— Alexey, in 2021, the Era Investment Fund was established in the PSB group, the main task of which was to support and scale promising developments in the field of military technologies. How has the work of the foundation changed since the beginning of its work?
— The work of the foundation was quickly reconfigured to meet the current requests of the Ministry of Defense of the Russian Federation. In the first months, the issue arose of the operational production and supply of unmanned aerial vehicles to the area of the SVO. In response to this challenge, the fund has developed a special mechanism for accelerated financing of UAV projects, which allows you to allocate money in record time — up to one week.
By the end of the year, we plan to put several thousand drones of various types on our territory: reconnaissance, reconnaissance-strike, kamikaze, aircraft type. The search for projects in this area continues, the demand for UAVs from the Ministry of Defense of the Russian Federation remains high.
With the active development of drones, there is a need for operator training. With the support of the foundation, a multifunctional virtual reality simulator "Sky-22" was created, which contains more than 25 training modules. The simulator helps to practice the skills of payload drop, control in difficult weather conditions, and escape from under the dome of electronic warfare. Several dozen of these simulators have already been delivered to the CBO zone. The completion of the training complex and equipping it with new modules takes place together with the active fighters of the SVO.
Another area that also required accelerated development is communication systems. The fund's portfolio already includes a project for the production of high-power antennas that provide fast data transmission in the frequency ranges of 11 GHz and 13 GHz simultaneously. It is important to increase the relevant production facilities and competencies for the development of such complexes — our team is ready to help in this. In total, during its work, the fund has financed more than 15 projects totaling 1.5 billion rubles.
— With the beginning of the SVO, initiative groups began to appear, often without even a legal entity, but developing the product needed here and now — such "military startups of the SVO period". Has the military technology market grown due to their appearance?
— We believe that a new market has formed. A lot of different players came out on it — engineering teams, individuals. Drone alone has become a huge separate niche in the Russian military technology market.
— Are there more people among such startups who want to help the country or earn money?
— There are both of them.
— What does the Era Foundation offer developers and how does it choose them?
— The Fund provides up to 200 million rubles in the format of both equity financing and debt financing on a repayment basis. The requirements are simple: the first is the availability of a prototype or laboratory prototype, the second is the compliance of the project with the interests of the Ministry of Defense of the Russian Federation, the third is economic stability, ensuring the repayment of money to the fund.
The selection process is structured as follows: initiators come with an application to the fund, we help to form a basic financial business model, prepare a term sheet (a document with the terms and conditions of a potential business agreement — approx. TASS), then we go to the investment committee. After that, we conduct financial, tax, and technological due diligence (the procedure for compiling an objective view of the investment object — approx. TASS), on the basis of which we make an assessment of the business. And we invest. Usually, the period for receiving funds takes from one to two weeks for revolving financing and from three to six months for investment financing.
— At what stage are they eliminated the most?
— As a rule, before reaching the first investment committee. Even before the committee, we ensure the interaction of developers with the Ministry of Defense of the Russian Federation in order to conduct basic tests of the product, evaluate its applicability together with the military, because first of all we focus on meeting the needs of the Russian army.
— We have heard from various developers that "the foundation literally took hold of the hand, brought it to the Ministry of Defense of the Russian Federation and thus launched the project."
— There is such a concept — smart money. Any investor should bring to the project not just money, but competence. This is how we approach the work of the foundation.
First, we help the initiators to find a customer, conduct tests, and competently submit the product. Secondly, we offer management competencies.
In addition, each project needs a business model with clear revenues and expenses, a promotion scheme and a service. A business is a business that must have a plan and a certain degree of sustainability in terms of processes. We also help projects acquire and implement this competence in corporate logic.
— Are the projects supported by the Era Foundation paying off?
— All our projects are profitable and returnable. It is clear that the venture capital market is always about risk investments, but nevertheless our strategy allows us to return money. We almost immediately give the initiators an understanding of whether there will be demand from the customer, this helps to reduce risks.
— Are these projects always implemented in the Russian circuit?
— Always. Now — always. We have already demonstrated our products to foreign delegations at the Army-2023 international military-technical forum, and I can say that they are very interested in Russian developments. But now our priority is to meet the needs of the Ministry of Defense of the Russian Federation.
— So you don't assess the export potential at the moment?
— Of course, we are tracking it, but we do not put it into the financial model. Based on the mandate of our investment fund, we are working in the interests of the Russian military department. But if you think about it, it can work like this: you are a developer, you make a good product and deliver it to your country. The army proves the effectiveness of your product. After that, the export appears in a very short period of time. This is a global scheme that works the same way everywhere.
— Will it be the same with the developments of the SVO period?
— I think everything will be faster. After all, the problem of setting up exports is not worth it.
— If we try to roughly estimate the new military technology market in the Russian Federation, how many billions of rubles is it in the future?
— In my understanding, it's hundreds of billions. If we take not specific directions, but the military as a whole.
— Where will the market move next?
— Sooner or later, any market moves towards an oligopoly when the number of players decreases and a leader appears. On the horizon of two to five years, products that will occupy leadership positions in certain segments will already be visible.
— Can you name some of them?
— All the projects we work with are unique, everyone has a chance to become a leader in their segment. We are ready to support the initiators in this endeavor.
