Benchmarking study on the venture capital market in the Czech Republic, Hungary  and the Netherlands

Ing. Veronika Svatoaová,Ing. Jaroslava Rajchlová

doi:10.21511/imfi.13(3-1).2016.05

Benchmarking study on the venture capital market in the Czech Republic, Hungary and the Netherlands

Ing. Veronika Svatoaová, Ing. Jaroslava Rajchlová

Open Access

https://doi.org/10.21511/imfi.13(3-1).2016.05

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Abstract

The main aim of paper is seen at two levels: the first level to assess the situation on the venture capital market in the Czech Republic based on the results of a comparative study of selected countries of European Union is the area of venture capital financing. The second level is, then, to propose measures, whose implications could increase the effectiveness of venture capital to the business sector in the Czech Republic. The main purpose of the paper is to identify internally homogeneous groups of the EU states regarding the situation on the venture capital market in the European Union Member States. The aim of this article is supported by relevant statistical data for the period 2008-2013 to assess the legislative framework of venture capital market in the Czech Republic and other selected European countries. Based on the results of cluster analysis, EU countries were identified, Hungary and the Netherlands, in which legislative conditions with venture capital market were subsequently analyzed and the results were compared with the situation in the Czech Republic. The Netherlands as a representative of the countries with developed market risk capital, Hungary as a representative of CEE countries. The problem of undeveloped VC market in the Czech Republic is not in demand for venture capital, but in its supply. Pension funds and insurance companies cannot invest more than 5% in risky assets. In the Czech Republic, there are no tax incentives to attract investors and even government programs that could complement the missing investors and support the creation of venture capital funds. This low level of venture capital usage for the development of enterprises could also be seen in misunderstanding and ignorance of this form of financing, the inability of management to prepare a business plan and to attract a potential investor, fears of administrative burdens arising from an investor and finally questionable return on investment when, for example, public offering of shares, which achieves a high appreciation, is in the Czech Republic underused. Keywords: venture capital, benchmarking, cluster analysis, Ward’s method, CEE countries, EU countries, Czech Republic, Hungary, Netherlands. JEL Classification: G32, M21

Highlights

According to the definition of the European Association for Private Equity Venture Capital with financing through venture capital refers to providing the equity capital to companies emitting no shares
The purpose of the paper is to choose states based on the use of statistical methods, which are identified as internally homogeneous groups of states of the European Union regarding the situation on the venture capital market in the Member States of the European Union and, to select those states that have higher levels of using the venture capital
The main aim of paper is seen at two levels: the first level to assess the situation on the venture capital market in the Czech Republic based on the results of a comparative study of selected countries of European Union is the area of venture capital financing

Summary

Introduction

According to the definition of the European Association for Private Equity Venture Capital (hereinafter EVCA) with financing through venture capital refers to providing the equity capital to companies emitting no shares. Venture capital providers are either private investors (Business Angels) or institutional investors (Venture Capital Funds). Their aim is an adequate return on capital invested by reference to the risk undertaken. Ing. Jaroslava Rajchlová, Ph.D., Assistant Professor at Mendel University in Brno, Faculty of Regional Development and International Studies, Department of Regional and Business Economics, Czech Republic. Ing. Veronika Svatošová, Ph.D., Assistant Professor at Mendel University in Brno, Faculty of Regional Development and International Studies, Department of Regional and Business Economics, Czech Republic

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