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Gap Analysis of Venture Capital Markets

Author

Listed:
  • Ondrej Ptacek

    (University of Economics, Faculty of Economics)

  • Bozena Kaderabkova

    (University of Economics, Faculty of Economics)

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.

Suggested Citation

  • Ondrej Ptacek & Bozena Kaderabkova, 2014. "Gap Analysis of Venture Capital Markets," Proceedings of Economics and Finance Conferences 0401730, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:0401730
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    References listed on IDEAS

    as
    1. Mike Wright, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5&6), pages 521-570.
    2. Mike, Ken Wright Robbie, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5‐6), pages 521-570, June.
    3. Robert C. Merton & André Perold, 1993. "Theory Of Risk Capital In Financial Firms," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(3), pages 16-32, September.
    4. Di Carlo, Anastasia & Kelly, Roger, 2010. "Private Equity Market Outlook," EIF Working Paper Series 2010/05, European Investment Fund (EIF).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    venture capital; asset management; private equiity; financial markets;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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