Access to capital for growing innovative companies and small scale businesses

Moscow, April 16, 2012Moscow, April 16, 2012

Small Scale Business growth in Russia…Small Scale Business growth in Russia…

6630% 30% Small firms’ share in

the total number ofall businesses

Small firms’ share inthe total number ofall businesses

20% 20% Percentage of GDP Percentage of GDP

60% 60% 70% 70%

Entrepreneursper 1000 people Entrepreneursper 1000 people 30 30

EUEURussiaRussia

The innovative development strategy of Russia for 2020,

approved by the Decree of the Government of the Russian Federation on December 8, 2011 N 2227-р

The innovative development strategy of Russia for 2020,

approved by the Decree of the Government of the Russian Federation on December 8, 2011 N 2227-р

*5-10%** - Russian Government objective by 2020*5-10%** - Russian Government objective by 2020

…is impossible without development ofhigh-tech production

…is impossible without development ofhigh-tech production

0,25 %0,25 %

Worldwide exports of high technology productsWorldwide exports of high technology products

16,3 %16,3 % 13,5 %13,5 % 7,6 %7,6 %ChinaChina USAUSA GermanyGermany Russia*Russia*

It needs urgent investments It needs urgent investments

"Our country is now among the top ten world leaders in financing R&D activities. We have recently increased public spending on this sector and take the eighth place in the world concerning investment in R&D, coming up to such countries like Great Britain and France and outrunning Italy and Canada, "- said Mr. Medvedev.However, he highlighted insufficient growth of private investment in innovation."Business is not so dynamic as we expected. Of course, there are some reasons for it. Russian companies’ costs on innovative and technological development have augmented from 190 billion rubles in 2006 to 350 billion rubles in 2010. I can admit that this growth is not significant. As a matter of fact, it is rather a weak growth, "- declared the Russian president.

"Our country is now among the top ten world leaders in financing R&D activities. We have recently increased public spending on this sector and take the eighth place in the world concerning investment in R&D, coming up to such countries like Great Britain and France and outrunning Italy and Canada, "- said Mr. Medvedev.However, he highlighted insufficient growth of private investment in innovation."Business is not so dynamic as we expected. Of course, there are some reasons for it. Russian companies’ costs on innovative and technological development have augmented from 190 billion rubles in 2006 to 350 billion rubles in 2010. I can admit that this growth is not significant. As a matter of fact, it is rather a weak growth, "- declared the Russian president.

RIA Novosti. OCTOBER 29, 2011,RIA Novosti. OCTOBER 29, 2011,

750 000private investors registered in RTS-MICEX,

31% of turnover ($1.05 trillion in 2011)

750 000private investors registered in RTS-MICEX,

31% of turnover ($1.05 trillion in 2011)

$ 68 000 000 000in individual deposits in Russian banks (Rosstat)

$ 68 000 000 000in individual deposits in Russian banks (Rosstat)

$ 16 800 000 000total amount of capital in the Russian Venture Capital Association (RVCA)

$ 16 800 000 000total amount of capital in the Russian Venture Capital Association (RVCA)

$ 22 000 000 000Pension funds: (5-10% can be invested in alternative assets)

$ 22 000 000 000Pension funds: (5-10% can be invested in alternative assets)

Russia has money for small scale businessRussia has money for small scale business

100 000people with spare capital more than

$1 million. HNWI (World Wealth Report 2011)

100 000people with spare capital more than

$1 million. HNWI (World Wealth Report 2011)

1 000 000 000 000 rubleswill be spent on modernization in 2012 (October 2011, Russian President Dmitry Medvedev)

1 000 000 000 000 rubleswill be spent on modernization in 2012 (October 2011, Russian President Dmitry Medvedev)

but it can not find the way to small business

but it can not find the way to small business

IIM RTS-MICEXonly for public companiesIIM RTS-MICEXonly for public companies

RTS Board, SecondShares secondary market for open joint-stock companies where the issuer is not an initiator

RTS Board, SecondShares secondary market for open joint-stock companies where the issuer is not an initiator

Data Bases

contain information about start-up projects, however are mostly informational

Data Bases

contain information about start-up projects, however are mostly informational

absence of efficient systems which provides informational disclosure of projects and facilitate tracking companies’ life cycle

absence of expertise

lack of investors (mostly consultants and mediators)

absence of real transactions (professional projects)

lack of insurance systems of transactions and settlements

absence of efficient systems which provides informational disclosure of projects and facilitate tracking companies’ life cycle

absence of expertise

lack of investors (mostly consultants and mediators)

absence of real transactions (professional projects)

lack of insurance systems of transactions and settlements

is an online information and trading system for attracting capital for leading companies in the innovation sector of the Russian economy

is a platform integrated in IIM RTS-MICEX, which may become one of the infrastructure elements of Russian development institutions and capital market improvements

• creates investors’ data base for Russian innovation sector and for medium and small scale business

• facilitates access to capital for the whole range of perspective young companies

• provides market with new prepared companies

Market Participants Interconnection

Platform for efficient cooperation of entrepreneurs and investors, joint projects realization, information exchange, networking and also for informal communication Promote collaboration with development institutions

Analyticsand Training

Market analysisProject expertise Trainings on capital attraction for innovative entrepreneur

Information and Transparency

Transparency improvementof young sector of innovationMonitoring systems of companies’ financialsDevelopment of corporate management culture

Start-ups Growing Companies IPO Preparation

Initial Level Base Level Pre-IPO Level

Requirements:

to be an innovation sector company, to have legal entity and to provide brief company presentation

Requirements:

to have a board-assistant, estimated capitalization at least $1 million, to provide an investment presentation

Requirements:

to have a board-assistant, capitalization at least $5 million, company valuation and investment memorandum

Information Mode Negotiations Auction

Clearing and Settlement Block is going to be implemented on the basis of National Settlement Depositary RTS-MICEX

Efficient way of company presentation for investors

Information and analytical support of companies and entrepreneurs

Online activities (seminars, webinars, online conferences) for investorsand partners

Private Investors

State Institutions

Entrepreneurs-innovators

Companies

• Encourages growth of participants of sector of innovation

• Meets necessity of small scale business in capital

• Connection with venture and innovative association

• Partnership with leading Russian exchange – RTS-MICEX

• Cooperation with institutions os development

• Open architecture - the ability to connect with external systems

Shares Post – establised in 2009. This platform allows investors to acquire shares of leading technological companies. The system permits to make and process transactions automatically and assure escrow settlements.Provides more than 100 000 private and institutional investors, and 152 companies.

ASSOB (The Australian Small Scale Offerings Board) – is a system for attraction of private and equity capital of medium and small capitalization, created in 1997Number of investors: more than 7500, funds raised - $122 million, major placing is from $250 thousand to $5 million.

Second Market – is a SEC regulated trading platform for alternative assets which is registered by a broker or a member of FINRA, MSRB и SIPC, founded in 2004 Provides more than 50 000 private and institutional investors, and more than 25000 private companies.

114

104

100

30

20200

8200

46

400

100 (24 companies are on IIM RTS-MICEX)

Initial Stage Growth IPO

> 10 000 ~ 600 ~ 100

Projects, approved byRUSNANO

RVC Fund Projects

Projects of funds of private equity and venture capital

CIS companies

potential issuers of MICEX

Foreign companieswith the "Russian feedback"

companies in 3 yearsProjects of Fund for Promotion of Small Enterprises in Science and Technology

RVC Seed Fund projects

“Skolkovo” members

2011 2012 2017

Working in test mode

18 companies

5 companies became “Skolkovo” residents, 2 of them got grant financing

450 investors and users

New comprehensive on-line version

Techniques and standards are being elaborated by the working group of IIMUp to 50 companies

Attraction of up to 1000 investors and first transactions

500companies

10 000investors

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