Institutional barriers to venture capital financing: an explorative study for the case of Iran

2018 ◽  
Vol 10 (3) ◽  
pp. 409-427
Author(s):  
Saeed Shojaei ◽  
Mahmood Motavaseli ◽  
Ali Bitaab ◽  
Hasti Chitsazan ◽  
Ghanbar Mohammadi Elyasi
Keyword(s):  
Venture Capital ◽  
Credit Rating ◽  
Institutional Reforms ◽  
Institutional Barriers ◽  
Content Type ◽  
Managerial Skills ◽  
Grounded Theory Method ◽  
Capital Financing ◽  
Research Findings ◽  
Investment Process

PurposeThis paper aims to explore the barriers that constrain the venture capital (VC) financing in Iran based on the institutional theory.Design/methodology/approachTo answer the question, “How institutional barriers constrain the VC financing in Iran?”, 31 detailed interviews were conducted, and the interviewed data were analysed by using the grounded theory method.FindingsThere exist several institutional barriers (formal and informal) in different stages of the VC investment process in Iran. Major formal institutional deficiencies include lack of appropriate financial regulations, inefficacy in tax, labour, property rights, financial disclosure, bankruptcy, investor’s protection laws and regulations, lack of credit rating/scoring system, inefficacy in small and medium-sized enterprise-supporting policies and capital market underdevelopment. Moreover, there exist some informal institutional barriers such as culture of capitalism disapproval, culture of secrecy, individualistic customs and weakness of managerial skills that constrain VC activities in Iran.Research limitations/implicationsThe research findings imply that the government’s role should change from “establishment of government-sponsored VC funds” to “enforcement of institutional reforms that lead to an appropriate framework for VC investment”.Originality/valueThis paper has made three key contributions. First, it has provided comprehensive insights into how institutional barriers constrain the VC investment in a developing country. Second, a new stage-wise model is proposed for analysing the VC investment process. Third, existing knowledge about the role of both formal and informal institutions in the VC investment is extended.

Optimal design of venture capital financing contracts: the case of Portuguese, Spanish and German markets

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maria do Rosario Correia ◽  
Raquel F. Ch Meneses
Keyword(s):  
Venture Capital ◽  
Qualitative Comparative Analysis ◽  
Contract Design ◽  
Control Rights ◽  
Content Type ◽  
Convertible Securities ◽  
Mixed Support ◽  
Capital Financing ◽  
Control Right ◽  
And Control

Purpose This study aims to investigate the use of convertible securities and control rights covenants for a sample of 53 Portuguese, Spanish and German venture capital (VC) firms. Design/methodology/approach A relatively new methodology in business sciences – a fuzzy set qualitative comparative analysis – that considers both quantitative and qualitative factors is used for obtaining a solution that best fits the empirical data. Findings The results show that the use of convertible securities is affected by agency predictions, namely, the anticipated severity of double-sided moral hazard problems. On the other hand, a mixed support is provided to the agency predictions regarding the use of control right covenants. The results seem to suggest that control right covenants tend to play a different role from convertible securities in the optimization of contract design for VC-backed investments. Originality/value Existing literature on VC contract design is extended by providing a cross-border analysis to VC financing decision.

scholarly journals Empirical Analysis of Hungarian Firms According to Venture Capital Investment Criteria

2016 ◽  
Vol 9 (1) ◽  
pp. 16-32
Author(s):  
Judit Edit Futó
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Selection Process ◽  
Statistical Tests ◽  
Venture Capitalists ◽  
Venture Capital Investment ◽  
Capital Financing ◽  
Venture Capital Firms ◽  
Investment Process ◽  
Index Investment

Abstract Over the past decade the venture capital industry has become more and more prominent, not just on a global level, but in Hungary, too. Thanks to the JEREMIE Program a large number of new venture capital firms are located in our country, and therefore an investment wave has started. The aim of the paper is to sort micro- and small sized enterprises in terms of how appropriate is a venture capital financing. The main topic of the paper relates to the selection of firms for venture capital investment; therefore, in the first part of the study we briefly summarize a general venture capital investment process, highlighting both the selection process and the criteria used for selection. Then we propose 3 indexes (trustworthiness index, openness index, investment index), which we have created to help venture capitalists to decide whether the targeted enterprises are appropriate for them, or not. In the main part of the paper we provide a classification of micro- and small sized Hungarian firms based on my own survey, and we analyze what kind of relationship exists between the proposed indexes and the type of the classified firms. The result of the classification is that we identify four main firm types and, based on statistical tests, it can be said that there is no significant relationship between the trustworthiness index and the clusters, but that there are between the two other indexes and the clusters.

AssessingSukukdefaults using value-at-risk techniques

2018 ◽  
Vol 44 (6) ◽  
pp. 665-687 ◽  
Author(s):  
Nafis Alam ◽  
Muhammad Bhatti ◽  
James T.F. Wong
Keyword(s):  
At Risk ◽  
Value At Risk ◽  
Credit Rating ◽  
Secondary Market ◽  
Economic Sectors ◽  
Content Type ◽  
Rating Agencies ◽  
Bond Issuers ◽  
Research Findings ◽  
Fundamental Value

PurposeThe purpose of this paper is to investigate the default characteristics of Sukuk issues by corporate firms in Malaysia using value-at-risk (VaR) techniques over a period of 16 years from 2000 to 2015 and across nine economic sectors.Design/methodology/approachThe paper employs non-parametric and Monte Carlo simulations to estimate Sukuk defaults.FindingsThe authors analyses revealed that the VaR predictions were fairly consistent with the ratings provided by credit rating agencies, despite the limited tradability of Sukuk in the secondary market. The study was able to demonstrate that Sukuk is not riskier than conventional bonds in the Malaysian context.Research limitations/implicationsThe research findings suggested that VaR values will depend on the fundamental value of a firm based on the considerations of market, credit and operational risk. It does not rely on the type of debt instrument, whether a Sukuk or conventional bonds.Practical implicationsThe use of Sukuk along with conventional bonds as debt instruments creates opportunities for investors and bond issuers globally.Originality/valueAlthough Sukuk has generated much interest among financial market players, studies are lacking on how to predict Sukuk defaults and whether Sukuk has the same risk profile compared to conventional bonds.

Pulse and Progress of Venture Capital Financing in India: An Analytical Study

Think India ◽  
2019 ◽  
Vol 22 (3) ◽  
pp. 553-562
Author(s):  
Dr. Devarajappa S
Keyword(s):  
Venture Capital ◽  
Capital Investment ◽  
Analytical Study ◽  
Economic Empowerment ◽  
Statistical Tools ◽  
Venture Capital Investment ◽  
Secondary Sources ◽  
Current Trends ◽  
Capital Financing ◽  
Secondary Information

The Main objective of the paper is to examine the current trends and progress of the venture capital in India and the paper also highlights the concept and stages of financing of venture capital. To meet the aim objective of the study the researcher used secondary sources. The required secondary information has been collected through various articles, reports, magazines’ and websites. To examine the trends of venture capital in India, IVCA (Indian Venture Capital Association) report is used.  For the purpose of examine the data; the statistical tools like Mean, Standard Deviation, Charts and ANOVA, Correlation coefficient have been employed.   The study concludes that, the venture capital investment has been increasing in India and this is the positive indication for the country, to curb the unemployment, economic empowerment of people through maximizing startups in India

Venture Capital Financing and Firm's Investments

2008 ◽  
Author(s):  
Fabio Bertoni ◽  
Massimo G. Colombo ◽  
Annalisa Croce
Keyword(s):  
Venture Capital ◽  
Capital Financing
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