Influx of Russian Talent Offers a Boost to U.S. Tech Sector
THE STREET: For those whose job is to look out for the next Sergey Brin, interesting times could be ahead.
The economic crisis afflicting Russia may bring an unexpected boost to the U.S. tech sector, as developers and tech entrepreneurs from Google (GOOG) founder Brin’s country of birth migrate to Silicon Valley and other innovation hubs – and away from economic and political instability in Vladimir Putin’s Russia.
The falling rouble, which has lost almost 40% of its value against the dollar since the start of 2014, coupled with political turmoil over Russia’s involvement in conflict in neighboring Ukraine, has led many of its brightest minds to consider emigration, with the U.S. a favored destination.
“Much of the conversation I’ve had with Russians has been ‘how can we get over to Silicon Valley,'” said Bill Reichert, Managing Director of Garage Technology Ventures and a long-time investor in Russian tech.
Overall, more Russians left the country in 2014 than in any other year since 1999, with the same trend noted both by seasoned investors in Russian tech and by startup entrepreneurs themselves.
“I know five or eight companies who are going or have already gone,” says Anton Gladkoborodov, founder of Moscow-based video-sharing platform Coub, which has opened an office in New York. They include Luka, a restaurant recommendation app which last month became the first Russian company to successfully apply to the powerful U.S. tech start-up incubation firm Y-Combinator, and Hopes and Fears, a lifestyle website founded in Moscow, but which began publishing in English out of an office in New York in January.
Gladkoborodov believes that, with investment money all but dried up at home, Russian companies with ambitions to become global players have been forced to look abroad.
“When you as a Russian company speak to American VCs it’s really strange – they never invest in you, they look at you very skeptically,” he says. “There’s the issue of whether you can ever make a successful product for the U.S. market while located in Russia. If you go to the U.S., it’s a lot easier.”
Beyond business needs, political uncertainty is driving Russians to the U.S.
“I have two American friends with technology companies employing a number of programmers in Russia. In both cases, based on political events, they’ve moved their developer teams overseas, to the U.S.,” said Bill Browder, founder of Hermitage Capital Management and a noted critic of Russian president Vladimir Putin.