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The Volume of Venture Capital Funds of Latvia and Their Financing Sources
Anatolijs Prohorovs
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DOI:10.17265/1537-1514/2014.04.001
Anatolijs Prohorovs, Ph.D. Candidate, Managing Partner of SIA Proks capital.
The venture capital funds (VCF) financing sources of Latvia are considered in this paper. In the course of the work, a comparison was made between VCF financing sources generally used in Europe, Central and Eastern Europe (CEE) countries, and Latvia. Based on the results of questionnaire of VCF partners, an investigation of sources and structure of the capital attracted by all of the Latvian VCF was performed. In process of the investigation, the following methods were applied: questionnaire, logical constructive method, and comparative analysis. Moreover, some VCs were interviewed. As a result, it has been revealed that as little as five financing sources exist in Latvia unlike Europe, where VCF have not less than 13 financing sources, and unlike CEE countries where the funds are supported by at least eight financing sources. The average size of a VCF in Latvia is 10.8 M EUR, which constitutes 35% of that of European VCF. Among the main reasons for a small size of Latvian VCF and a small number of types (classes) of their investors, the country’s low financial appeal for VC and immaturity of some types of investors in Latvia can be mentioned. For that reason, the State has to compensate for a shortcoming of VC; as a result, the share percentage of social capital in VCF financing sources of Latvia has reached 76.2 % while all VCF of Latvia are hybrid.
venture capital fund raising, venture capital funds capital structure, venture capital funds financing sources, Latvia
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