Can local startups replace foreign companies in Russia?
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27 April 2022

Can local startups replace foreign companies in Russia?

GenerationS corporate innovation development platform experts on new opportunities for small businesses in crisis.

The main economic news of recent weeks concern the new sanctions that foreign countries have imposed on Russia. Russia, in turn, is developing initiatives aimed, among other things, at supporting small and medium-sized enterprises, which are often forgotten when it comes to global processes in the economy. Meanwhile, many startups today are at a crossroads: shut they down? Or look for investors? Develop in new fields?

This article Is dedicated to the opportunities for small businesses that appear in a crisis.

Last year was successful for Russian startups, many planned to find investors and sign new contracts in 2022. According to Inc.Russia, at the end of last year, the volume of Russian venture investments amounted to almost $1.8 billion compared to about $300 million a year earlier. The six-fold growth promised a boom in 2022, but now many startups have put their activities is on hold.

After the introduction of sanctions against Russia, many media representatives turned to experts with a request to outline the prospects for the development of the domestic economy. Experts’ assessments varied from “crisis is a time of opportunity” to “nothing good will happen in the current situation.” What is already obvious: Russian venture funds will reduce or have already reduced funding programs. Under such conditions, the volume of support for startups in 2022 will certainly decrease.

Those Russian startups that do not lose hope of entering foreign markets (and theoretically they still have such an opportunity) may be subject to sanctions during additional verification of foreign partners if the presence of people is found (or simply suspected) in their ownership or financing structure who are already under sanctions. The Asian market is opening and investors from this region are becoming more active. Many small and medium-sized businesses are forced to change foreign suppliers with whom stable ties have been established.



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