Venture Capital in Brazil: Early Experience of Emerging Company Investment Funds
International Journal of Entrepreneurship and Inovation Management IJEIM, v. 6, n. 4/5, pp. 341-355, 2006
16 Pages Posted: 3 May 2012
Date Written: May 3, 2012
This article examines the recent Brazilian experience with the creation of venture capital funds which facilitate institutional investor participation, the Emerging Company Investment Funds. Such funds were authorized only since 1995. Thus any evaluation of their performance may be premature. 20 such funds existed at the end of 2003. They have raised only slightly more than US $100 million to date and have invested in 74 firms. To date the funds have had, on balance, slightly negative nominal returns. This behavior to date is hardly encouraging for venture capital financing in Brazil. Organizational factors that have affected accumulated annualized fund returns to date positively include fund size, the of management fee, and, negatively the success fee. The 71% of fund returns not explained by structural factors is attributed to differences in portfolio selection.
Keywords: Venture capital, Brazil, emerging companies, return on investment
JEL Classification: G24, G10
Suggested Citation: Suggested Citation