US-based semiconductor company Plastic Logic is continuing in its talks with a $5bn Russia state-backed venture capital company investing in nanotechnology and might set up a factory in the country either in St Petersburg or outside Moscow.
Russian Corporation of Nanotechnologies (Rusnano) has been in talks with corporate venturing-backed Plastic Logic over the summer about it taking a minority stake and deal sources said these discussions were still "continuing well".
Rusnano only takes minority stakes in third parties and in June set up Rusnano Capital, its venture capital operation in Switzerland, to bring in external limited partners to invest in Russian companies or bring foreign businesses to the country.
One source said it had still to be decided whether Plastic Logic would set up in St Petersburg or outside Russia’s capital, Moscow, where the government is investing heavily to create Skolkovo, its equivalent of the US’s Silicon Valley.
However, the source said it was looking for investment to develop its unique semiconductor, which is made of plastic rather than silicon in order to cut production costs by about 80%. Despite the savings, the cost of a commercial chip production facility requires heavy investment and the public stock markets were unwilling to provide as they had in an earlier period, he added.
The lack of a public fundraising has coincided with the delay in the launch of its first product, the Que (pictured) after Apple launched its iPad and forced Plastic Logic to wait until its second generation device could be ready, expected to be next year.
Founded in the UK before moving its head quarters to the US, Plastic Logic has raised more than $200m, including $50m two years ago, from corporate venturing units BASF Venture Capital, Intel Capital, Dow Venture Capital, Mitsubishi’s Nanotech Partners and Siemens Venture Capital and venture capital and other financial investors Oak Investment Partners, Amadeus Capital Partners, Merifin Capital, PolyTechnos Venture Partners, Quest for Growth, Tudor Investment and Bank of America.
Russia has been investing heavily to bring nanotechnology skills to the country.
Last week, UK-based venture capital firm I2BF and VTB Capital, the venture capital division of Russian banking group VTB, won a joint mandate to manage a planned $100m fund to invest in nanotechnology in the Russian Federation and the Republic of Kazakhstan.
Rusnano and Kazyna Capital Management, a $1.5bn subsidiary of Kazakh sovereign wealth fund Samruk-Kazyna, both agreed to invest $25m each in the Russian-Kazakhstan Nanotechnology Venture Fund with the remainder to come from private investors.
Last month, industrial research conglomerate Battelle, through its Singapore-based 360ip intellectual property corporate venturing unit, joined up with Rusnano to invest $50m each in an Asian Nanotechnology Fund, while Singapore’s Economic Development Board (EDB) is providing $20m in grants for local businesses.
At least half the Asian fund will invest in Russia-based projects.