Economically disengage from Russian oppression, but do so thoughtfully

The imperative to divest from Russia should not be turned into an ethnic witch hunt

The Russian aggression unfolding in Ukraine is shocking, disgusting and an assault on the very freedoms that allow the biotech industry to thrive: freedom to innovate, freedom to collaborate and freedom to question. But beyond the imperative for our industry to immediately economically disengage with Russian oligarchs and state actors, there is another way to weaken Putin’s hand.

Showing Russians they can find career success, support and recognition outside Russia is how the regime collapses from the inside; painting Russian expats with the same brush as oligarchs will only backfire.

The danger in failing to do this is that we risk creating a class of disgruntled enablers ripe for Putin to exploit.

It is essential that we remove all legitimacy of the perpetrators of this heinous assault on the Ukrainian people and, indeed, complete economic disengagement is a right and just response. However, in our speed to show our solidarity and abhorrence, this should not be turned into an ethnic witch hunt.

Those of us with a Russian background left the country because of the corruption and political oppression stifling every opportunity. Talented people who want to innovate and expand the cutting edge of science in advanced therapies, whilst keeping their consciences clean, do not have a place in Putin’s Russia.

How we got here

As we seek a robust and sustainable way to formulate a response from our industry, it is vital we look to the roots of the problem.

For a select few, more specifically, Putin’s cronies and enablers among the oligarchs, Russia has been a land of opportunity. As of 2021, Russia had 117 billionaires. Out of the top 50, five made their fortunes in tech. Most of the rest gained their fortunes because of a privatization windfall in the noughties and cemented them through their loyalty to Putin.

For years, the political opposition in Russia, of which I have been a long-term and proud supporter, has called for sanctions against these oligarchs and detailed scrutiny of the systemic corruption surrounding them. Alexei Navalny, Russia’s jailed opposition leader, has vocally called for tougher action on global corruption. However, these calls fell on deaf ears, with Western governments, regulators, and financial markets branding it an ‘internal Russian problem’.

They have let Putin’s friends play, spreading their influence and lies, and we are now reaping the gruesome consequences. Brandishing tens of billions of dollars, oligarchs gained access to the best and the brightest of the global finance and investment industry — including, of course, the top venture capital funds and the innovative technologies they generate.

Innovation exiles

Disenchanted by the endemic corruption and oppression in their country, many Russians have left their homeland over the past 15 years. A lot of these people have come from an outstanding science and engineering tradition and enriched the global tech and life sciences industries. Thriving in a free, competitive environment, some of them became highly successful business leaders and investors and created well-known companies and funds.

Our own fund, 4BIO Capital, was born out of the very freedoms the West has come to embody. We are an international team with presence across three continents, yet some of our team members are ethnic Ukrainian or Russian.

Our background and understanding of the real cost of Putin’s regime and oligarchic corruption that sustains it, led us to build rigorous evaluation processes of money coming out of Russia and we consistently refused to work with anyone who could be linked back to Putin’s regime, including the oligarchs and the state actors.

How should we move forward?

Based on this knowledge and experience, what are the concrete steps the industry could take to ensure it disengages from Putin’s silent economic army?

First, do not take investment from oligarchs. Not all of them have been sanctioned; conversely, not all of them are Putin supporters or owe their fortunes to him. Look at Russia’s Forbes top 10: only Pavel Durov, the tech entrepreneur behind Telegram, earned his fortune outside of natural resources and is outside Putin’s circle. Do you see your potential LP or investor anywhere near the top 50 of the Russian Forbes List? Do your diligence. Unless they are a verified global entrepreneur or financier, walk away.

Second, do not invest in Russia. With investment comes transfer of technology and ideas. As much as it pains us, we have never invested in Russia, and advise every venture fund against that. Do not feed the beast.

Third, do not engage with state actors. Most of these will be covered by sanctions now, but they have previously masked their engagement successfully through intermediaries. For years, the venture capital industry concealed their LP base — the move to disengage from investors with state actor backing will not be successful unless there is systematically greater transparency.

Fourth, do not turn this into an ethnic witch hunt. Rejecting all ethnic Russians is not only wrong, but counterproductive. The disengagement and isolation of the Russian industry will not be successful without a whole-hearted buy-in from the global community of the Russian expats and exiles. Many of these are your peers — tech and biotech entrepreneurs, employees or leaders in top industry consulting firms, directors in major banks, as well as outstanding academics — who have Russian names and Russian backgrounds. They have left Russia for a reason and have no desire to support Putin’s regime.

Talent seeking to escape the oppression in Russia should not be seen only on ethnic grounds. If the talented, ambitious people craving freedom and opportunity leave Russia, both our industry and our long-term security will be better off.

I strongly believe that it is our job as global entrepreneurs, investors and citizens of the free world to ensure that we cut off the perpetrators of the unprovoked war in Ukraine. I do however caution that we cannot lump every Russian in with them — or else risk enabling Putin through alienating those who genuinely oppose the criminal aggression in Ukraine and seek to contribute their talents to the global community. We need to be able to inspire the next generation of Russians that they can leave and they can be successful outside Russia, weakening Putin’s regime even further.

Dima Kuzmin is a Managing Partner of 4BIO Capital, a fund investing solely in advanced therapies from headquarters in London, and an Assistant Professor of Medicine (Adjunct) at Yale University. The views in this article are personal and might not represent the views of the institutions Kuzmin is affiliated with.