“TekhUspekh” rating 2017


 

Warning to third parties, who have access to this Methodology
This Methodology was created by PricewaterhouseCoopers Consulting LLC, hereinafter referred to as PwC, for Russian Venture Company OJSC, hereinafter referred to as RVC to make a rating of fast-growing high technology Russian companies within the “TekhUspekh” rating.
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METHODOLOGY


Rating organizer is the "Russian Venture Company" OJSC (RVC OJSC).

Developer of the Rating methodology is "PricewaterhouseCoopers Consulting" LLC (PwC).

This methodology was agreed with and approved by the Rating Organizer.

SUMMARY


“TekhUspekh” rating (hereinafter referred to as the "Rating") is aimed at identification of fast-growing Russian companies operating in the field of high technologies.

Based on the results of the Rating, a rating of the fast-growing high technology companies will be made that will consider the following indicators: size of the company, rate of the revenues growth, development dynamics and technology level of the manufactured products or services rendered, level of demand for the products on the export markets.

Rating Methodology was developed in 2013 and was modified in further years. The latest modifications were made in 2017. The international experience of PwC in such research, experience of creation of TekhUspekh ratings in 2012 - 2016, was used to develop the rating methodology. Besides, analysis of latest and most respected international research and ratings of the innovation companies was made, including: The Most Innovative Companies 2012 (The Boston Consulting Group), The World's Most Innovative Companies (Forbes), TOP 100 Global Innovators 2012 (Thompson Reuters), The Global Innovation 1000 study of R&D spending (Booz&Co), Technology Fast 50 – Technology, Media, Telecom 2012 (Deloitte), How Companies Approach Innovation (McKinsey Global Survey).

In the course of the analysis, the main criteria to evaluate the level of success and technology of the company, were created, such as: amount and average yearly revenue growth ratio, availability of new of significantly improved products or services, expenses for R&D and technology innovations, intellectual property owned by the company, investments in innovation projects and acquisition of the high technology business.

When forming criteria to determine the level of high technology of companies, their products or services, approaches applied by the Institute of Statistic Studies and Economics of Knowledge (ISSEK), US National Science Foundation, OECD (Organisation for Economic Co-Operation and Development) and Eurostat were considered: Manual for selection and analysis of innovation information (Oslo Manual).

Based on the examined approaches to the creation of ratings and research, the methodology for making the TekhUspekh rating-2017 was developed, its summary is specified below.

Companies satisfying the following qualification requirements are invited to participate in the Rating:

1. Revenue of the company (group of companies) for 2016 is from RUB 100 million to 30 billion;
Based on the revenue level, the companies are divided into 3 sub-categories:
– Small (from RUB100 million to 800 million);
– Medium (from RUB 800 million to 2 billion);
– Large (from RUB 2 billion to 3 billion).

2. Cumulative Annual Growth Rate (CAGR) for the last 5 years (2012, 2013, 2014, 2015 and 2016):
– For small companies – at least 20%;
– For medium companies – at least 15%;
– For large companies with the turnover up to RUB 10 billion – at least 12%;
– For large companies with the turnover over RUB 10 billion – at least 10%.

3. Over the last 5 years (2012, 2013, 2014, 2015, 2016), there have been no more than two periods of revenue decrease by more than 10%;

4. Over the last 5 years (2012, 2013, 2014, 2015, 2016), the company launched at least one new or significantly improved product/service on the Russian market, that was developed based on their own or purchased R&D results;

5. Share of revenue from the sales of such new product/service is on average for the last 3 years (2014, 2015, 2016):
– For small and medium size companies – at least 30%
– For large companies with the turnover up to RUB 10 billion– at least 25%;
– For large companies with the turnover over RUB 10 billion– at least 20%.

6. Average expenses for R&D for 3 years (2014, 2015, 2016) are not less than 5% from revenue;

7. Average expenses for technology innovations for 3 years (2014, 2015, 2016) are not less than 10% from revenue;

8. Minimum age of the company — 4 years.

For any of the above criteria, deviation of not more than 10% to the downside is accepted. If downside deviation is more than 10%, the criterion will be deemed as not satisfied.

How the rating is formed


Companies to form the rating are selected through submission of filled applications by the participants: the companies fill in the application form based on which the compliance of the participants with the qualification requirements is determined.

The copies of the following documents are attached to the application: Balance sheets, Profit and loss statement, or in case of peculiarities of the accounting policy of the company, their analogues filled in according to the form provided by the Rating organizers.

Accuracy of information specified in the applications is verified by the Rating Operator based on the documents provided by the company and public sources.

Application questions are divided into quantitative and qualitative.

The qualitative criteria are as follows: company revenue growth rate, expenses for R&D and technology innovations, revenue from sale of new products/services.

Qualitative parameters reflecting specifics of innovation activity of the company and products manufactured by it are as follows: innovativeness and novelty of the products/services, intellectual property owned by the company. Qualitative parameters are evaluated by the experts.

Based on the results of applications survey, the participating companies that satisfy the qualification requirements, will be ranked depending on the revenue size for 2016 and divided into three sub-categories based on the criteria specified above.

Formation of the "Primary Rating"


"Primary Rating" is formed in every sub-category of the participants (large, medium and small companies). To rank the companies within the framework of the "Primary rating", three criteria are used: revenue growth rate for the last 3 years (2014, 2015 and 2016), innovativeness level and export potential.

Score for the revenue growth rate are granted based on the results of simple ranking of the companies in every group of participants according to the individual revenue growth values.

Score for innovativeness is calculated as the weighted-average value of evaluations made for parameters of share of new products in the revenue (10%), relative share of expenses for R&D in the revenue (20%), relative share of expenses for technology innovations in the revenue (20%) and expert evaluation (50%).

Score for export potential criteria is calculated using the following criteria:
– share of exports in the company revenue (50%);
– expert evaluation of the export potential of the company based on the company’s operational performance (50%).

Ranking results using these criteria are weighted based on the scales set up by the methodology and based on the calculation results, the "Primary Rating" is derived from every company sub-category.

Winners of the TekhUspekh rating of the fast-growing high technology companies are determined in the following categories:

1. Top 5 Best companies in every of 3 subcategories – formed based on the Total rating in every sub-category.

2. Top-15 fast-growing companies – formed on the basis the overall rating of companies from all sub-categories having the highest revenue growth rate.

3. Top-15 companies with the highest export potential – formed on the basis the overall rating for the export potential criteria.

4. Top-15 innovation companies – formed on the basis of the overall rating of the companies from all sub-categories considering the expert evaluations received and the following criteria: share of new products in the revenue, expenses for R&D and technology innovations. Every criterion and expert evaluation are assigned a weight coefficient.

Quantitative information provided by the companies for the above criteria are divided into the intervals and evaluated according to the scale from 0 to 100 points. Answers related to the qualitative parameters are evaluated by the experts according to the scale from 0 to 10 points and are reduced to the 100-point system through multiplication by 10. If one company is evaluated by several experts within the framework of a single industry, the average value of all points scored to the company will be calculated. Points received by the company are multiplied by the corresponding weight coefficient. Sum of the received values is the Total score, based on which the list of Top-15 innovation companies is formed.

Apart from the specified nominations, Growth Leaders - companies that were included in the “TekhUspekh” rating at least 5 times, will be highlighted separately.

Expert council


Expert pool is formed based on the industries to which the companies participating in the Rating belong.

During the analysis, companies are grouped by industries. At least 2 experts are allocated to every industry that evaluate qualitative criteria reflecting specifics of innovation activity of the company and technological level of the products manufactured by it. Not more than 10 companies are assigned to the industry expert for evaluation.

The Expert Council includes professionals having deep practical knowledge in their industry with the experience in working and successful business development (private or corporate) in the relevant industry. They may also be scientists making research in the field of innovation, experts in this field as well as specialists in economic expertise and organization of innovation project financing.

Members of the Expert Council evaluate technological level of the products manufactured by companies participating in the Rating and their innovativeness.

Members of the Expert Council have the right, by the collective decision, to accept a company for participation in the rating that, based on the results of application examination, doesn’t meet one or two declared criteria, but nevertheless is a high technology company whose potential should be highlighted. When making a decision of accepting a company, the Expert Council may request from such companies an explanatory note disclosing the reasons for non-achievement of these values.

Besides, by a resolution of the Expert Council, the companies which satisfy the qualification requirements, but received a low rating from the Members of the Expert Council in relation to innovativeness/high technology may be excluded from the rating.

Membership of the Expert Council is an open information source and will be published on the Rating website as well as in any other public sources reporting on this Rating.

Procedure and terms of the Rating


Any company that submitted the filled application to the contact person of the Rating Operator before September 15 may apply for participation in the Rating. The filled application should be signed by the company director.

A participant sends to the Rating an application with all specified documents attached (Balance Sheet and Profit and Loss Statement, or their analogues according to the form provided by the Rating organisers). Financial information included in the application and documents attached thereto is confidential and will be available exclusively to the Rating Operator and Organiser. Rating Operator analyses information from the received applications. If any information is missing or any sections are filled in incorrectly, the Rating Operator will get in touch with the company contact person to clarify information. The analysed application information will then be forwarded to the Expert Council for evaluation as a consolidated form that doesn't contain the initial financial information. Afterwards, the answers will be evaluated and the "Primary rating" formed.

If the application is submitted by the group of related companies, financial information should be relevant for the whole group. The Expert Council will also evaluate the whole group.

Rating Operator contact information:
info@ratingtechup.ru