The Internationalization of Venture Capital: Challenges and Opportunities

Foresight - Russia, Vol. 5, No. 4, pp. 66-76, 2011

Higher School of Economics Research Paper Forthcoming

11 Pages Posted: 20 Jun 2013

See all articles by Thomas Gstraunthaler

Thomas Gstraunthaler

National Research University Higher School of Economics

Galina Sagieva

National Research University Higher School of Economics

Higher School of Economics RPS Submitter

National Research University Higher School of Economics

Date Written: 2011

Abstract

This paper attempts to summarize and systematize the landscape of the global venture capital industry. It presents major basic business models and investment strategies, assesses the contribution of venture capital (VC) to economic growth, and the incentives and constraints for VC’s development, and it identifies research gaps in this area.

Venture capital is often regarded as the only source of support for start-ups, particularly for those in high-tech innovative sectors. The authors explore the reasons for this. In contrast to more traditional investors, VCs provide targeted investment, and they maintain a long-term strategic focus. Financial capital is only one benefit they provide for entrepreneurs. They provide industry knowledge and social capital, often vital for success. Also, venture capital serves as an intermediation device in finding further finance. These benefits focus the attention of public administration in venture capital and pro-investment policies to build strength and assure future competitiveness. The authors conclude that governments can only do so much to spur creative thinking and entrepreneurial activities. Their support is best placed in education, oriented toward a culture which rewards competitive and entrepreneurial thinking. Results of such policy mature slowly but they can be vital.

In conclusion, the authors point to the need to introduce new and refined research strategies promoting VC. One key focus to study venture capital is to understand how the industry itself is developing through its own drive. It would help to examine comparatively a country’s initiatives, which would allow policy makers to understand where the industry is going and how best to support or participate in growth. It would also allow distinguishing among segments of the venture capital market. Finally, further analysis of the VC industry should be conducted through the prism of its internationalization.

Note: Downloadable document is in Russian.

Keywords: venture funding, venture capital, innovative company, innovation startup, capital market, venture investment, venture capitalist, venture fund, regional pattern

JEL Classification: 016

Suggested Citation

Gstraunthaler, Thomas and Sagieva, Galina and RPS Submitter, Higher School of Economics, The Internationalization of Venture Capital: Challenges and Opportunities (2011). Foresight - Russia, Vol. 5, No. 4, pp. 66-76, 2011 ; Higher School of Economics Research Paper Forthcoming. Available at SSRN: https://ssrn.com/abstract=2269129

Thomas Gstraunthaler (Contact Author)

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Galina Sagieva

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Higher School of Economics RPS Submitter

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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