THE MANAGEMENT OF VENTURE CAPITAL AS A TYPE OF FINANCIAL RESOURCES: GOALS & OBJECTIVES

In the context of Ukraine’s integration into the world market, there is a growing interest in creating a control system for all stages of venture capital activities. The mechanism of effective management of venture activities of an enterprise should become a tool for establishing this system. The system of information flows is of great importance, which provides information to the process of making management decisions on a risky innovative project at a venture capital enterprise. The purpose of the venture business is to make a profit on the invested funds [1]. Unlike simple investment, venture capital is the most risky form of capital investment. However, if the project is successful, venture capital investment is the most profitable. Venture investment is, on the one hand, a way of financing the innovative vector of the economy, on the other, an innovative form of entrepreneurship. The main goal of venture capital financing is that the monetary capital of some entrepreneurs and the intellectual capabilities of others (original ideas or technologies) are combined in the real sector of the economy in order to bring profit to both types of entrepreneurship in a new company.

Venture investment under multi-stage incentive model based on fairness concerns

PurposeThis study explores the impact of EN's (venture entrepreneurs, simplified as EN) jealousy fairness concerns coefficient on two-stage venture capital decision-making in cases of symmetrical and asymmetrical information. It discusses the equilibrium solution of two-stage venture.Design/methodology/approachThe principal-agent model was established based on multiple periods, and differentiated contracts were established at different stages. The validity of the models and the contract was verified by numerical simulation.FindingsThe results suggest that with the increase in the EN fairness concerns coefficient, the effort level of EN decreases continuously and decreases faster in the second stage because this is the last stage. The level of VC's (venture capitalist, simplified as VC) effort declines first and then increases; that is, VC will increase the effort level when the fairness concerns coefficient increases to a certain threshold. To motivate EN to pay more effort, VC will increase the incentive to EN in the first stage. However, it will reduce the level of incentive to EN in the second stage. In the limited stage of venture investment, consider that the fairness concerns of EN do not make the profits of EN and VC achieve Pareto improvement simultaneously.Originality/valueFirst, the authors implanted fairness concerns into multi-stage venture capital and discussed the impact of fairness concerns on the efforts and returns of both parties. Second, among the influencing factors of the project output, the authors consider the bilateral efforts of EN and VC, the working capacity of EN, the initial investment scale, and the external uncertain environment.

FORMS AND METHODS OF STATE SUPPORT OF VENTURE CAPITAL: WORLD EXPERIENCE AND TRENDS

In this article the concept of the venture capital is invest-gated and its role in the system of innovative business is examined. The mechanism of venture investment is established. The features of venture financing have been determined. The article also analyzes the experience of state support for venture entrepreneurship on the example of Japan, China, Israel, the United States and the Russian Federation. Recommendations are given on the creation of a system of tax preferences in the Republic of Belarus to stimulate venture capital investments.

Investment Partnership in the realm of Other Forms of Joint Ventures Existing in Russia in comparison with US Limited Partnership

Globally the developed countries economies exist in conditions of ever-increasing competition. In recent decades, the states whose economy is based on modern technologies, the introduction of innovations and the creation of a favorable environment for their emergence has gained some advantage. Venture investment is an important component of the innovation economy, without which it is difficult to imagine the rapid development of new technologies. Under these conditions, the task of the legal systems of developed countries has become to create a legal framework for venture investment: convenient, transparent and understandable for national and international investors.In Russia, an important stage in the creation of a legal infrastructure for investment was the adoption of the Federal Law “On Investment Partnership” in 2011, designed to provide the investment community with contractual organizational and legal forms of collective investment activity, taking into account the specifics of the implementation of venture (especially risky) business projects. The Russian investment partnership is a direct analogue of the American limited partnership (limited partnership).The paper considers the main advantages of an investment partnership over other forms of collective investment activity, as well as analyzes some aspects of the regulation of investment partnerships in Russia and limited partnerships in the United States. The author concludes that an investment partnership is the optimal form of collective investment activity provided for by Russian legislation. There is no doubt that the general proximity of the construction of an investment partnership and a limited partnership, common in the United States (and other common law countries), makes an investment partnership the most attractive form of attracting foreign investment to the Russian market.

ESSENCE AND SPECIFICS OF VENTURE INVESTMENT INTO INNOVATION ACTIVITY

On the basis of the analysis of scientific approaches and practical application, the authors have concluded that venture investment of innovation activity is a type of entrepreneurship based on the ability of an entrepreneur to accumulate investments from various sources, which is focused on the practical use of technical and technological innovations that are assessed as highly profitable, and which is aimed at fulfilling scientific and technical projects that have not been tested in practice, as well as at improving existing ones in order to exercise intellectual property rights and make a profit and (or) other effect (benefits). It has been noted that the analysis of the essence of venture investment of innovation activity at the current stage of the development of the National Innovation System, suggests that inter-temporal changes of public investment growth, which should act as an institutional magnet, are much greater than the dynamics of private investment. One of the key problems of the modern Ukrainian model of the development of venture industry, which is implemented at the state level, is the imbalance between public and private investments, which must be promptly eliminated. The temporary lack of private investments in Ukraine has been so far successfully replaced by public investments, but it is necessary to create a stable market for both private Ukrainian and foreign venture capital for the effective implementation of the global strategy of building an innovative economy. The authors have substantiated the position that the process of venture investment into innovation activity consists of two stages: 1) invention and development of the object of venture investment and 2) implementation and realization of the obtained result into production, services sector, etc. The specified stages can be combined or considered separately depending on the specialization and (or) specifics of the venture company. An approach to the recognition of two most common forms of venture investment into innovation activity has gained the development. These forms are: 1) investment into corporate capital of companies and 2) investment loans. However, both of these forms are often used simultaneously in practice. The essence of venture investment into innovation activity abroad compared to Ukraine, is the identity of the ultimate purpose of venture and innovative entrepreneurship, which is to make a profit through the industrial introduction of advanced technologies (materials, products, production methods, etc.), despite the fact that methods and means to achieve this purpose are different. Thus, sources of investment of venture entrepreneurship are diversified in different countries from purely private (through specially created structures) to a combination of private and public investment resources. It has been substantiated that venture investments are currently the most affordable alternative to loan financing. One can confidently state that this form of investment is the most profitable for the recipient company, because the previous experience of investors always has a positive effect on a venture company. Keywords: venture entrepreneurship, innovation activity, an investor, investment, venture capital, corporate capital. JEL Classification D92, E22 Formulas: 0; fig.: 0; tabl.: 0; bibl.: 11.

Problematic issues of determining the parties of relations of venture investment into innovation activities

Problem setting. Nowadays, given that public relations, as a rule, are ahead of the development of legislation that does not have time to adapt and modernize to new economic relationships, such relations do not receive adequate legal provision. Relations on venture investment into innovation activities are no exception. It is related both to the lack of a mechanism for legal provision, as well as scientific and practical best practice of its basic categories, one of which is the parties of the relevant legal relations. Analysis of recent researches and publications. The current state of the research on the selected issues indicates the imperfection of the current legislation and the lack of legal doctrine in the context of determining the parties of relations of venture investment into innovation activities. The doctrinal works of domestic and foreign experts, although contain analysis and reasoned conclusions about the participants of innovation relations, but do not provide unambiguous answer to the question on their parties. Target of research. The purpose of the research is to outline the parties of relations of venture investment into innovation activities. Article’s main body. The venture capital market is represented by two sectors: formal (venture funds) and informal (individual investors). Studying the essence and specifics of venture entrepreneurship is due to the fact that different countries have their own specifics of its implementation, and, accordingly, different parties of the relevant relations. It is mainly applied to organizational and legal forms of legal entities. At the same time, the implementation of corporate venture investments provides a significant number of new opportunities for a corporations, related to the reduction of costs for the purchase of new technologies, reduction of risks from the development of technologies, etc. The parties of venture investment into innovation activities can be represented by institutional investors, which should be understood as financial institutions that attract a large number of investors to combine them into a single money pool with the subsequent placement at the securities market and (or) investing into real estate. Thus, one can distinguish two groups of institutional investors depending on the subject matter of activity: universal investors (commercial banks, professional participants of securities market) and specialized investors (venture funds, incorporated investment funds, asset management companies, private pension funds). Conclusions and prospects for the development. There is currently no clear definition of organizational and legal forms of venture funds, because they are created as legal entities (corporate funds) or a set of assets (share funds) according to the current legislation. Venture funds should be created and should operate exclusively as legal entities – corporate investment funds. It provides certain guarantees to their individual investors, since the legislator establishes special conditions for the participation of individuals in venture funds. Organizational and legal forms of legal entities in the field of venture entrepreneurship should be a joint stock company or a limited liability company. The entities of venture investment into innovation activities are: 1) entities that bring the object of intellectual property to the status of an innovative product; and 2) entities that implement innovations and / or produce innovative products.

Clean-tech Venture Capital Investment in the United States, 1995-2020

This paper studies venture capital investment in the United States, with an emphasis on the Clean-Technology industries. The Clean-Technology industries encompass ventures that compete in markets with products and services that explicitly take environmental issues into account. This paper explores the importance of macroeconomics variables, aggregate venture capital investment on Clean-Technology and investment backed by venture capital. Quarterly data of capital venture investment and number of deals are used for the period 1995-2020. The results indicate that Clean-Tech investment offers investors possibilities for some degree of diversification.

Due Diligence and Risk Alleviation in Innovative Ventures—An Alternative Investment Model from Islamic Finance

Risk is a big concern for anyone contemplating investing in new, especially innovative ventures. However, if successful, the returns can be extraordinary, serving as an impetus for many venture capitalists to provide greater funding. Still, many new ventures never see the end of the tunnel, and success stories are scant. The venture capital market is growing, yet many investors feel on edge when investing in new and innovative ventures. This paper is based on field survey data to evaluate the importance of risk and return components of an alternative venture investment approach called diminishing Musharakah (DM). DM has roots in Islamic modes of investment that are more suited for ventures with a higher risk profile. This paper focuses on four key ingredients, i.e., due diligence (DD), flexibility (Flex), moral hazard reduction (MHR), and risk reduction (RR) inherent in this mode of investment. All these components contribute towards the end goal of any investment, i.e., value enhancement (VE). DM is based on investment modes approved by Islamic law, called Shariah, and Islamic jurisprudence, called Fiqh. The analysis and the paper’s results show that the proposed model is perceived as flexible enough to accommodate a wide variety of investment possibilities. The model carries the potential to encourage venture investment through various stages of growth of a venture. The findings are based on original perception data through a field survey across a broad spectrum of banking users who were interested in alternative and Islamic modes of investment. Findings and analysis of the survey data strongly support our connotations. We propose that the Shariah-based investment model presented in this paper will bring a vast new market into play, i.e., the Islamic money market, thus providing greater venture financing possibilities. As a result, we hope that the number of successful venture investment projects will significantly increase over time as we put the proposed investment model into use.