Capital Investment Process Research Articles

Navigating the Startup Landscape: The Social Impact of Venture Capital

Over the past few decades, venture capital has become increasingly popular as an effective financing tool for high-risk start-ups compared to traditional financial instruments. A combination of scientific, technical, economic, environmental and social aspects is leading to positive developments in venture capital investment. As more and more venture capital is invested in startups, less and less attention is paid by investors to the social aspects of investing. The main goal of venture capitalists is to make profits in the long run. The purpose of the study was to analyze the social impact of venture capital in startups and its relationship with the economic impact of the investment. In order to achieve the research objective, the method of systematic literature review was identified as the most appropriate method according to the previously established inclusion criteria. The results of the study showed that the main aspect that is determinant in the venture capital investment process is the logic followed by investors at different institutional levels. The analysis analyzed and compared the logic that pursues the financial goals of the activity and the logic that pursues the social goals of the investors and the startup team. As a result of the study, it was possible to establish that venture capitalists have a contradiction between the commercial logic and the social logic of the startup's functioning. It was found that this aspect is predetermined by institutional aspects such as mission, values, management models and decision logics. The results of this study have both practical and scientific significance. Although in modern conditions it is possible to achieve success if measures to promote sustainable functioning are implemented comprehensively, touching social, environmental and economic aspects at the same time. The scientific significance of this study is to better understand the relationship between economic and social aspects of venture capital for start-ups. The practical relevance of this study is that for startup founders, the results of this study can be a basis for properly designing institutional aspects to better attract investors.

Venture Capital and Strategic Development of Innovative Business

One of the most important sources for improving the financial support of innovative activity is venture capital. The development of venture financing in developed countries is one of the defining areas of support for medium and small innovative businesses. The purpose of the article is to identify the key features of venture capital, the selection of structural characteristics of venture capital, and the functional features of venture financing for the strategic development of innovative businesses. The survey is based on the following methods: analysis, systematization, and generalization to identify the key features of venture capital, as well as to select structural characteristics of venture capital, and the functional features of venture financing; tabular representation for the visual display of the results of research and analytical data. The article analyzes the interpretations of venture capital. A significant expansion of the key features of venture capital was noted. The structural characteristics of venture capital for the strategic development of innovative businesses are highlighted, which are systematized according to the following signs: elements of the classic form of venture capital, functions of venture capital, characteristics of the venture capital market, phases of the venture capital investment process, reasons for the refusal to receive venture capital, results from the implementation of venture capital at the macroeconomic level. Functional features of venture financing for the strategic development of innovative businesses must be considered in the context of such features forms of venture financing, types of venture financing, features that are characteristic of venture financing, steps of the venture financing process, stages of venture financing, the most common exit strategy for venture capital investors, principles of venture financing, advantages of venture financing, disadvantages of venture financing. The obtained results are the basis for further scientific research in the part of venture financing of the strategic development of innovative businesses in Ukraine and attracting investments for the development of innovative activity.

Online Stock Trading Workshop In Providing Understanding To The Public To Invest The Indonesia Stock Exchange

Investment is defined as the process of capital investment undertaken by an investor both foreign and domestic investors with the aim of making a profit. Investment is a term that is familiar to the public, both the upper, middle and lower class. However, most people have the perception that being an investor must be people who have a lot of money, especially for investing in large companies that are well known. Actually, this perception can be minimized by inviting people to conduct online trading training and providing an understanding to them that being an investor is not only among people who have a lot of money. Currently, the Indonesia Stock Exchange has made it easy for investors from the lower middle class to be able to act as investors. The solution provided by the Indonesia Stock Exchange is to reduce the number of shares in 1 lot, which is 100 shares. Finally, it is expected that with this online trading training activity, it can attract people to invest in the capital market.

Capital Planning

A firm’s ongoing competitive edge can be attributed, in part, to its capital planning and investment process. Potential pitfalls can arise from issues created by decentralization and a narrow focus on the short-term planning horizon. In this study, we propose a comprehensive approach for the development of capital plans and attempt to simplify the maze of planning views and plans in a corporation. This process contains several action items and milestones, including setting the evaluation criteria for investments for the development of a capital plan and a standardized data request form with a detailed calendar for the entire organization to initiate the planning process each year. Finally, we develop a framework for project analysis or a business case to support a capital requirement.

Identifying and Prioritizing Factors Affecting Innovation of investee companies from the Perspective of Venture Capitalists: A Case Study

Innovation is one of the vital success factors of new SMEs. Venture capital can promote innovation of investee firms. The aim of this paper is identifying and prioritizing factors affecting innovation of investee firms. Initially, by reviewing the literature, 18 factors extracted. Then by statistical analysis six factors with less importance were removed. The 12 factors with more importance advanced to final step, which was Fuzzy DEMATEL to be prioritized. Results demonstrate that the most important factors are respectively: providing valuable information from the industry, cooperation and contact with the industry activists and informing about the possible threats and opportunities. The findings of this paper provide key insight in alternative investment which is a novel area in Iran’s emerging financial markets, in other words, it can support both sides of a venture capital investment process to know which factors are of more importance to boost the possibility of success.

Relaciones económicas entre China y América Latina. Una historia de la globalización, siglos XVI-XXI

El propósito del artículo es analizar tres instancias que marcaron la relación económica entre China y América Latina durante el largo período comprendido entre el siglo XVI hasta la actualidad. Ellas son: el galeón de Manila (1565-1815), la migración de los culíes a las economías exportadoras de América Latina (1850-1890) y el reciente proceso de injerencia de capitales e inversión la RPCH en la realidad económica latinoamericana (1980-2019). La modalidad y características que asumieron cada una de estas vinculaciones se analizarán en la propia evolución de la globalización de la que formaron parte. Se utilizan fuentes del Nacional Histórico de Madrid y datos económicos publicados por la Comisión Económica para América Latina y el Caribe (CEPAL). Se añade una extensa lista de trabajos bibliográficos de diferentes universos historiográficos que poco diálogo han tenido entre sí hasta el momento. El ensayo finaliza identificando los grandes ejes geohistóricos que hicieron posible la relación entre ambos espacios en el pasado y se interroga sobre si el nuevo proyecto chino proyectado desde 2015 One Belt One Road (OBOR) o también conocido como “la nueva ruta de la seda” representa el eje geo-histórico donde se asentará la relación en el siglo XXI.

Application of fuzzy analytic hierarchy process in multi-criteria decision-making of venture capitalists

This study aims to determine the factors of the venture capital investment process that may influence the multi-criteria investment process of venture capitalists in an emerging market like India. Firstly, we used the exploratory factor analysis to identify and analyse the consistency of several factors that may facilitate the adoption of multi-criteria decision-making (MCDM) techniques in an Indian venture capital industry. Secondly, fuzzy analytical hierarchal process (FAHP), a most suited technique for MCDM to handle the fuzziness, vagueness and multi-dimensionality, was adopted to assign the weights and prioritise the pre-defined criteria and sub-criteria. These findings indicate that venture capitalists' investment decision does not emphasise solely on entrepreneurial activities, product and market; however, economic and regulatory environment also plays a significant role in the venture capitalists' investment decision-making process. These results may help entrepreneurs to recognise their strengths in respective criteria before approaching a right venture.

A grounded theory exploration of appraisal Process of Capital Investment Decisions — Capex Appraisal Model (CAM)

The purpose of this study was to explore the appraisal process of capital investment decisions. The study adopted the grounded theory approach for the exploration of the objective. In the first stage, 48 in-depth interviews were conducted from finance executives of PSX listed companies. After transcription of all of the interviews, NVIVO software was used for analysis. Theoretical sampling was used in this study. Initially, 35 concepts and 19 categories were obtained from the initial coding of 48 cases. In the next stage, using focused coding, 19 initial categories into 09 categories were classified. These 09 categories represent each stage of the appraisal process of capital investment. These stages are Idea generation, Strategic planning, Analysis, Risk Evaluation, Selection, Mode of finance, Implementation, Monitoring and control, and Post-audit. The development of appraisal process stages is the novelty of this study and key theoretical contribution. Findings provide an in-depth understanding of the systematic way that industry appraises capital investments. This study opens grounds for new knowledge for academia, adds to relevant literature and reduces the gap between the corporate world and academia.

Embodied Growth Accounting with Recombinant Innovation: A New Approach

This paper formulates a novel growth accounting framework that attempts to achieve several objectives. The first is to build a bridge between growth accounting and growth theory by resolving their asymmetric interpretations of technical change and the fundamental “sources” of growth. This effort is based on the proposition that rather than the interpretation of technical change being framed by the functional form and parameterization of an economic model, the modeling exercise should be framed by scientific processes and historically-based interpretations of change, including technical change. An implication of this reinterpretation – that change results from recombinations of existing functions and forms – implies that innovation, both physical innovation and brain-centered human innovation must be conveyed through the process of physical and human capital investment. Accordingly, the paper devises a model of embodied growth accounting, omitting the Solow residual, and reliant on relevant elements of the Kennedy-Samuelson-Acemoglu model of factor-augmenting adjustment. Using data for the U.S. during 1950-2000, the model is tested against the conventional growth accounting model.

An analysis of timing decision in venture capital staged financing: evidence from India

Purpose Staged financing is a prominent feature of the venture capital investment process. With staged financing, venture capitalists (VCs) may choose to either make an investment or delay it at each round. The purpose of this paper is to investigate the influence of market uncertainty, project-specific uncertainty and agency problems on these decisions. Design/methodology/approach The study uses data from Indian firms that received venture capital funding between 2000 and 2017. The duration between funding rounds is analysed using survival analysis. An accelerated failure time model is used to estimate the influence of market uncertainty, project-specific uncertainty and agency problems on the length of time between funding rounds. Findings VCs delay investment when there are high levels of uncertainty in the market; if market uncertainty increases by 1%, delay in funding increases by more than 6% (almost a month) on average. There is no statistically significant relationship found between the funding duration and project-specific uncertainty. Agency problems motivate VCs to invest sooner. An increase in agency problems results in a reduction of 55% (almost five months) in the length of time before the next funding round. Practical implications This study has useful business policy implications. It provides VCs with real option value drivers such as market uncertainty, agency problems, which influence the timing of decisions in staged investment processes. It will help to make the choice between investing and delaying at each round of financing more robust. Further, it is useful for VCs to differentiate between market uncertainty and agency problems against the backdrop of their different implications for staging decisions. Originality/value Few studies have examined staging decisions from a real options perspective in the context of a developed economy and very few from a developing economy perspective. This study increases understanding of staging decisions in the Indian context.

Harmonization of the accounting of capital investments of an enterprise

Methods. In the process of considering the accounting system of capital investments of domestic enterprises there were used methods of analysis and synthesis, the method of observation, methods of induction and deduction, methods of comparison and analogy, graphical, logical, and tabular methods. The methodological and logical basis of the study were the methods of analysis, synthesis, and observation, which provided an opportunity to update the main problems of accounting the capital investments today. Deduction and induction techniques were used to determine the place of capital investment in the accounting system. A graphical method was used to build a document flow chart and take into account the factors that affect the capital investment process. The method of comparison has been applied to determine the specifics of accounting the capital investments in accordance with IFRS. The generalization method was used in systematizing the results of comparing national standards and IFRS. The method of analogy was used in the study of accounting free capital investment. Results. Differences in the regulation of capital investment accounting between national and international accounting standards have been identified. A detailed schedule of document circulation in the implementation of capital investments by enterprises of Ukraine has been formed. The scheme of the investment process in terms of operations of acquisition of assets, their creation by own forces, and carrying out construction work by economic and contractual ways is presented. The solution to the problem of consistency of the data of the statistical reporting form with the financial reporting prepared according to IFRS is offered. The procedure for accounting the free receipt of capital investments in accounting according to national standards is proposed, and alternative approaches to the accounting of such transactions under IFRS are considered. Novelty. During the monitoring of the capital investment accounting process, in practice, problematic issues that arose due to the lack of comprehensive methodological support from both the national standards and IFRS were identified, and ways to address them were proposed. Practical value. The considered and systematized ways to eliminate the existing shortcomings of the accounting process of capital investments can serve as a basis for the development of methodological recommendations for the accounting of capital investments.

Linguistic and Cultural Assimilation as a Capital Investment Process

I develop a learning-by-doing theory of cultural assimilation, in which an individual's cultural identity is determined by past investments in culture-specific capital. The model incorporates several empirically relevant aspects of assimilation that have been difficult to explain in past models. The mechanism in the model yields two possible qualitative outcomes of the assimilation process, depending on the intertemporal complementarities of investment. The first, in which individuals become more homogeneous over time, has been used to explain immigrants' wage assimilation. The second, in which individuals become more heterogeneous as some assimilate and some do not, has different implications for immigration and integration policies. Using detailed datasets from three immigrant destination countries, I provide a variety of evidence from linguistic and identity measures that cultural assimilation (in contrast to economic assimilation) more closely resembles the second type of process.

Venture Funds as one of the Major Sources of Investment for Innovative Entrepreneurship in the Republic of Kazakhstan

The article presents the development of venture capital investment in the Republic of Kazakhstan within the context of analyzing foreign experience in the implementation and application of the methods, models, vehicles and schemes of venture capital investment in knowledge-intensive high-tech innovative enterprises. Kazakhstan is primarily interested in the experience of Western Europe and the USA, since the venture capital industry of these countries is the most developed as compared with venture investing investment in other countries. The goal of this article is to focus on studying of the theoretical and methodological foundations of venture capital investment, as well as on developing practical guidance on improving the development of venture capital operations in the Republic of Kazakhstan. Trying to achieve the above goal the following results have also been achieved: uncovering of the goal, essence and peculiarities of venture capital investment, as well as its role in the development of innovative projects; identification of current trends, patterns and contradictions in the development of the venture capital investment process; consolidation of the best practice in organizing venture capital investment in the Republic of Kazakhstan and abroad. The article offers practical guidance for enhancing the efficiency of venture capital investment in the Republic of Kazakhstan. First of all, it has been concluded that nowadays the country is in an urgent need for the formation of a new investment model providing for the creation of venture funds investing in business-plans and pilot teams.

Application of Spatial Models in Making Location Decisions of Wind Power Plant in Poland

In this paper,we explore the process of making decisions on the location of wind power plants in Poland in connection with a gradually increasing consumption of energy from renewable sources and the increase of impact problems of such facilities. The location of new wind power plants attracts much attention, and both positive and negative publicity. Visualisations can be of assistance when choosing the most advantageous location for a plant, as three-dimensional variants of the facility to be constructed can be prepared. This work involves terrestrial laser scanning of an existing wind power plant and 3D modelling followed by. The model could be subsequently used in visualisation of real terrain, with special purpose in local land development plan. This paper shows a spatial model of a wind power plant as a new element of a capital investment process in Poland. Next, we incorporate the model into an undeveloped site, intended for building a wind farm, subject to the requirements for location of power plants.

Investigation on the Performance of a Cylindrical Parabolic Concentrating Solar Water Heater

Background/Objectives: The objectives of the present work are focused to investigate the theoretical heat gain, heat loss and instantaneous collector efficiency of cylindrical parabolic concentrating solar water heater over a clear day. Methods/Statistical Analysis: The performances of a cylindrical parabolic concentrating solar water heater fitted with copper absorber tube, using water as working fluid are investigated theoretically. The theoretical investigations are studied for water flow rates 0.1 kg/s and 0.15 kg/s between 8:0 h and 16:0 h over a sunny day. Findings: The theoretical results are showed that intensity of solar beam radiation with respect to time much more at noon than that calculated at 8:0 and 16:0 hours. Theoretical solar beam radiation data obtained are compared and validated with that of experimental based published data. The instantaneous efficiency, useful heat gain, hourly energy collected and heat loss are influenced by water mass flow rate. Application/Improvements: The theoretical study consumes less time than analytical and experimental studies. The initial capital investment is must to procure the experimental setup, whereas for theoretical work not required neither capital investment nor procurement process.

Government as fund-of-fund and VC fund sponsors: effect on employment in portfolio companies

Governments around the world have set up fund-of-fund programs to increase the supply of venture capital financing to young growth-oriented firms. In these programs, a government fund-of-fund acts as limited partner in a venture capital fund. The venture capital investment process is hereby delegated to external investors, which were selected by the government fund-of-fund. We investigate employment growth in 108 portfolio companies that benefited from the ARKimedes fund-of-fund in Flanders. Accounting for the heterogeneity in the types of venture capital investors managing hybrid funds, and the associated goal diversity and resource endowments, we find that portfolio companies backed by hybrid independent venture capital funds show greater employment growth than those backed by hybrid captive or hybrid government venture capital funds. This finding is relevant because it indicates that the financial objectives of hybrid independent venture capital funds are highly compatible with the government’s objective of employment growth, as providing companies with superior monitoring and value adding services with the objective of realizing a successful exit creates employment in the process.

Empirical Analysis of Hungarian Firms According to Venture Capital Investment Criteria

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.

Using interpretive structural modeling in venture capitalists’ decision-making process

In today’s era, technology and innovative ideas had driven the global economy. A selection of venture investment process is regarded as the most complex task due to its direct or indirect impact on venture’s success rate. Venture capitalists (VCs) use a multi-criteria approach to identify new and incipient entrepreneurs while investing a new venture. At the times of investment, VCs assess several investment proposals based on some key factors such as entrepreneur’s personality, product and market characteristics, financial consideration, management skills and so on. Earlier researchers were concentrated on these factors solely; thus, a holistic approach is required for better understanding of venture capital investment process. To do so, interpretive structural modeling was used to explore and develop an inter-relationship among relevant decision-making factors. Structural self-interaction matrix was used to measure the level partitions at various iteration levels. A digraph facilitates the accomplishment of logical framework based on identified dependent (those affected by drivers) and driver (those affect others) factors. This paper may help VCs and entrepreneurs to better analyze the investment process and provide them a deep understanding of various issues associated with investment decision-making process.

The financing of envisaged capital investments in South Africa

The envisaging of capital investments is of prime importance for the economic growth and business development of a country, as it represents the starting point of the entire capital investment process. This paper focuses on the financing of envisaged capital investments and addresses amongst others the various sources of financing and the finance cost thereof, the related capital structure theories, as well as the determinants of the capital structure of an enterprise, which comprise of the economic and firm-specific factors. The objective of this research paper embodies the improvement of the financing decision-making when enterprises are envisaging capital investments. A literature study provided the secondary data and formed the basis of this research. To achieve the research objective, an opinion survey was done to obtain the perceptions of the business leaders in South Africa regarding the importance of the economic and firm-specific factors for the financing of envisaged capital investments, the associated problem areas as perceived by the firms, as well as the frequency of envisaging various types of capital investment projects by the respondents

Uma análise exploratória do processo de orçamento de capital em empresas algodoeiras

Este trabalho teve como objetivo analisar o orçamento de capital (OC), voltado a investimentos em ativos de capital (máquinas e equipamentos), desempenhado por gestores de empresas algodoeiras. Sua elaboração foi motivada pela queda produtiva em algumas regiões do País em que a cultura algodoeira era tradicional, especificamente nos estados de São Paulo, Minas Gerais e Goiás. A escolha das empresas levou em conta a disponibilidade dos gestores em conceder entrevistas presenciais. Dessa forma, partindo-se de uma abordagem qualitativa e exploratória sobre os dados, aplicou-se uma análise de conversação, forma de análise de conteúdo que permitiu identificar particularidades de cada unidade investigada e realizar inferências quanto a razões, causas e motivações em relação aos investimentos dessa natureza. Resultados apontam para um enfoque gerencial mais voltado à tentativa de se garantir resultados operacionais satisfatórios no curto prazo. Assim, a gestão na maioria das empresas pesquisadas não considera um planejamento de investimentos no médio e longo prazos devido à percepção quanto aos baixos ganhos marginais da substituição e investimento em novos ativos. Constatou-se ainda uma forte influência de experiências passadas nas decisões de investimento dos gestores entrevistados. Tais observações podem impedir políticas de investimento e de negócios focadas no desenvolvimento do setor como uma forma de contornar suas dificuldades, mesmo havendo mobilizações recentes por parte dos produtores.