2022 | StartupBlink View the Global Startup Map p. 145 Last year, Russia boasted 16 cities in the top 1000. This year, it has only 9, as multiple ranked Russian cities have dropped out of the global top 1000. Startup Ecosystem Overview Russia has been trying to overcome the perception of a closed startup ecosystem and open itself to the international markets for a long time. Unfortunately, the war in Ukraine has further deepened divides with the West. Amid a complicated geopolitical situation, Russia’s startup ecosystems face the possibility of becoming even more isolated. In addition, recent events increase the risk of severe brain drain of Russia’s most talented entrepreneurs and IT professionals. Building a Russian startup targeting international sales is becoming increasingly difficult with its disconnection from the global financial system due to sanctions on the country and its banking system. However, we should also note a few advantages of the Russian startup ecosystem. Firstly, Russia has a big enough market to allow its startup founders to create substantial revenue by building high quality technology exclusively for Russian buyers. The advantages can already be seen, as the latest international isolation reduces competition from global solutions that are no longer available, giving Russian startups vast opportunities of taking domestic market share on all aspects of the economy from their International counterparts. It should also be noted that the Russian economy so far has been surprisingly resilient. Russia’s currency is holding up, and its trade deficit is now shrinking as its imports are reducing, and energy exports maintained statiblity. This, however, can only push the local startup ecosystem to reach a certain distance, as the local economy is not on the scale of other closed ecosystems like China. The amount of technical talent in Russia is second to none, but the challenge has always been making sure that this talent stays in Russia. Some of the founders of Telegram, Google, Revolut, and Ethereum were born in Russia, showing the lost potential when more ambitious Russian entrepreneurs move to other startup ecosystems. Some massively successful Russian startups and unicorns have transitioned their official headquarters to other countries while keeping most of their operations and development in Russia. It has not been easy to be recognized as a Russian global startup. Despite the current situation, we should also note that the public sector in Russia has been successful in building highly involved corporate accelerators, led by the Skolkovo center, an outstanding large scale tech center. We can only hope the situation goes back to normal soon, as we are not convinced that an isolated, closed garden Russian ecosystem is a good outcome for the global startup ecosystem. Russia is a textbook case of massive but unrealized potential due to events beyond the control of its talented entrepreneurs.