Can the state be a venture investor?

Framing the question

Venture investor or market architect?

In an age of climate, technological and geopolitical crises, the question is no longer whether the state should participate in the economy. It is what form of participation creates lasting value.

Can the state act as a conventional venture investor, risking public money in a portfolio of start-ups where most hypotheses fail? Or does its strength lie in another model: industrial policy, infrastructure and the delegation of strategic functions?

The state can invest in the future. That does not mean it should copy the mechanics of a private venture fund.

The experience of Russia's largest state corporations allows this question to be examined through sustainability, technological sovereignty and long-term value creation — not profit alone.

Industrial policy

Rostec: an instrument of technological sovereignty, not an investment fund

Established in 2007, the state corporation brings together more than 800 organisations in 60 regions, grouped into approximately 15 holding companies. These include Kalashnikov, High Precision Systems, KRET, United Aircraft Corporation, Russian Helicopters, KAMAZ, AvtoVAZ and Ruselectronics. Revenue exceeded RUB 4.5 trillion in 2025, while the strategy through 2036 targets more than RUB 7 trillion, with civilian products accounting for at least half.

The state remains the principal customer. Many assets were transferred to the corporation on the verge of crisis: the task was not to buy profitable businesses, but to restore enterprises and preserve critical expertise. Funding combines defence orders, civilian sales, subsidies and additional capital for strategic R&D.

Rostec is therefore better understood as an industrial policy institution responsible for recovery and development than as a venture fund. Its principal outcome is the country's ability to produce its own aircraft, engines, electronics and other critical goods. Profit matters, but does not capture the model's full value.

The internal tension is clear: recovering troubled assets takes time and resources, while commercial KPIs demand measurable results now. Yet it is precisely a long-term horizon that sustains technological sovereignty in critical industries.

A strategic function

Rosatom: a horizon measured in decades

Rosatom is a vertically integrated, full-cycle system: from uranium mining and nuclear plant construction to operation, decommissioning and waste management. Its remit also includes the nuclear icebreaker fleet, the Northern Sea Route, nuclear medicine, composites, digital products and wind power.

According to Rosatom's 2024 public report (PDF, Russian), freight traffic on the Northern Sea Route reached 37.89 million tonnes. This figure matters beyond transport volumes: it reflects the development of infrastructure designed for a multi-year horizon.

The model is distinctive because the corporation defines a substantial part of its strategic tasks itself, within a state framework. Export contracts for nuclear plant construction, fuel supplies and long-term servicing create a planning horizon unavailable to most companies.

Again, this is not conventional venture capital. It is the delegation of sovereign functions in nuclear energy, the Arctic and a global technological presence. The model works precisely because its outcomes are not judged within a single investment cycle.

Infrastructure

Russian Railways and Rosseti: value that cannot be measured by margins alone

Russian Railways is one of the world's largest transport companies and is wholly state-owned. According to the holding company's official report, its total revenue in 2024 was RUB 3.296 trillion. Tariffs are state-regulated. Projects such as the Baikal–Amur Mainline, the Eastern Rail Network and high-speed railways may struggle to generate short-term returns, yet are strategically necessary to connect the country.

Rosseti is one of the world's largest electricity grid holding companies. The group's business model centres on managing grid infrastructure and transmitting electricity. The principal task is reliable power supply, connections to new territories and infrastructure development, rather than maximising margins.

Both companies can be described as the economy's circulatory system. Their management model implements state policy within limited room for manoeuvre. Financial outcomes reflect a compromise between service affordability, regulated tariffs and large investment programmes.

A cautionary example

Rusnano: why publicly funded venture investment conflicts with the control system

Rusnano was created as a state investor in nanotechnology and high-tech projects, but faced a liquidity crisis by 2021. In 2024, the company reported settling approximately 80% of its historical bank debt, and in 2025 stated that it no longer borrows or invests at the state's expense.

Why was the original model vulnerable? It brought three different logics into conflict.

1. Venture risk versus state control. For a private portfolio, the failure of most hypotheses is part of the model. With public funds, every unsuccessful project becomes subject to public and supervisory scrutiny.
2. Debt instead of equity. State-guaranteed bonds must be serviced on schedule, whereas a venture cycle can take seven to ten years and offers no guaranteed return.
3. Ambiguous KPIs. A single organisation was expected to develop technologies, deliver financial returns, support import substitution and foster international cooperation. Conflicting goals make any outcome open to criticism.

The lesson is stark: conventional venture investment cannot simply be placed within a public budget framework without changing the rules governing risk, financing and performance assessment.

Three models

Where state participation genuinely works

Private financial-industrial groups are managed primarily to increase value and returns on capital. State holding companies exist to perform functions whose significance extends beyond an individual business.

• Industrial policy. Restoring critical assets, developing manufacturing expertise and securing technological sovereignty.
• Natural monopolies. Reliable, accessible infrastructure, connected territories and resilient essential systems.
• Strategic functions. Delegating tasks that require decades, the scale of the state and an international presence.

Profit remains an important measure of efficiency in all three models, but it is not their sole reason for existing.

A hybrid model

The state sets the framework; private capital accelerates experimentation

This distinction is fundamental for innovation ecosystems, including BIOS projects in the Moscow Innovation Cluster, as well as Metabuild and Orbital Green, developed by this article's author. The state is effective when it provides a long-term horizon, infrastructure and protection of strategic interests. Conventional venture investment remains the domain of private capital, where risk and failure are normal parts of discovery.

The future of technology requires a hybrid arrangement: the state acts as a customer, regulator and holder of strategic assets, while private funds and accelerators drive rapid experimentation.

In this model, ESG and sustainability are needed not as declarations, but as a way to measure a project's technological, social, climate and geopolitical value.