presentation venture capital

8/13/2019 Presentation Venture Capital

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EVCA defines venture capital as a subset of

private equity investments made for the launch,

early development, or expansion of a business.

Figure 2.1.1 illustrates the successive phases of

a business from its genesis and as it grows until

it is floated on a stock market and becomes afully fledged publicly owned (quoted) company.


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Venture capital differs from traditional

financing sources in that venture capital

typically:

Focuses on young, high-growth companies;

Invests equity capital, rather than debt;

Takes higher risks in exchange for potentialhigher returns;

Has a longer investment horizon than traditional

financing; Actively monitors portfolio companies via board

participation, strategic marketing, governance,and capital structure.


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Venture capital is also an active rather

than passive form of financing These investors seek to add value, in addition to capital,

to the companies in which they invest in an effort to helpthem grow and achieve a greater return on theinvestment.

This requires active involvement; almost all venturecapitalists will, at a minimum, want a seat on the boardof directors.

The primary objective of equity investors is to achieve asuperior rate of return through the eventual and timelydisposal of investments. A good investor will beconsidering potential exit strategies from the time theinvestment is first presented and investigated.


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Angel Investors or Business

angels are high net worth individual investors who seek

high returns through private investments in start-up companies.

Private investors generally are a diverse anddispersed population who made their wealththrough a variety of sources.

But the typical business angels are often former

entrepreneurs or executives who cashed outand retired early from ventures that they startedand grew into successful businesses.


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European VC industry is relatively small with its50billion of capital under management

Compared to other sectors of the European investmentfunds industry, venture capital remains a niche sector.

As figure 2.2.1 demonstrates, the venture capital sectorin Europe is small compared to the broader sector of

private equity. Within the broad range of private equity investors,

venture capitalists account for between 10% and 15%,depending on the chosen year of reference.

As at the end of 2010 there were about 1,500 private

equity managers headquartered in the European Union.


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Figure 2.2.1. Private equity and venture

capital fundraising and investments

(2003-2010)


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On global frame, situation concerning venture

capital investment is presented in figure 2.2.2.


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The European market is smaller

than the American one dedicating insufficient funds toward the financing of

innovative start-up industries.

While the United States, in the period from 2003-2010,

raised approximately131 billion into venture capitalfunds, European venture capital funds only managed toraise28 billion in this period.

In addition, between 1990 and 2005, US funds averageinvestment per company amounted to around4 million,while the European average remained at2 millionthroughout this period.

Europe needs to improve its venture capital market bycreating incentives to invest and by improving regulation.


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Private equity investments as a percentage

of GDP for Europe, CEE and selected

European countries, 2010


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Republic of Moldova is at the stage of designing

a mechanism of funding with venture capital When the private sectors development is impeded by a

reduced access to finances and a low level of absorptionof innovations and technological transfer it is necessary

the development of the legal framework on venturecapital which might become a critical catalyst forinnovation-based expansion of private sector .

Since the possibility of financing projects is still mostlybank-oriented, Moldova should alter the law regulation

that puts legal constraints to domestic investors such aspension funds, insurance companies and otherinvestment funds to take part in private equity or venturecapital financing.


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In order to improve the framework conditions for venture

capital funds and to progress towards a European venture

capital market have to act to improve, as follows:

Insure the functioning of capital market

Define the regulatory framework for venture

capital Improving the regulatory framework

Establishing of institutional investors such aspensions funds, insurance funds etc.

Reducing tax obstacles.Mutual recognition of venture capital funds

presentation venture capital

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