has been trying to improve the operation by mere percent, invent multi-core processors, and so on. Here we have a manifold improvement. The developers have surpassed the technological edge at which the so-called Von Neuman architecture got stuck. Energy consumption has been reduced 10-15 times. The investment of monetary resources into this project is small, while the expected impact is huge. Entirely new fields of microprocessor usage are being discovered. Nanorobots and other fantastic things are becoming reality.   

* Reference: Rosnano – the State-owned Russian Nanotechnology Corporation, established in 2007 for the implementation of the state policy in the area of nanotechnologies and the development of the innovation infrastructure. The corporation acts as a co-investor in projects with a substantial economic or social potential. The Russian Federation Government has allocated 130 billion Rubles for the Rosnano’s operations.  Anatoli Chubais is the General Director of the Corporation.