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Two days in Russia's Kremlin Valley: Can government create startup innovation?

The Skolkovo Startup Village sits about an hour's drive outside Moscow, in a flat-lying countryside of farmland, pine forest and inactive building sites. The surrounding area looks like someone took a large area of Surrey and decided to build a town from scratch, out of concrete. The Abramovich family has significant property and land investments in the area. They own an expansive golf course, and under their curation modern, gated Dachas have sprung up around the old town of Skolkovo to cater for oligarchs and Russia's growing middle class, who are fleeing Moscow one by one in their black BMWs.

As you drive into the startup village, the road has the feel of the approach to a stately manor. Manicured trees and grass verges stretch along the side of the road, but before long this gives way to a landscape of security checkpoints and razor wire. There are three checkpoints to entry: two police, and one army. At the last checkpoint, four Russian soldiers in urban camouflage waved us through. Over the trees, the bleached, dilapidated tower blocks of the Moscow suburbs rise and fall like mountains in the snow.

The Skolkovo open day takes on the aesthetic of a festival like Glastonbury, or Budapest's immensely popular Sziget. The grass is scattered with beanbags, stalls are made of hay bales, and there are slightly disorientating primary-coloured sculptures of farm animals watching impassively from the verges. One cow sculpture has two heads, one on each end. Another, two rears.

There are coloured flags snapping in the wind, and shipping containers piled three-high bear the Skolkovo logo: Sk, like an element on the periodic table. A quadrocopter assault course took up one side of the compound, and huge plastic topiary Sk logos invited visitors to spray paint on them.

The playful, anarchic aesthetic is misleading, though: this is Russian officialdom through and through, as Prime Minister and former President Dmitry Medvedev's appearance on the second day demonstrated. Moscow power-broker Viktor Vekselberg was also in attendance. Photographers followed the foreign journalists everywhere, taking snaps of us as we lounged on the beanbags, a sound guy from Russian television holding a boom mic over our heads as we queued for coffee. Helicopters routinely passed overhead.

The centrepiece of the village is the Hypercube, a 5-storey sustainable-style building that houses all the startups resident in Skolkovo. It's an intense space, where startups of all varieties share office space and cross-pollinate ideas. Uniformed police watch from the rooftop, occasionally taking photographs and pointing down into the crowd.

A recently-built but unopened building known only as Matrix, a 14-storey glass and steel trapezoid tower block sits opposite the Hypercube. Inside, in a large, airy atrium, is a giant matroshka Russian doll, the purpose and meaning of which is obscure. There was a large cartoonish matroshka awning hung down the side.

One speaker, Vasily Gatov, told me that with Skolkovo the Russian government is trying to kick-start the same culture of success that led to the unique atmosphere of California's Silicon Valley.

"Russia has a lot of smart people, and a lot of tech entrepreneurs," Mikhail told me. "Not as many as in the US, but more than in Europe. What we lack, I think, is the feeling of a gold rush that they had in California – that critical mass of success stories. In California people tell each other about their neighbour who invested one dollar and got 100 back – that's what we need in Russia. We have success stories like Yandex, sure – but not that story of the one guy working away at something that becomes a brilliant success, and that's what I hope Skolkova will help with."

But can this organic proliferation of success stories be replicated artificially? Startups involved in Skolkovo pay absolutely no corporation tax, a scheme for which the government has placed a 10-year limit. There are also whole rafts of cushy grant programmes, and the startup village provides all kinds of support for startups on their journey from concept to product. The Russian government is investing hard in the area, with 500 billion roubles (£9 billion) to be fed to Skolkovo over the next 6 years - so much so that one startup owner told me that people sometimes call it "Kremlin Valley".

"Entrepreneurship can't be taught in universities," one speaker told me, but Skolkovo is aiming to be absolutely that. The campus-like feel is underlied by a huge accommodation complex called "Skolkovo nuclear", under construction on the approach to the village. This will one day be a community of 20,000 people, if the Russian government is to be believed. A gated community of creativity and innovation.

This atmosphere is fostered at the Skolkovo conference with "visionary sessions" and keynotes from a wide variety of speakers set to pounding techno video game-style beats.

The event's Russian government connections were again underlined by a much-anticipated appearance from Viktor Vekselberg, who is, depending on which reports you believe, either the wealthiest man in Russia, or the third wealthiest, and the world's largest collector of Fabergé eggs. He is close to the Kremlin, having overseen projects to modernise the Russian economy.

"There's a common feeling that there is no demand for innovation in Russia," Vekselberg told a packed-out amphitheatre, "that we're at rock bottom and it can't get any worse. But I'm absolutely convinced that the world today is set up in such a way that we have enormous potential for innovation in Russia."

"I think if there's something in you that tells you that you have to succeed, I think that aura, that energy, will bring people to your cause," he said, to a round of rapturous applause.

Prime Minister Dmitry Medvedev also arrived to give a short speech and tour the grounds, surrounded by Russian state TV and secret service agents. One tactical armed officer followed close behind him as he toured the stands, wielding a large machine gun.

"No matter what changes in the budget occur," the Prime Minister said, "I want you to know that we will always support Skolkovo."

Is Russia's Skolkovo startup village a bold experiment in creating innovation from nothing, or an expensive black hole? A cow with two heads, or two behinds?

Perhaps at this point, only time will tell.

ITProPortal will soon be visiting Silicon Valley, where we'll compare the startup communities in the United States and Russia.

Which will come out on top? Stay tuned to find out more.