Private military developments in Russia, nicknamed the people's defense industry, continue to appear and develop. Yesterday's "garage workers" complicate production and turn into serious technology companies. Andrey Bezrukov, Chairman of the Board of the Center for Unmanned Systems and Technologies, told TASS how their organization brought together 200 military startups and solves their problems, bringing them to the world level
— Andrey, when was the ANO "Center for Unmanned Systems and Technologies" (CBST) created and for what purposes?
— We started our activities to support the front in 2022. Back then, each of our team worked in other fields: someone in business, someone at universities, someone in public service. We quickly went from supplying equipment to creating our own high-tech products. We got a lot of bumps, but we managed to create several successful products. And a group of like-minded people began to form around us, which today has turned into a patriotic professional community uniting more than 200 high-tech companies.
This is not the defense industry and not the state defense industry (military-industrial complex — approx. TASS) in the classical sense of the word. These are rather technological startups, but with military specifics, while having typical startup problems: from attracting investments to scaling production, testing ideas, hypotheses, and finding teams to solve specific tasks.
Therefore, the first global goal of our association is to help the state build an effective policy of supporting innovations in the field of military technology and national security, to make this policy so effective that the glory of Russian weapons continues at a new technological turn.
And the applied goal is to unite all those in Russia who are engaged in defense technologies in the form of small, small and medium—sized private design bureaus and companies, and help them in their difficult activities.
— The Popular Front and, for example, Technopolis Era provide support to new players in the military technology market. What is your special feature?
— I identify four main functions. Firstly, the CBST is a hotline. We have a consultant assigned to each company who deals with solving startup problems. Starting with the fact that components were purchased in one place, but they stopped selling there and you need to find and meet the original price. Ending with the search for competencies, combat testing or laboratory testing, and so on. In fact, calls are received every hour from the entire array of residents.
Secondly, we are an investment consultant. We have a stable network of investment partners: the Era and Borey funds, a number of private Russian funds, and the Foundation for Advanced Research. Also, business angels are individuals who also invest in such projects. All of the above use our expertise, because investing in such startups is a risky business.
Third, foundations and public organizations purchase mass—produced products. In fact, the period of its technological relevance is limited, from my point of view, to about three months. Product updates are constantly happening, so one of the most important tasks is to provide our projects with up-to-date information about what is currently in demand.
Fourth, we are one of the most serious organizations in this field, which carries out a full cycle of tests. For example, for laboratory tests of mock—up samples, we use the largest Moscow university sites, laboratories with anechoic cameras, oscilloscopes and other equipment. We conduct tests directly on the line of contact, at military training grounds. There are also tests for customers. When a customer buys a large series of products from small technology companies, they are concerned about quality, so selective or continuous testing of these batches is also our task. I would like to emphasize that this is free testing, both for developers and for customers. We are a non—profit organization.
— How do the CBST resident companies interact with each other?
— There are two main scenarios. The first is horizontal cooperation, when there is a manufacturer of the product (conventionally, a quadcopter), and those who produce components — frames, batteries, flight controllers, and so on. Here, the CBST plays the role of an integrator, providing testing not only of products, but also of components.
I have a table with a list of manufacturers of components for electronic warfare, copters and other products, and consumers. I demand that I have an up-to-date status on a weekly basis: shown, tested, offered, bought. We are not a marketplace, of course, in the classical sense, but nevertheless we are a service with recommendations of the best components for Russian defense startups.
The second scenario is the integration of independent solutions into a single complex. We are currently undergoing combat testing of a reconnaissance and strike complex project, which consists of three separate parts: a detection system, a laser targeting system and a defeat system. These teams worked individually, achieved some success, and now we are integrating them. Integration involves defining the format of data transmission, defining interaction tactics, and packaging this into a single solution. All this is also our job.
Unified innovation system
— You mentioned business angels. Are there many individuals interested in investing in such projects?
— There are many of them, and they are often unexpected people. There are a lot of graduates of leading technical universities, many successful entrepreneurs. Perhaps because it is to them that the teams come for expertise, for mass production, and they begin to delve into it, but I think that these are primarily all patriotic people.
— Patriotism is certainly important, but how promising are investments in terms of return on investment?
— I think it's very promising. In general, when we did a retrospective of innovation systems, Russian and foreign, we drew attention to the fact that in Russia the civilian segment of the innovation ecosystem was often isolated from the military due to the historically developed features of the national economy of both the USSR and Russia.
If we emphasized that the defense industry is here, and this is "civilian IT", then in the [United] States it is always a single complex, which caused discussions and discussions, which at this historical stage were reduced solely to supporting this kind of investment. If we look at the largest foreign venture capital funds, then a few years ago, those who were passionate about the ESG agenda (ecology, social policy and corporate governance) moved to investing in Military Tech and Defense Tech startups. We can list — these are the leading gurus of Silicon Valley. The founders of Oculus and PayPal have created what are now well-known, classic successful military tech startups — Palantir and Anduril, products that are now being tested in Ukraine as a testing ground.
— If this is promising, will there be more specialized investment funds?
— It will definitely happen. Our partners and I are discussing the creation of such a fund that would invest in such startups at an early stage. We are at a fairly advanced stage of discussing this idea with a number of large industrial players who are interested in these technologies, and with a number of institutional financial investors.
— What problems does the fact that historically we have civil innovations separately and defense innovations separately create? What do we have to overcome in terms of legislation, image, and concepts?
— I would like to start by saying that the people who have been leading security policy in Russia for the last ten years have been engaged in supporting and developing innovations. Dmitry Anatolyevich Medvedev is a fashion for venture investments, IT. He was at the origin of the creation of the Council for Economic Modernization and Innovative Development of Russia. Andrey Belousov — technological independence and sovereignty, forcing state corporations to innovate, forming the concept of small technology companies that will now develop. It seems that this division, which we talked about, will gradually disappear. We really hope so.
What problems are there now? Firstly, it is quite difficult for startups to gain access to current tasks in the field of national security. I believe that having access to the formulation of the task is even more important than having access to government money and a government order. Now there are mechanisms for allowing the startup community to address current issues.
Second. When we talk about investments, it is very important for an investor to see a business model that, as they say, converges successfully and gives a return on invested funds. In the case of working with the defense industry, until recently it was the case that a startup has the opportunity to sell technology or, moreover, products only directly to a government customer. This is due to the large bureaucracy and rationing of the domestic economy in military production. But among other things, there are other forms of interaction between state defense customers and such startups, when money is invested and issued in a lightweight format.
I mentioned small technology companies (MTCs). The MTK registry is being formed now, there are technological leadership projects, among which there is no national security direction. From my point of view, this is bad, it should appear there, and we are initiating such work.
The third. Development institutions. From my point of view, it is necessary to adjust the development institutions to focus on solving the tasks of national defense and security. Now we either do not have such a focus at all, or, as in one of the leading Russian state development institutions that supports startups, there is a direct ban on granting grants to enterprises and companies that deal with military and dual technologies. Apparently, it is necessary to point this out and initiate changes.
There are also positive developments. Just a few days ago, with the support of United Russia, the State Duma and the Federation Council adopted a law on the appearance of tax benefits in the military technopolis Era — on profits, on a single social tax and a number of others. It is signed by the president. This has not happened before and, from my point of view, this is a big step forward, showing the government's commitment to support this area.
— The gurus of Silicon Valley, as you say, have already switched to Defense Tech. What can we say about Skolkovo?
— We are cooperating with Skolkovo, we have created a separate structure called the Cluster of Special Technologies. We have agreed that we recommend our successful startups to obtain residency. Several dozen of our companies have already gained access to preferential tax treatment for profits, property, VAT, reduction of single insurance premiums — in general, all the wide possibilities of Skolkovo grant support. Naturally, we are talking about dual-use startups. In this case, "dual" means not only defense, but also civilian.
There are more than 4 thousand companies in Skolkovo, some of which have solutions in demand in the field of national security. Many of them already have some experience working with such customers and topics. Even more companies want to get such an experience, but they do not know where to start and how to build it correctly, they do not know who to go to. We are such a single window.
In addition to the subject of our discussion, there are also technologies in the field of nutrition — the military market of sukhpai is huge, and it is now non-technological. Pharmacology — wound healing, recovery, and so on. A wide range of technologies that are not directly related to this topic. Here we are ready to pave the way for startups.
Time of the organizers
— The market for private military technologies is developing rapidly. What points of growth would you identify?
— If we are talking about growth points, then, oddly enough, they are more organizational than technological.
You asked about technological niches, and we see them in the often-listed list of breakthrough or end-to-end technologies. These are, of course, artificial intelligence, machine vision, sensors, quantum technologies — quantum navigation, quantum encryption, quantum computing. I think this is the stack that needs to be emphasized. In our country, these technologies have been supported over the past few years, there are good foundations, laboratories and specialists.
It seems to me that the point of growth for all of us is rather organizational. Companies, military technology startups — two years ago they were engaged in fast, "garage" large-scale assembly. Now they are overgrown with quite a serious development around them.
Even if you take a copter, you need to import software, make your own guidance system (this is artificial intelligence). Therefore, we need to find a laboratory that does this. Or import batteries — here you need to find chemists.
It turns out that the competencies for this are in leading universities, for example, at MIPT. All the laboratories and engineers who have been doing this kind of thing, often just because it's interesting, have gained real demand. From my point of view, the point of growth is the involvement of universities in the activity of defense startups.
— What are the flagship products of the Center for Unmanned Systems and Technologies?
— I would not like to single out anyone separately. We take our partner units out monthly to try out products and get feedback.
From what was carried last time and handed over, the "Edge" product. In one device there is a radio communication system and a secure smartphone: it works with a portable spectrum analyzer [radio frequencies] with an antenna. It is possible to work individually or as part of a group. To study the "radio weather", to book the frequencies at which drone operators will work. To form a secure, encrypted mesh network (a type of network in which each device can communicate with other nodes directly without a central router - approx. TASS) on an extended section of the front to transmit data and exchange information. An interesting, creative thing that went into a small series.
We support and promote stationary night surveillance cameras without infrared illumination, which can work in a group to protect objects. They themselves are not visible to the enemy in any way. They don't shine, but they process the video signal inside themselves — you can see it like in the daytime. The Starlink search and detection systems, which work both from copters and from other devices, have proven themselves quite well, and we are refining them. Laser targeting systems [are being promoted]. There is our famous Krasnopol, a high—precision projectile. We have a similar development: a copter highlights with a laser, and an impact UAV flies out to this illumination and destroys the object.
— How many of your residents have entered the State Defense Order (GOZ)?
— Of course, we have such companies, but there are few of them, and I think it's rather good. Because GOZ implies serial production, quality, a guarantee of the value of the product price for a fairly long time, support, service, operation and responsibility for compliance with these parameters.
To grow up to all this, you need to go a long way. There are companies that already have a similar or similar culture of development and production, documentation and other internal processes. By the way, we also see our important role in the company's growing up to this production culture.
On the other hand, as a representative of 200 military technology startups, I believe that access to opportunities to work with GOZ and options for working with GOZ and with its financing should be different and flexible. We have developed and are discussing a list of possible options.
— One of the classic ways for a startup to succeed is to sell it to a major market player. As if there were no high-profile mergers in the sphere of our defense industry? The complexity of the existing defense policy?
— I have such examples, but they are few. In general, you are right, in a situation where there is a legally stipulated rationing of the economy of a military-industrial enterprise and there is a profit margin, it is quite difficult to generate free cash flow from this profit margin in order to buy a team or buy a startup, technology and integrate them entirely into the existing economy of the defense industry enterprise. This, I think, is one of the key difficulties.
But this creates a market for talented people, that is, it is profitable not to buy the whole company, but to take the team and employ it. That's basically what happened. This is what hinders investors, because the investor says: why would I invest if then everyone is "stolen"? Of course, it all needs to be embroidered, changed and modernized.
— The sales market for defense products is very extensive, but when the goals and objectives of a special military operation are fulfilled, will the demand for the created technologies remain? How interesting are they to foreign partners?
— The interest is huge. Moreover, there are substantive negotiations, discussions and, in general, familiarization of foreign interested parties with what is available, what can be tried. There are such dialogues, I think that at the beginning of next year we will surprise you with the ideas of several international events. You are right to say that some other market is needed, our market will become insufficient at some point.
— Is Russia currently setting global trends in the field of defense startups?
— Today, just like our opponent, we are the best and most understanding technological core in the world, familiar with practice and problems and, most importantly, with how to formulate tasks and how to solve them.
— We are now at such a historical moment that the classic monitoring of competitors is a full—fledged intelligence. Do you have such competencies?
— We have a team of people who are engaged in OSINT, open source intelligence. And not only for open ones. We distribute digests among decision makers. I know several other centers with civic roots, and we all share this information. We are very interested in information about what technologies and supplies are being discussed. In general, often all this beauty that they show in practice turns out to be not so efficient and vulnerable. But this is quite an interesting competition for engineering teams, so, of course, we are conducting technological intelligence.
On the other hand, we know that from the side of the direct enemy, at least 36 large state and non-state organizations are engaged in technological intelligence of what is happening here in Russia. Not to mention that we have about 1.5 thousand companies that work against us. We have 200 of them in the CBST perimeter, but I believe that technologically and ideologically we keep parity.
