Proceedings of the 2nd Economics & Finance Conference, Vienna

GAP ANALYSIS OF VENTURE CAPITAL MARKETS

ONDREJ PTACEK, BOZENA KADERABKOVA

Abstract:

Venture capital is one of most important alternative sources of capital for early stage of enterprise development. It is largely acknowledged that there occurs a market gap in European venture capital markets as there are much more companies in search for an investor than that actually obtain investment. Some authors find this an example of a market failure in the access to finance of micro to medium sized enterprises. There are also authors saying that identification of a market gap does not automatically establish a market failure, as the investors balance both risk and potential gain. We found out that at the supply side of venture capital, the market gap is caused by risk aversion and imperfect information on future development or market acceptation of innovative products in some European countries. At the demand side, imperfect information occurs as young entrepreneurs have often limited knowledge in alternative sources of financing or low level of strategic management abilities, which again discourages potential investors.

Keywords: venture capital, asset management, private equiity, financial markets

PDF: Download