TITLE:
Venture Capital as a Support Instrument for Start-Ups in Latvia
AUTHORS:
Ieva Kokaine, Inese Kokaine, Līga Ritere, Henrijs Kaļķis
KEYWORDS:
Venture Capital, Start-Ups, Support Instruments, Smart Money
JOURNAL NAME:
Open Access Library Journal,
Vol.9 No.7,
July
28,
2022
ABSTRACT: Venture capital has become a hot topic in every economy today, as it has focused on companies with excellent growth potential and a need for large financial resources. Also in Latvia, 13 new venture capital funds have been registered for 2020, with a total fund capital of €294 million, while €172 million were uninvested. Financial resources are available in Latvia, but the question is why are there so many uninvested funds? Is it because new companies did not choose this support instrument, or because venture capital funds cannot find suitable companies to invest in? The aim of the study is to investigate the functioning of venture capital and its support for start-ups in Latvia and to develop directions for the improvement of venture capital as a support instrument. The monographic and computational methods, qualitative and quantitative analysis were used. The results of the study indicate that venture capital in Latvia provides only financial support and is difficult to access for start-ups due to the lack of technology experts who are able to understand the business model and invest in start-ups, as well as the low level of risk for venture capital investors in Latvia, which affects start-ups’ access to venture capital funds. Moreover, the venture capital industry in Latvia is still in a nascent stage, with no privately funded venture capital funds and 46% of venture capital fund funding still coming from public funds.