Is Russia Silicon Valley for Real or just the New way for the Russian Mobs get Richer?



Here in Awesome DC, we try to keep our focus on everything related to DC. However, as a serial entrepreneur, I found the recent buzz on Russia’s Silicon Valley too good not to blog about.  I think it will affect most of us here in DC in an intangible way.

Reuters reported that Siguler Guff & Company, the NY based private equity firm sitting on a $8.5 billion will be investing $250 million of their fund on Russian Silicon Valley, Skolkovo. The investment will be mostly on digital infrastructure and IT services for Skolkovo which is the first foreign investment on Skolkovo,  according to Russian business newspaper Vedomosti, and more to come.

Siguler Guff got to be either on crack or they are somehow deeply connected to the corrupted Russian business system known as “Russian Mafia”.

I have been monitoring Russian President Dmitry Medvedev initiatives on entrepreneurship and his Silicon Valley dream for the past couple of months. I have also been monitoring the high level corruptions in the country since 2003.

Here is one out of thousands and the most recent case supporting my argument. I urge our investors to do their homework prior any further investment in the country. The clip is from Fareed Zakaria‘s weekly GPS just last week when he dedicated his entire segment to Russia, including interviews with William Browder, the American investor who invested millions of $$$ in mother Russia in the late 90’s and ended up pulling out of the country 5 years later with financial loss and death of his Russian lawyer, Sergei Magnitsky who simply tried to fight the corruption in his country. You will also hear the feedback from Bret Stephens, foreign affair columnist with Wall Street Journal and Stephen Cohen, Russian scholar at the NY State University.

Coming from that part of the world myself, and worked with Russians, I have a lot more to say, but I think this segment sums it all up pretty good:
Vodpod videos no longer available.

Although, the President  Medvedev’s initiatives sound inspiring and promising, given half year gone by since  the death of the Russian Lawyer, Sergei Magnitsky and Medvedev has done jack about the tragedy, Russia is not nearly close to be considered as a legitimate country to be invested on.  Not to mention their politics.

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About Elias Shams
I have been a serial entrepreneur in telecom and social media space for past 12 years or so. I hold a M.S. degree in Telecommunication Engineering from the George Washington University and a B.S. degree in Electrical Engineering from the University of Maryland. I’ve lived and worked in many countries and cities including London England, Tehran Iran, Bonn Germany, Paris France, Alicante Spain, Delhi India, and my favorite of all Washington, DC of great US of A. Two of the greatest Washington, DC based companies I worked for and very proud of are Yurie Systems which was sold to Lucent in 1998 for $1.23 B and telezoo.com that I founded in 1999. I am currently the founder and awesomizer @ awesomize.me

10 Responses to Is Russia Silicon Valley for Real or just the New way for the Russian Mobs get Richer?

  1. kazmonavt says:

    Skolkovo is not so new as one might think, though i hope that both partners have learnt from the past.
    moneylaundry and fraud, … happening elsewhere.

    On Wallstreet you just wouldn’t call it mafia.

    I think it’s a good move also to give future talents more motivation and a wider future vision which seems to be missing at the moment (last years)

  2. Akademgorodok says:

    Not sure why it’s dubbed the ‘first’ Russian Silicon Valley/Taiga project: they had a quite successful Akademgorodok (http://en.wikipedia.org/wiki/Akademgorodok), city emerged in 1961 and ended up being a thriving community of 20+ research facilities. NSU university was considered 3rd in Russia at some point, especially in Math/Physics because of proximity to real research (not puppy physics like say Yale, giggle 🙂 Unlike todays’ incubators Akademgorodok didn’t have a strong investment funding/capital, state controlled the town’s economy/research funds, however what Russia produced for the time was superb. In 2010 the model has changed, let’s see how it works with the venture groups.

  3. mes says:

    Noone in their right mind inside Russia expects *anything* good to come from this project. Anything good for the society, that is. Perhaps a well-shielded place for kids of top government officials and the like to spend college days or postgrad time, if that. Ask yourself – what happened to the previous “Innovation City” built in the much more appropriate city of Dubna, which boasts a sizeable and active community of scientists (physicists, and back in time, computer pundits). Nothing. It rots empty. And it’s not like the current proponents of the Skolkovo venture display any coherent long- or even midterm strategy. Except spending money, of course. If I were an investor in that equity fund, I’d be running in circles yelling “fraud” right away. Unless I enjoy funding kickbacks to foreign governments and “contractors” for no real reason.

  4. Magid says:

    no way would i invest in russia until they can cleanupt corruption and improve levels of transparency. this market scares the crap out of me.

  5. sergey says:

    Westerns just want resources… Its why they pay KGB regime 😦

  6. Agriya says:

    No doubt this money will end up lining the drug habit of some Russian oligarch living the high life in Monaco as usual! Why would they invest money in this country?! Cue “In mother Russia” jokes.

  7. moscow blue says:

    have heard the designation of the land to be used in this “silicon valley” area was needed and urgently, and thus the quickest best way to change it from Farm land to Residential/Commercial use was “silicon valley” … local government around is saying there won’t be such a big deal as “silicon valley” there it was a land designation plot….
    also a new 9 hole Nicklaus golf course is being built in this neighborhood….
    always good to be careful investing as an outsider here in Russia

  8. sovande says:

    Having worked in Russia for a western company I can confirm that. We saw daily that russian “partners” just took over the venture and throw out their western partners. They were basically meet with a closed door and told to go home.

  9. Haumea says:

    Translation: To invest in Russia is idiocy, my American comrades, they’ll steal and take apart everything, you’ll wind up with dick!

  10. Bob says:

    The only reliable way for a non-Russian company or individual to invest in Russian high-tech brainpower is to find entrepreneurial Russians who have already left, and who have made good on their own in North America for a few years. That group of Russians has proved its ability to survive in an honest business environment without “blat” — the Russian term for corrupt connections to those in power. (Even Western Europe is too close for comfort; still too many corrupting ties with the mother ship.) Invest in those people, not in Russian businesses run by people who — even if, as is often the case, they are personally honest and well-meaning — are still subject to the shadowy, hopelessly anti-entrepreneurial, pervasively corrupt business environment in Russia.

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