Ruminations on Russia

I have been here before many times but some late night reading of blogs from the Always On Conference meant that sleep was interrupted by random thoughts on how to invest in Russian technology. My sleeplessness can be attributed to Tim Oren's Thoughts on Venture Capital Investing etc..... so he should at least be attributed.

So back to basics;

There is some exceedingly interesting Russian technology out there in a more or less comercial or commercialisable form.
Where computational power matters (telecom's for instance) Russia's huge mathematical skills make a real difference.
Because Russia, and its predecessor, had to work with sub-standard equipment (you name it, it was sub-standard) scientists, programmers and the like had to find ways to make inferior products work, as well as, or better than the most modern equipment in the west. Most commonly this was achieved through a multi-disciplinary approach that is broadly lacking in the West. These generalisations are so easily challenged but they are broadly right.
The cost of building a product to Beta and beyond is a fator of 4-10x cheaper than a similar product in western Europe or US. This makes no comment about quality.
Russia's continuing isolation from the hotbeds of technology limit its ability to build products and applications that solve today's problems.
Russian management teams have not yet had exposure to the long term exposure to western management and customer interfacing that provides a pool of highly qualified management teams - even at the CTO level. Somewhere I read that 25% of Valley start-ups have Indian and Chinese CEO's.
There is almost no qualified capital looking at Russian technology.

So where is the value to be found? Somewhere in Tim's blogging he mentioned he questioned the stage of investing differentiation between venture funds that was caused by the bubble in the late 90's. Hopefully for the right reasons he decided it was a good thing, hopefully for the right reasons I agree with him. Inherently I believe in early stage investing, something about being a frustrated entrepreneur; but is that the right model for investing in Russian technology. Assuming the assumptions above are correct; the massive weakness of Russian technology is management and its applicability to global markets. Surely then it makes sense to invest at the point that these two problems are solved? Or is it not overly arrogant to believe that through appropriate mentoring of the right people applications and additional management can be added to overcome these shortcomings.

Assuming that we invest in companies that have the ability to see where their weaknesses lie - understanding what they don't understand - then early stage investing makes sense........I think.

Anyway back to the day job.