Russia Brain Drain Saps Talent as Sanctions Hit Financing
Artem Kulizhnikov, founder of a startup designed to help musicians annotate music, is packing his bags to leave Moscow in December.
His destination: Dubai or Singapore, where he sees a better chance of securing funding for his second company.
“Russian venture-capital funds want to invest their money only in Russia, but we want to build an international business and they won’t support us,” Kulizhnikov, a former analyst at investment firm Alor SPB, said at a forum at Moscow’s Digital October center on Oct. 10.
Kulizhnikov, 22, is part of a growing brain drain as Russia’s worst clash with the U.S. and Europe since the Cold War accelerates an exodus of capital and its brightest minds in finance and technology.
Since Russia annexed Crimea in March, Pavel Durov, the founder of VKontakte, Russia’s version of Facebook, left the country to develop a mobile social network, saying he was unwilling to comply with government demands to turn over personal data on Ukrainian users. Game Insight LLC, ranked by Forbes magazine as the nation’s seventh-largest Internet company, shifted its headquarters from Moscow to Lithuania. Pavel Muntyan, the Russian founder of Toonbox animation studio, moved his staff of 15 from Moscow to Cyprus.
Herman Gref, chief executive officer of OAO Sberbank, has taken note, saying Russia’s largest lender has seen an increase in companies seeking applications for foreign-residence permits for their employees.
“In business, now the most popular application isn’t the one to set up a company but to get out,” Gref, whose bank controls 46 percent of the nation’s deposits and a third of all lending, told delegates at the VTB Capital forum on Oct. 1. “Until we fix the environment, nothing will change.”
A brain drain “is an invented problem as there is movement in both directions,” Andrei Fursenko, Putin’s adviser on education and science, who is on the U.S. and European Union sanctions lists, said by phone. “Venture-capital funds haven’t gone anywhere, especially given that they don’t fall under sanctions.”
VTB Group, the Russian state-controlled lender that is also on the sanctions list, is trying to slow the exodus by shifting its high-technology investments back to Russia and away from Silicon Valley.
“There’s always a decline in venture capital when there’s a crisis or uncertainty,” he said. “In Russia, Ukraine and Belarus, you have people with a lot of technical skills and a lack of options. Of course they want to get out.”
Source: bloomberg-Russia Brain Drain Saps Talent as Sanctions Hit Financing
