Attraction of investments into venture capital and private equity funds of Latvia
2013
Prohorovs, A., Riga International School of Economics and Business Administration, Riga (Latvia)
The paper deals with the issues of attracting investments into venture capital and private equity funds in Latvia. The aim of the research is to assess changes in the venture capital and private equity industry and evaluate its condition in the post-crisis period. The period of analysis is the years 2004-2012, focusing on processing information for the period 2010-2012. The issues regarding the demand for and supply of venture capital and private equity, the specialisation of funds, and the changes in their number are investigated. The author has performed an analysis of the reasons why some funds continue their operation after the crisis. Furthermore, the positions of Central and East European countries in the Global venture capital and private equity Country Attractiveness Index before the crisis and in 2012 and the possible effect of ''cross-border factor'' on the attractiveness of Central and East European countries for venture capital and private equity are analysed in the paper. Based on the present research, one can draw a general conclusion that the venture capital and private equity industry in Latvia suffered substantial losses during the crisis in terms of both quantity and quality. There are imbalances between the demand for and supply of investments in the venture capital and private equity market. The demand does not match the supply regarding financial instruments and size of investments as well as the number of ''prepared'' projects for investing is small. It especially relates to venture capital projects. Owing to the existence of factors that repel investors, additional instruments of government support are needed for boosting venture capital, including developing the infrastructure of venture capital.
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