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A venture capital model for transitioning economies: The case of Poland

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  • Richard T. Bliss

Abstract

The venture capital investment process is examined in a transitioning economy. The move from a planned economy to a free-market system confronts venture capitalists and entrepreneurs with an environment not typically encountered in developed countries. This may include high inflation, immature capital markets, a nascent legal system, and a dearth of managerial talent. Using interviews and follow-up questionnaires with a sample of Polish venture capital firms in 1995, the research yields two important results. The first is a VC decision-making model for transitioning economies that diverges from previous research in two areas. First, the privatization of state-owned enterprises is an important part of deal origination and many venture capitalists actively solicit deals from targeted industries. Second, firm-specific screens are rarely part of the process owing to the lack of depth in most industry and geographic segments. The second result is a modified set of investment criteria that reflect some of the unique difficulties venture capitalists face when evaluating deals in transitioning economies. Several differences between their criteria and those used by venture capitalists in developed countries are identified. The implications of these results for venture capital firms are discussed briefly.

Suggested Citation

  • Richard T. Bliss, 1999. "A venture capital model for transitioning economies: The case of Poland," Venture Capital, Taylor & Francis Journals, vol. 1(3), pages 241-257, July.
    • Handle: RePEc:taf:veecee:v:1:y:1999:i:3:p:241-257
    DOI: 10.1080/136910699295884
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    Cited by:

    1. Karsai, Judit, 2006. "Kockázati tőke európai szemmel. A kockázati- és magántőkeipar másfél évtizedes fejlődése Magyarországon és Kelet-Közép-Európában [Venture capital through European eyes. The development of venture a," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1023-1051.
    2. Rafał Morawczyński, 2020. "Venture Capitalists’ Investment Criteria in Poland: Entrepreneurial Opportunities, Entrepreneurs, and Founding Teams," Administrative Sciences, MDPI, vol. 10(4), pages 1-30, October.
    3. Darek Klonowski, 2006. "Local Laws and Venture Capital Contracting in Transition Economies: Evidence from Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 18(3), pages 327-343.
    4. Kerstin Bernoth & Roberta Colavecchio & Magdolna Sass, 2010. "Drivers of Private Equity Investment in CEE and Western European Countries," Discussion Papers of DIW Berlin 1002, DIW Berlin, German Institute for Economic Research.
    5. Karsai, Judit, 2022. "A kelet-közép-európai startupok romló kilátásai a nemzetközi kockázatitőke-piacon [Eastern European start-ups looking for international venture capital]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 1009-1030.
    6. Darek Klonowski, 2005. "The Evolution of the Venture Capital Industry in Transition Economies: The Case of Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 17(3), pages 331-348.
    7. Judit Karsai, 2012. "Development of the Hungarian Venture Capital and Private Equity Industry over the Past Two Decades," CERS-IE WORKING PAPERS 1201, Institute of Economics, Centre for Economic and Regional Studies.
    8. repec:diw:diwfin:diwfin03050 is not listed on IDEAS
    9. Alexandra Moritz & Walter Diegel & Joern Block & Christian Fisch, 2022. "VC investors’ venture screening: the role of the decision maker’s education and experience," Journal of Business Economics, Springer, vol. 92(1), pages 27-63, January.
    10. Qing Lu & Peter Hwang, 2010. "The impact of liability of foreignness on international venture capital firms in Singapore," Asia Pacific Journal of Management, Springer, vol. 27(1), pages 81-97, March.
    11. Groh, Alexander P., 2009. "Private equity in emerging markets," IESE Research Papers D/779, IESE Business School.

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