I am writing a business novel, idea of which has been occupying my mind for a while. I wanted to make it not only entertaining and interesting, but also useful. Useful for a wide range of readers, who are interested in bright personalities, ability to «bend the world for themselves», secrets of successful career building and personal life. Useful for business people – the self-scarifying propulsions of progress. The majority of what I have gathered through my business experience is being implemented in limited amounts into the novel’s plot. I hope that my experience in business, experiences of my colleagues, partners, clients, and of course respectable competitors written about in an artistic form will be in demand among entrepreneurs. Feelings and emotions of the main characters in their personal lives correlated with their actions and motives in business seem interesting to me. Not a small portion of life connected with entrepreneurship largely defines personal life. Is it good? Is it right? Everyone has to make a decision. And each and every one has to build his/her life. But life, divided in two parts – personal and business, often conflicting destinies- has to be created as a harmonized whole, otherwise it won’t be happy… The main character of the novel, a thinking entrepreneur, re-thought his past at a ripe age and completely changed his life. I am convinced, dear friends, that we can all do it, because in the modern world we all have endless opportunities. I will gradually introduce you with some drafts of the novel. I am thankful in advance for your critical, but kind comments.

Truly yours,
Konstantin Y. Smolentsev
http://smolentsev.com

To sell something useless

The hero of the legendary "Prostakvashino" Uncle Fyodor had said: "To sell something useless, you must first buy something useless". Obviously, for now to sell and buy is all that investors can do for innovative companies. And the profit went to the original shareholders, who got rid of the IPO of part of the shares.

In the summer of 2010 at the Moscow Interbank Currency Exchange (MICEX) one after another two innovative companies were placed – «DIOD» and «Russian Navigation Technologies» (RNT). According to Dionis Gordin, a board member and a managing director of investment activities of the Russian Corporation of Nanotechnologies (SC «Rusnano "), by the end of the year a dozen more innovative companies will enter MICEX. During September-October IPO of foreign organizations are expected on the Russian market.

Recently the government has been putting a lot of effort in trying to attract investors to innovative projects, and not only Russian and not only through the stock exchange. For example, there is interest in foreign venture investors. On May 25^th the President Dmitri Medvedev met with heads of American funds. During the meeting the President said that Russia is lacking venture capital. According to him, currently there are 20 active venture funds in Russia with a total capital volume of approximately $2 billion, which in comparison to USA and other countries is extremely negligible. However, foreign investors hardly showed any interest.

Market for innovators

Talks about creating «Russian NASDAQ» have been going for quite some time now. In January 2007 a trading platform RTS START has been launched, which is designed for small and medium capital companies. Securities of issuers included in RTS START segment are simultaneously allowed to be traded on RTS. Currently RTS START has 5 securities: shares of the paper mill «Kommunar», Kosogor metallurgy factory, «Elektrozinc» factory, Neftekamskiy automobile factory, and «SiGMA» company.

In July 2009 a Market of Innovations and Investment (MII) has been created on MICEX. The main goal of this joint with «Rusnano» project has become the creation of a mechanism to attract funds to high-tech companies – from financing innovative business on early stages to its release to a public offering. The first IPO in the new sector was held in late 2009 – then the Institute of Human Stem Cells (IHSC) entered the stock market. In June 2010 «Diod» has released its shares on the stock market, and in July of the same year – RNT.

However, placement of a small or medium capital company on the MICEX could have been done in 2007 when the Sector of Innovative and Growing Companies (IGC) was created. The First issuer of the IGC Sector has become a closed-end investment fund of particularly risky (venture) investments «FINAM – Information Technologies» (FINAM-IT). As well, through this sector three more companies entered the stock exchange: IT company «Armada», Television channel «O2TV», and NEKK, a producer of chemicals. By the way, in July 2010 «Armad» has transferred its shares from IGC Sector to the main list of securities in MICEX. According to the General Director of the SE MICEX Konstantin Korishchenko, it signifies «the growth of corporate management, as well as achieving maturity of the company’s business».

Ready for the stock exchange?

But is it too soon for Russian innovative companies to enter a stock exchange? Usually there is a phase of venture investing before IPO. Among those innovative companies that have already entered the stock exchange through the MII MICEX platform, only RNT has went through this path. Many experts believe that currently Russia has almost no projects ready to enter the stock exchange. It doesn’t mean that there are no good innovative companies. The thing is that its’ shareholders do not want to allow anyone else to manage them. The same companies that, on the contrary, are willing to sell their shares, as a rule, don’t have a high managerial level and perspective business ideas.

Konstantin Smolentsev, Chairman of the Board of Directors, IC «SMOLENTSEV & Partners» has told Bankir.Ru that relying on the work experience with Russian companies of innovative business and analysis of the world experience, it is too soon to enter IPO for many Russian innovators. Main factors are the following: lack of experience of corporate management, lack of a history of public borrowing, low management level, poorly reasoned financial prognoses, and several other serious reasons.

Venture financing helps to solve these problems, even perhaps, not one round, but throughout 3-5 years. A breakdown of a project into stages in terms of attracting funding allow for a business more intensely, simultaneously building up experience. The market value of a business with such path to IPO is much higher, which makes IPO more attractive for large players on the financial market.

…

We don’t need experience

According to Konstnatin Smolentsev market of shares of innovative companies is quite risky by definition. It is especially true for Russia where this segment does not have fully formed parameters that allow you to look confidently into their future. These are highly risky assets. Therefore, minority shareholders have a chance to make money on these shares and having the risk of losing. No one can give a reliable forecast at the time of placement, as then, during operations on the secondary market. The volume is too small of the mentioned segment of shares, and market threats and restrictions are too significant.

But for venture funds innovative companies are attractive assets. Many, especially foreign players have experience working with such organizations, therefore, there is an opportunity to share that experience. When venture investing, a business does not get many minority «passive» shareholders, but one of a small group of qualifies partners, who are interested and are actively influencing the formation of a successful business.

That is why for the minority shareholders, and for large investors, as well as for the stock market itself it is better to initially develop a business with the help of «angel» or venture investments, and only then enter IPO. Then there are more chances to earn profit for the minority shareholders, and most importantly, it is likely to continue in the long term.

…

To make conclusions for the companies placed for business, even preliminary, is too early. Any qualitative assessment can be carried out only in long-term, when there is understandable efficiency of management actions, successful realization of the claimed business-strategy, and investment program of each concrete company. According to Andrei Sapunov, currently the following is obvious: placed issuers on the stock exchange have become more competitive. A greater transparency of business significantly increases appeal of public companies for partners and contractors in comparison to non-public competitors. Given that RNT, DIOD, and IHSC are oriented on strengthening capacity of international presence, openness of their business would be a powerful driver of growth of operational, and consequently, financial performance in the long term.

Tatyana Lanshina, Bankir.Ru

09/06/2010

http://bankir.ru/publication/article/6114321

Konstantin Y. Smolentsev
http://smolentsev.com

The International rating agency Fitch Ratings has affirmed the long term Issuer Default Rating of the Russian Federation at the level of BBB and has changed the prognosis from «stable» to «positive», according to the agency.

It has also been noted that the weakest moments for sovereignty ratings of Russia are low quality management, lacks in the institutional sphere, corruption, lack of a business climate, slowing down investments, diversification and growth, as well as dependence on prices for raw goods (and, as a consequence, on global economy) and history of high and relatively volatile inflation.

Possibly I’m not the only one trying to attract attention of the heads of Russian business, several political parties, well, and the country itself to the weak sides of the Russian economy. And lacks in an institutional sphere, and corruption are at least talked about constantly, whereas other key aspects such as low quality management and lacks in business climate are not paid attention to. Is the misconception so great that these aspects seem less important? Or that they can fix themselves? Or is there a deeper reason?? Either way, management of the Russian government and business will stay on the same level as today, until formation of the business climate will be consciously formed, Russia won’t have high ratings, venture and other capitals won’t come to the country. I often have to deal with heads of foreign businesses and venture funds, in particular. The most frequently heard question/argument is for careful relations with Russia – the level of management qualification of the heads is too low, and the risks of corporate management are too big!

What and when are we going to do for these questions not to appear?

And what should happen to come to understand the importance of these factors for the future of Russia?

Konstantin Y. Smolentsev
http://smolentsev.com

Wide expansions of Siberia… It is a region of courageous people, magnificent taiga, endless rivers and lakes, region with its rich and in most tragic history.

By destiny sometime ago I have ended up in Gornopravdinsk village. And one kind man has acquainted me with the priest of a local Orthodox church – p. Aleksander. I, in turn, have acquainted Priest Aleksandr with my colleague. For the little time that Aleksandr has been the Priest in Gornopravdinsk village a lot of things have positively changed in the life of the village. The main thing being spirituality.

Only the Ascension Temple of God is still all ruins. And there is no more churches within tens and hundreds of taiga kilometers.

According to archives, in 1755 in the Filinskoe village (Gornopravdinsk) a temple was built and blessed in honor of God’s ascension. In 1835 the old building was torn down and the parishioners built a stone one floored church. In February of 1933 the church was closed down. Until November 29^th, 2009 the temple was used for a bakery.

Christ Resurrection Cathedral has been recognized as an architectural monument.

In September 1989, a small community of the faithful parishioners is reviving. On June 13, 2008, according to the decision of the Parish Council, for the position Rector of the Christ Resurrection Cathedral priest Aleksander Menzelintsev was appointed.

We decided to figure out how to help the reconstruction. On our little charity, it can’t be done. But if everyone who sympathizes to spiritual re-birth of Siberia will contribute, then there would be a great temple. For centuries churches have been built this way in Russia. That is why we decided to create a website http://www.voznesenie-church.ru/, which can guide you through the history of the parish, learn about its current life, communicate with the Priest, and if you wish – donate for the temple’s reconstruction. Because “those who give, those are to receive”.

We truly hope that the destiny of a Siberian Ascension Temple of God will not leave you indifferent!

Konstantin Y. Smolentsev

Gregory Popov

In annotations and advertisements of Ayn Rand’s (Alisa Rosenbaum) bestseller «Atlas Shrugged» there was much said about the importance of this work. I believe that the novel is much deeper than it was claimed to be. It is a novel about the human kind and humanity. It’s a philosophical novel. About family. About understanding. About a man and a woman. About sex. It’s a novel about a world view. A novel about a position in this world, about the everyday problem of choice. A novel important for a thinking person of any age and very important for the formation of a young personality. A novel about the world of Alisa Rand. A novel about my world and the world of every person. Without exceptions.

Konstantin Y. Smolentsev
http://smolentsev.com/