Risks in the activity of venture organizations. Abstract The history of the emergence of venture organizations, their activities. Entrepreneurial risks and risks leading to bankruptcy. State regulation and improvement of the legislation of venture organizations
Collection output:
VENTURE BUSINESS IN RUSSIA AND ABROAD
Khmelev Igor Borisovich
cand. economy Sciences, Assoc. cafe World Economy of the Moscow State University of Economics, Statistics and Informatics, Moscow
VENTURE BUISNESS IN RUSSIA AND ABROAD
Khmelev Igor
ph.D., Assoc. department. The global economy of the Moscow State University of Economics, Statistics and Informatics, Moscow
ANNOTATION
The article focuses on the fact that one of the promising and interesting methods for the development of the Russian economy is investment based on venture capital. The concept of venture financing is revealed in more detail. The following is a brief review of Russian and foreign experience.
ABSTRACT
The article focuses on the fact that one of the most promising and interesting methods of development of the Russian economy is to invest through venture capital. More detail reveals the concept of venture capital financing. Here's an overview of the Russian and foreign experience.
Keywords: venture business, venture capital firm
keywords: venture business
The history of the world economy throughout its development has been striving, on the one hand, for unification and general globalization, and, on the other hand, for a general division of labor, which, in the end, has led to the global distribution of labor and resources. In the modern world, all countries of the world belong to one or another region. It largely determines the prospects for the further development of the country. As a result, it is very important to understand what you can bet on in order to make a rapid economic leap, which is very important for our country.
The Russian Federation is the largest country in the world, thanks to which it owns a huge supply of raw materials. At the same time, despite the gradual development of the domestic economy, its pace leaves much to be desired, for which new ways and methods of economic development should be found. One of the promising and rather interesting methods of actively injecting new investments into the Russian economy is venture capital, which has its own characteristics and advantages.
Venture financing is an active investment of small and medium-sized businesses, in which there is a fairly large risk of non-repayment of the funds spent. The name itself comes from the English "venture", which translates as a risky venture, so this type of investment has its own specifics, which, accordingly, gives it its own characteristics. At the same time, venture capital funding has its own history, as well as experience, which should be considered in more detail. This will reveal all its advantages and disadvantages, making a conclusion about the possibility of using this method in Russia.
Financing based on venture capital consists in the implementation of proposals for the development of commercial, industrial, economic or other activities that the region needs for its successful development. It is important to note that as a result of such investment, funds can be used both to support and qualitatively transform existing enterprises, and to create new production facilities. At the same time, the investor or sponsor is usually well aware of the fact that the probability of non-repayment of invested funds is quite high, since the investment goes into obviously risky industries.
Interestingly, the objects of venture financing are often commercial ideas, as well as various projects that imply their direct implementation in the very near future. The main components of a venture capital fund are:
determination of the territory and scope of activity, including the collection of data on the economic situation, the formation of a certain bank of required objects, as well as the search for new investment projects;
· formation of an effective and reliable system of replenishment of monetary and other resources necessary for the implementation of venture investment in projects and their implementation;
· organizational activity, consisting in the analysis of the market, carrying out a number of examinations to evaluate it, the search for profitable ideas and projects.
It is important to note that a particular entrepreneur is usually at the center of an investment project, so all interaction takes place not from the position of "capitalist - entrepreneur", but rather, as "entrepreneur-entrepreneur". The owners of venture capital usually just pour funds into certain projects, but the control over their rational successful use lies with special elected persons. At the same time, you should always remember about the big risk on the part of the investor, which he always takes consciously and sometimes even with a certain degree of adventurism.
If we start from the United States of America, then here from the very beginning of its inception, and this is the 50-60s of the twentieth century, venture capital investment has developed unevenly. The founders of this business are American capitalists Tom Perkinson, Frank Cofield, Brooke Byers and Eugene Kleiner. It was they who developed the main concepts of venture financing, where work was carried out on a specific partnership agreement that provides for rights, obligations, as well as possible risks from the enterprise. A venture institution can be founded both as a separate company and as a limited partnership, and there is always a parent company that is entitled to an annual compensation of 2.5-3% of the initial obligations of its investor. In addition, such a company relies on the so-called carried interest - a fixed percentage of profits (about 20%).
It is noteworthy that, despite the high risk, the number of investors is currently not decreasing at all. Moreover, if we carefully analyze the formation of global capital, then in many respects it was venture financing that contributed to scientific and technological progress and the rapid development of information and computer technologies. The following example is very indicative. In 1957, engineer Eugene Kleiner invented the silicon transistor, for which he was awarded Nobel Prize. At the same time, his boss William Shockley was not very pleased with the invention and did not understand all its prospects. Interested in the new device was investor Arthur Rock, who, with the assistance of a number of other Wall Street influencers, met with the inventor and suggested that he set up his own company in southern California. A total of about $1.5 million was allocated for the project. A few years later, a small company turned into a large corporation, Fairchild Semiconductors, which became the first in the territory of today's famous Silicon Valley.
Another successful example of venture capital funding in the United States is the founding of the famous Hewlett-Packard Company, which became possible only because one of the employees, Tom Perkins, the inventor of the gas-pumped laser, decided to invest his $10,000 in a new house, and in the foundation of his own company. As a result, today we see one of the most successful and steadily developing world-class corporations.
The most promising sectors for investment in the Russian economy can be considered wood processing, production of dairy and sour-milk products, wholesale trade, fish and meat processing, motor transport, production of building materials, tailoring, as well as the chemical industry (production of plastic, packaging, etc.). Further). In general, there are 32 main activities in which venture capital is pouring most actively. The average investment is approximately $2 million, as fluctuations are $0.5-4.5 million. At the same time, it is important to note that venture capital is steadily gravitating towards the more industrially developed northwestern region of our country.
An important feature of Russian venture capital is that their main shareholder is the EBRD, through which all cash investments pass. At the same time, our economy is currently distinguished by a rather specific structure, which indicates the strengthening of large national companies through the absorption of medium-sized businesses.
Considering all of the above, investing money in the economy of the Russian Federation is quite risky, so many investments in this direction are classified as venture capital. At the same time, few people deny that our country has a huge scientific and technical potential. With proper financing, as well as competent management, it can bring a considerable profit to the investor. Huge reserves of ore materials, oil and gas, practically inexhaustible forest reserves, as well as vast territories attract potential investors: they are not afraid to take risks and invest in the domestic economy.
Summing up all of the above, it should be said that venture capital has very often become the main impetus for the rapid development of existing production processes, as well as the emergence of new ones. The main example of this is modern information technology. Their colossal potential was hard to imagine 25 years ago. So the Russian economy today is quite an attractive field for enterprising Western investors. It is thanks to them that the country has the opportunity to make a qualitative economic leap and again become a powerful Eurasian power.
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SCIENTIFIC AND EDUCATIONAL MATERIALS
COLLECTION BY THEME
"Venture Business"
The composition of the scientific and educational team:
1. Aleksakhina Yu.V., Ph.D. cafe - team leader
2. Skorobogatov V.S., Ph.D., prof.
3. Gorshkova E.A., Art. teacher
4. Rylkova L.S., Art. teacher
Moscow 2011
Introduction ................................................ ................................................. ...
1. Venture business and its development in Russia…………………………………
1.1. The place of venture financing in project financing……
1.2. Role of venture financing…………………………………………….
1.3. Goals of the private equity investment industry…….
2. Theoretical foundations of venture investment………………………………..
2.1. The concept of venture capital………………………………………………………
2.2. History of venture capital and investments .......................................................
2.3. Typical organizational and legal forms used in
Central and Eastern Europe…………………………………………………..
3. Features of the functioning of venture capital in Russia……………
3.1. The general macroeconomic situation in Russia as a potential for
Development of the venture capital industry……………………………………………
3.2. Sources and general mechanism of venture investments in the Russian Federation……………….
3.3. The main problems of the functioning of venture funds in Russia…
4. State support of venture capital in the Russian Federation…………………….
Conclusion…………………………………………………………………………….
Bibliography……………………………………………………………………..
The modern economy is developing so rapidly that no technology, no project can wait - money for business development, as a rule, is needed either immediately or never. Venture capital is precisely the mechanism that reduces the time for the appearance of money for the development of companies, and therefore, the study of risky investments is becoming more and more relevant both in developed countries and in Russia.
Like any other innovation, venture financing is beginning to attract more and more interest. The relevance of this topic is also confirmed by the following two important trends that emerged in the innovation sphere of the leading developed countries in the 1990s. First, the leading role in research and development funding is shifting from the public to the private sector. Second, profit maximization in R&D does not mean passive, aloof, and tech-incompetent institutional investors. On the contrary, there is a growing number of intermediaries specializing in the analysis, selection and management of technological innovation projects. At the same time, everyone's attention is directed to venture capitalists, since it is they who play the most important role among such intermediaries.
Currently, Russia is facing economic problems that are associated with the lack of an established system for financing innovation activities in the country. In this regard, the study and analysis of non-traditional sources of investment, one of which is venture capital, are beginning to become increasingly important in our country.
Using the methods of comparisons and analogies, an analysis of venture capital investment in Russia was carried out, the study of which is the object of analysis in this paper. At the same time, the flow of venture capital money directed to Russian funds should be considered as the subject of analysis. It is necessary to analyze the volumes in which these funds were received for a certain period, as well as their dynamics and the factors determining it.
In this paper, such tasks of analysis are set as a theoretical consideration of the concept of venture capital and the history of its emergence in developed countries and Russia. Also, the theoretical significance of the project is to substantiate the presence of prerequisites for the development and successful functioning of the venture industry within the current macroeconomic situation in our country. Further tasks are to study the sources of venture capital in Russia and the specifics of this mechanism. Particular attention is paid to the analysis of the obstacles that arise in the way of the formation and functioning of venture funds in the Russian Federation today, and ways to overcome them, which characterizes the practical significance of the project. Finally, the role of the state in the development of the venture capital market is revealed.
The purpose of this project can be formulated as the study and analysis of the situation of the venture capital market in Russia, indicating the obstacles that have arisen and developing ways to eliminate them.
This goal will be achieved by considering the following main tasks:
1. Analysis of the theoretical justification of venture investment,
2. Consideration of the main features of venture capital investment in Russia,
3. Study of state support for venture capital in the Russian Federation.
Despite the growing interest in risky investments, in Russia this type of financing is in its infancy. In this connection, in my opinion, it is advisable to make comparisons in the course of work in the functioning of risk capital in Russia and in Western countries, where the venture industry has long justified its existence by rewarding its investors with astronomical profits.
1. Venture business and its development in Russia
The point of a venture (risk) business is to provide funds to companies that do not have other sources of financing in exchange for a part of a block of shares that a venture investor sells a few years after entering the business for a price many times higher than the initial investment. The sale of shares is called "exit".
Venture capital business can bring huge profits - or end in failure. The American and European economies owe much of their growth at the end of the 20th century to the flourishing of the venture capital business.
In our country, a political and entrepreneurial climate favorable for venture capital and direct investment is gradually being formed. A number of steps taken by the venture industry community and government agencies at various levels contribute to the development of small and medium-sized businesses (in particular, in the high-tech sector), which, in turn, can give impetus to the development of the Russian economy as a whole.
With the support of the state, the private sector and international organizations, structures of the research sector of the market type were created, such as technology parks, innovation and technology centers, legal and consulting companies.
New tools and mechanisms were also created related to the functioning of budgetary and extrabudgetary funds to support fundamental and applied research and development, their competitive financing, and the protection of intellectual property rights.
One of the main economic instruments that have ensured the innovative development of the leading industrial countries of the West over the past decades is the mechanism of venture (risk) financing.
The main ideas underlying this mechanism in its modern sense were first successfully tested in the United States in the late 1940s and early 1950s. In the future, interest in risky financing increased for three reasons. First, in a number of cases, investors received real income many times greater than the possible income from traditional credit and financial transactions.
Secondly, the specificity of the objects of financing - high-risk entrepreneurial projects - gave impetus to the development of special management methods that help minimize investment risks. Thirdly (which is apparently the most important from an economic point of view), the venture mechanism provided a practical opportunity to finance new innovative ideas and developments at the initial stages of their implementation.
With the support of venture capital investors, many of the largest radical and improving innovations of the 20th century, related to microprocessor technology, personal computers, the Internet, genetic engineering, etc., found their way to the market. Microsoft, Apple, Digital Equipment Corporation, Compak, Sun Microsystems, Lotus, Federal Express, Genentech, Yahoo, Netscape and many others.
The problem of developing venture financing mechanisms has attracted Russian researchers and management specialists for more than 15 years. In 1985, when at the beginning of perestroika the task of intensifying scientific and technological progress to bring the USSR economy out of the crisis was set at the highest level, the economic and political conditions necessary for the use of venture financing for innovations were completely absent.
Since 1988, certain hopes were pinned on the first commercial banks (few people today remember that they were created then as financial structures to support innovation, and some of them still retain the letter combination “in” from the word “innovative” in their name). However, they were not destined to come true.
The share of innovative projects in the portfolio of such investors rarely exceeded 5%, which was due to objective economic reasons. The author noted at that time that the created innovative banks would not be viable if they did not start to engage in traditional commercial lending for the sake of self-preservation6. The subsequent course of events confirmed the legitimacy of this conclusion.
The radical economic reform that began in 1992 paved the way for the development of entrepreneurial initiative, but a civilized stock market did not yet exist. In addition, inflation that at times exceeded the 20% mark per month made any investment for a period of more than a few weeks economically meaningless.
Nevertheless, the privatization carried out at a “shock pace” attracted the attention of foreign venture capital investors, but not in the field of financing initiative innovative entrepreneurial projects, but in the direction of overcoming the crisis and increasing the efficiency of privatized enterprises (which is also one of the traditional areas of venture business). At the initiative of the European Bank for Reconstruction and Development, 11 regional venture funds were created in Russia, which specialized mainly in acquiring stakes in small and medium-sized enterprises under privatization in order to provide them with the necessary assistance in adapting to the conditions of the transition economy. It was assumed that after some time the purchased shares could be sold at a higher price.
In March 1997, the pioneers of the venture business in Russia united to form the Russian Venture Investment Association (RVCA). There have been reports of the creation of the first venture funds based on the funds of large Russian banks and diversified holdings.
However, the emerging progress was stopped by the financial crisis that broke out in August 1998, which sharpened the problem of liquidity of risky investments and delayed the spread of the venture capital mechanism in Russia for at least a few years. One of its negative consequences was the loss of confidence of the general population in the institutions of the stock market.
Under these conditions, the initiative to develop the venture industry was taken over by the state. On March 10, 2000, the government issued a decree on the establishment of a venture innovation fund - a non-profit organization to form the organizational structure of the venture investment system.
One of the goals of this organization is to promote the creation of industry and regional venture funds through equity participation in their authorized capital.
Since 2000, venture fairs have been regularly held to help attract investments to finance promising projects of Russian entrepreneurs (60 innovative enterprises participated in the third fair, held in October 2002 in St. Petersburg).
According to official data from the Ministry of Industry and Science of the Russian Federation, over the past 10 years, venture capital investments in Russia amounted to a total of about 1.5 billion euros and were used to finance more than 250 enterprises. To date, there are about 30 venture capital funds, most of which represent foreign investors.
The contribution of small businesses to the Russian economy is growing every year. According to the State Statistics Committee, as of January 1, 2003, the number of small enterprises amounted to 882.3 thousand, which is 4.7% higher than the corresponding indicator of the previous year. The number of individual entrepreneurs without forming a legal entity increased by 2.7% and covers 4.6 million people.
Investments in fixed capital of small enterprises grew by 14.4%, including in industry - by 28.3%. The volume of products (works, services) produced by small enterprises increased by 36% and amounted to 1159.9 billion rubles. Tax revenues from small businesses also increased by 11% and amounted to 28.4 billion rubles.
In order to obtain more complete data on entrepreneurs without forming a legal entity, the State Statistics Committee of Russia and the Ministry of Antimonopoly Policy of Russia on the territory of the Russian Federation in April 2004 will conduct a complete statistical survey of individual entrepreneurs based on the results of work for 2003.
It is obvious that these figures do not yet compare with the scale of the venture capital market in the US and other industrialized countries.
The following factors hinder the development of the venture capital industry in Russia today:
* poor development of infrastructure that ensures a fruitful symbiosis of venture capital with small and medium-sized innovative businesses;
* lack of significant Russian sources of venture capital;
* low liquidity of risky investments, the absence of the market mechanism necessary for this (special stock market);
* insufficient economic incentives to attract venture capital to the implementation of high technology projects;
* low prestige of entrepreneurial activity in the field of small science-intensive business;
* weak information support of venture business;
* lack of qualified managers of innovative projects, including those carried out with the involvement of venture capital;
* Problems with registration of venture funds, etc.
To correct the current situation, the Ministry of Industry and Science of the Russian Federation developed and at the end of 2002 submitted for consideration a draft Concept for the development of the venture industry in Russia, which, in fact, state system stimulation of venture investments. According to this concept, in 2003-2004. it is planned to establish 10 regional and sectoral venture funds with state participation. In addition, the state will take on a significant part of the efforts to create the infrastructure necessary for the successful development of the venture business, create a favorable economic environment for attracting venture investments in the innovative sector of the economy, ensure the liquidity of risky investments, and increase the prestige of entrepreneurial activity in the field of small and medium-sized businesses.
It is expected that the implementation of these measures will make it possible to attract up to 1 billion rubles annually starting from 2004. private investment in newly created venture funds.
Will the global decline in the risk capital market affect the creation of the venture business industry in Russia? It is difficult to answer this question unambiguously today. If this crisis ends in the coming years, the successful implementation of the outlined Concept will contribute to the formation of private venture capital of Russian origin, without which it is difficult to count on the development of small innovative businesses in the country. If the recession drags on for a longer period, then the infrastructure formed with the assistance of the state can, in our opinion, be used to attract the accumulated last years abroad a large reserve of venture capital, which today is looking for new areas of application outside of their countries.
However, in this case, the state will have to find additional ways to maintain market liquidity (for example, by allocating additional financial resources from the budget or by providing investment tax credits to large industrial investors).
1.1. Place of venture financing in project financing
* Traditionally, it is customary to distinguish four types of project financing:
1. Debt financing (including leasing)
2. Equity investment
3. Funding from the company's own funds
4. Financing from public sources
* Without dwelling on the question of how successful the division into project financing methods is, let's determine the place of venture financing among these four methods. The first is equity investment.
* Venture financing in varying proportions may include debt financing, as well as financing in the form of leasing and partially financing from public sources. However, the focus is on equity investment and some participation in the project.
* Equity investments, as you know, can be of two types: exchange (or portfolio) and over-the-counter (or direct).
* Exchange (portfolio) financing through equity investments is carried out by various investment funds, such as Mutual Investment Funds (PIFs) and the more recent General Funds of Banking Management (OFBU), which make portfolio investments in the shares of listed enterprises on the stock market.
* In some cases, portfolio investors (eg insurance companies) may invest in the equity of enterprises in the OTC market (ie small and medium-sized enterprises). In such cases, we can talk about high-risk direct investments, very similar to venture capital investments.
* In general, "business angels" annually invest in the United States, according to some estimates, an order of magnitude more than all formal venture investors taken together (about 30-40 billion dollars).
1.2. The Role of Venture Capital
* Direct financing ("direct equity" or "private equity") and its variety of venture capital financing ("venture capital") is by far the most developed in the countries of precedent systems, primarily in the USA, Great Britain, Canada, Austria.
* Of greatest interest to Russia is the unique experience of the development of venture capital financing in the United States, which has the largest venture capital market today.
* In 1970, there was practically no venture capital market in the United States, in 1980 the total venture capital in the United States did not exceed $1 billion, and by the mid-1990s, the venture capital market under management in this country was at the level of 35 billion dollars, of which about 4 billion dollars. has been invested.
* If these 4 billion dollars. United States to compare with 30-40 billion dollars. US, which were obtained from the sale of shares in the stock market, then the venture capital market will look very modest. However, the role of venture financing is not limited to an additional $4 billion. STA annually invested in the economy of this country.
* Small and medium-sized businesses, for which venture investment is primarily intended, are practically deprived of other opportunities to receive long-term (3-6 years) investments without security, especially in the absence of a "credit history". Meanwhile, it is small and medium-sized businesses that are able to develop most dynamically, creating jobs.
1.3. Objectives of the private equity investment industry
* It took a while for the private equity industry to realize that different participants in the investment process have different goals. Over time, it was possible to roughly determine what these goals are for: invested companies, investors, fund managers.
1.3.1. Invested companies
* In Europe, 21.5% of all investments are 100% of the sale of the company to a venture capitalist, together with the transfer of management to him.
* The rest of the investment takes the form of acquiring more or less than half of the shares of the company at an early or later stage in order to develop or expand it
* In the case of a 100% sale, the seller's goals (whether it be a corporation selling its division, or a person selling what he created or inherited) are a combination of price, continuation (or maintaining independence) of the business, the desire to save work for managers and staff etc.
* For the managers of a company undergoing a change of ownership, the overall goal remains to achieve funding and a structure that will ensure long-term growth for the company while carefully balancing what needs to be given back to creditors from profits and capital gains.
* Managers at management buyout are usually very sensitive about their own share of capital gains.
* When deciding to what extent managers will participate in equity capital, the venture capitalist should not forget that at any stage of the company's development he may be in a state of competition with other sources of funds that managers may find more attractive, such as in the following cases
1.3.1.1. Opportunities to raise funds for development
1.3.1.1.1. Organized stock market
* In the US, organized stock markets are a good source of funds even for early-stage companies that have suffered significant losses. Stock markets in Europe demand demonstration previous achievements they are expensive to list and care more about protecting investors than encouraging them to choose their risk profile and invest in the right companies. The same reasons limited the access of more mature businesses in Europe to new capital for expansion/development.
* A recent attempt to overcome this is AIM (Alternative Investment Market - Alternative Investment Market) in the UK, which has raised more than $600 million of "new" money in the first 15 months of operation. Time will tell how permanent this source of investment will be in the future. New trading system EASDAK, on which hopes are pinned that it will soon provide the Europeans with liquidity close to that which their American counterparts have been enjoying for a long time
* It often happens that venture capital serves as an ideal bridge to enter the company at an early or later stage in the stock market, because it allows you to use the contribution of venture fund managers, being outside the restrictions of the stock market, and also to maximize the price of the company at the time of its quotation on the market
* However, if entry into the stock market will be largely determined by the desire to boast on occasion that your company is an open joint-stock company, then the prospects for obtaining venture capital financing are small
1.3.1.1.2. Banks
* Historically, banks have been the most important source of financing for industrial growth in most countries, especially in the late early stages
* Some economies rely too much on this source - for example Germany, where the ratio of direct investment to the volume of loans issued is less than 19% (equity/debt ratio)
* Bank loans look quite cheap compared to internal rate of return(hereinafter - IRR or GNI ), what venture capitalists are looking for
* This approach does not take into account the “hidden cost” of bank financing, which includes its cyclical nature, insurance requirements, insufficient strategic involvement, pressure exerted by the bank during difficult times for the firm, the requirement for annual payments regardless of cycles cash flow etc.
* All this can be smoothed out by using direct investments, at least at a certain stage of financing the production development process
* Given the differing interests of the banks themselves, they can be made excellent partners for the venture capital industry, for example, in buyout transactions, under which they can provide less risky (less expensive) loans, while the venture investor takes on the more risky and less liquid component direct investment
1.3.1.1.3. Government
* Government funding often has mixed goals, among which profit making can be subordinated to the goals of creating new jobs, new technologies and new industries
* Public funding is an important factor in the economy, but in the industry of the EEC countries over the past ten years, its importance has decreased from 20.5% of funds raised to 3.1%, although it remains an important source of direct investment in some countries, such as Spain
* For companies, such financing is beneficial in that it is cheap, long-term and not designed for large returns in the end - venture fund managers will not agree to finance on such terms. However, this rather “passive” money can be a useful addition to venture investments at the end of the initial stage.
1.3.1.1.4. Other
* There are other structures on the market that specialize in investments, for the most part they are engaged in consulting, such as investment and trading banks, brokers and corporate finance specialists. They are very important for the organization of the investment process, but they rarely invest themselves.
* In general, it should be emphasized that investee companies can use direct investments for different purposes at different stages of their development, along with other sources of financing
* For those who are looking to sell their business, venture capital is an attractive alternative to other buyers from their line of business (strategic buyer), if the latter do not show a desire to acquire new productions or when other aspects are also important in addition to the issue of price
* In situations where capital is needed to develop production, venture capital is a very attractive source, if cheaper and more passive sources of financing are no longer available to the company, or, more importantly, when the active skill of the venture manager is required to create and / or maximize the value of the enterprise
1.3.2. Investors
* The goals of those who make direct equity investments are as diverse as the sources of this money
* In the US, 70% of these funds come from pension funds, insurance companies or charitable foundations, which expect a premium of about 4% compared to what they would receive from investments in more liquid types of assets, such as buying stocks on the stock exchange
* In Europe, 30% of direct equity investments come from the same sources and with the same calculation. Approximately 40-50% of the funds come from banks, and although “strategic investments” (for example, to support issued loans) still take place, these institutions also have to somehow justify directing funds to direct investments.
*In the private equity industry, profits have taken on significant importance. “Feed the winners, starve the vanquished” is a completely natural consequence of such goals.
* What is put in the spotlight internal rate of return (IRR or GNI) focusing on the efficient use of funds over time, rather than simply multiplying investments, has important implications for the private equity industry, both in terms of continuing with those investments that meet these objectives, and in terminating investments and using mechanisms for reallocating investment directions
1.3.3. Fund managers
* If it is recognized that “survival” is a natural instinct (including among fund managers), then it becomes clear from the previous section that direct equity investment is oriented towards capital appreciation
* To achieve an acceptable return, you need to ensure capital growth within your investment portfolio
* Beyond these limits, depending on the rules adopted in a particular fund for the distribution of income, there may be goals for members of the fund management team called carid interest(i.e. returns to the fund itself rather than investors)
* Provided that the size carid interest carefully and fairly calculated, these goals can be very important both in ensuring that managers are properly motivated to closely monitor the performance of companies in their investment portfolio during their growth period, and in retaining an experienced team
* In theory It is very easy to achieve capital gains in venture capital investment. It's just price/annings (p/e) multiple between the start of investment and the exit from the project, multiplied by the increase in profitability during the investment period (how many times increases, if at all, increases, leverage, If speak about leveraged buy out or buy out management)
*As sellers purchase more experience in venture capital investment (and this, alas, is true!), the differential p /e multiple decreases. And if we take into account the restrictions that apply in Europe in the 90s on leverage, the goal of fund managers is increasingly becoming one way or another to increase the capitalization of the invested company, sharply increasing its profitability
* Therefore, in practice, capital gains are somewhat more difficult than in theory, as we will see later, especially if fund managers are trying to solve their problems only with the help of smart financial engineering.
1.3.4. Objectives of the private equity investment industry
* There is no doubt that the interests of all participants in the venture process are united around the concept of capital gains and internal rate of return. The only exception is when a company or shareholders sell all 100% of their business, while setting themselves simpler or more complex goals and objectives than those described above.
2. Theoretical foundations of venture capital investment
2.1. The concept of venture capital
The term "venture" itself comes from the English "venture", i.e. "risk venture or undertaking". The concept of capital can be defined as the main property, value, bringing surplus value. That is, capital is the value in the form of money and goods, which is used to obtain its additional growth or profit. As can be seen from the above definitions in the modern interpretation, the concept of capital is associated primarily with the ability to bring economic benefits. Therefore, such a type of capital as venture capital, in my opinion, can be described as a kind of economic instrument used to finance the commissioning of a company, its development, capture or buyout by an investor during the restructuring of property. The most common definition of venture capital is the financing of a project by private entrepreneurial capital, the successful implementation of which is not guaranteed.
Venture capital is risk capital invested with the aim of making a quick profit. In today's market economy, project owners, entrepreneurs and leaders of young companies are interested in such a rapid and powerful influx of third-party funds. In the event of a delay, even the largest investments may become useless, because competitors may have a similar idea. The investor also cannot wait. If the idea is not financed in time, it will float away from the investor in the same way as from the hands of its creators. But classical capitalism meant gradual accumulation. The main reason why the classical scheme does not work in the modern economy is time. In general, the modern technological revolution, one of the elements of which is the development of network business, is that strong brands are formed in a matter of months, and not for decades. In fact, only the money of venture investors can finance a nascent project in the short term. In my opinion, it is the high rate of capital turnover that is the main reason for the formation of an investment market intended for start-up businesses and business projects. Appendix 1 schematically presents the general structure of the venture capital market.
As a rule, venture investment is carried out in small and medium-sized businesses, as well as in enterprises whose shares are not traded on the stock market. Due to the high risk associated with venture investments, their illiquidity and the long "exit" period, as well as due to the significant size of the minimum investment, venture capital funds are not available to small and medium-sized investors. It should be noted that venture investments are provided without any collateral or guarantees.
The process of forming a venture fund is called fundraising. In order for investors to make a decision about investing in a venture fund, they would like to get an answer to the following question: why does it make sense to invest in this particular fund? (It is assumed that these people do not lack offers of this kind.) To provide them with detailed information, the founders of the funds at the initial stage issue a memorandum detailing the goals and objectives of the fund, the specific conditions of its organization and preferences. As an example, Appendix 2 contains excerpts from a Russian Technological Fund memorandum issued during the fundraising period.
Usually, capital investment is carried out by acquiring a part of the shares of the enterprise - the client or providing him with loans (including with the right to convert these loans into shares). That is, the venture investor does not seek to acquire a controlling stake in the company receiving financial investments. This is its fundamental difference from the "strategic" investor, whose goal is to establish full control over the enterprise.
By not acquiring a controlling stake, a venture investor hopes that the company's managers (and they are usually the owners in small and medium-sized businesses) will use the funds received as financial leverage for faster growth and development of their business.
Next, having collected the target amount, the venture capital firm closes the subscription to the fund, proceeding to invest it. In order to minimize risk, venture capitalists tend to spread their funds among several projects, and at the same time, several investors can support one project. For the same, with venture financing, a phased allocation of resources is used in the form of small portions (tranches) or, as they say among venture businessmen, through a "drop" when each subsequent stage of the development of an enterprise is financed depending on the success of the previous one.
And finally, venture capital owners, by directing investments where banks (by charter or out of caution) do not dare to invest, not only receive ordinary or preferred shares, but also stipulate a condition (in the case of the purchase of preferred shares), according to which the investor has the right at a critical moment to exchange them for simple ones, in order to acquire control over the "limping" company in this way and try to save it from bankruptcy by changing the development strategy.
Since for the profitable realization of investments invested in venture enterprises, it is necessary for a new high-tech company to enter the stock market to sell shares, the owner of the funds invested in the company is not interested in dividends, as already noted, but in the growth of the capital itself. Usually venture capitalists, investing in venture enterprises, want to increase their capital by at least 5-10 times in 7 years. At the same time, since a venture enterprise can enter the stock market for the first time in the best case 3-5 years after the investment, the venture capitalist does not expect to receive a profit earlier than this period. Due to the increased risk, venture capital is provided at a higher interest rate than a loan, usually at the rate of 25-35% per annum (the exact rate is set when the investment is detailed).
And so, a venture capitalist cooperates with an invested company until it not only gets on its feet, but also becomes attractive to potential buyers. From this moment, yesterday's owner of the invested funds, and now who has become the owner of a package of shares in demand, considers his functions exhausted and exits the investment, releasing capital "frozen" for several years and receiving a long-awaited profit.
To do this, the venture capitalist has two fundamentally possible options: either the sale of shares on the stock market, which is preceded by an initial public offering of shares; or a direct sale of the company or part of it to a buyer who is ready to purchase it at a price that provides the investor with the planned amount of profit. After that, the venture capitalist permanently or temporarily parted with the company.
Since venture investments are high-risk, and in case of unsuccessful development of the company, the investor loses all invested funds, in my opinion, the role of the investor in the successful development of a new company is not limited to the timely provision of venture capital. It also includes simultaneously investing your experience in business and, of course, business connections that contribute to the expansion of the company's activities, the emergence of new contacts, partners and markets. Therefore, venture capitalists seek to directly participate in the management of the enterprise, entering the Board of Directors. The same explains the fact that they often take a direct part in the selection of objects for investment, as well as the fact that they always simultaneously carry out several venture operations, that is, they work with new ones, with existing ones, and with companies prepared for sale.
So, the mechanism of venture investments, as a rule, is not always clearly defined and has options for each specific case. If in classical capitalism the time factor was often not taken into account, then at the present stage of economic development, time becomes the main thing, which has a decisive influence on the mechanism of functioning of venture capital.
There are three main types of venture investments (Fig. No. 1.1), although in reality there are much more of them, and the main types are not completely independent. In fact, they represent the stages of the implementation of the entire project, from the idea to mass production of the final product.
Rice. 1.1. Types of venture investments.
1. Financing at an early stage of development is the most risky form of investment for an investor, since after its completion, about 70% of new projects that previously seemed commercially profitable do not find confirmation of their profitability. This type investments are divided into two subgroups - pre-start and start-up financing. Pre-startup capital is allocated before the direct formation of the enterprise. That is, at the stage when the company is a team of like-minded people and an unmaterialized idea. An example is the financing of work on the creation of a prototype of a new product and its patent protection, analysis of the sales market or the provision of services, legal support for profitable franchise agreements and sales contracts, as well as the formation of a business plan, the selection of managers and the formation of a company up to the moment, when you can switch to start-up funding. Start-up capital is directed to financing before the product is launched on the market, that is, to prepare the company for production on a commercial scale. Funds go to product development and primary marketing. The risk in this case is high, and investments are unlikely to pay off earlier than in 5-10 years, but the rate of return on investment at this stage is 39 - 63%.
2. Funding in the expansion stage is divided into three stages: in the first stage, funds are allocated for the company to start full-scale production and commercial sales; in the second stage, the purpose of financing is to support the activities of a company that needs significant working capital; the third stage provides for the allocation of funds to enterprises with existing production, which have great potential for expansion, for example, through the commissioning of a new production line or the creation of a distribution network in new territories. The risk of such investments is much less than in previous cases, and their payback period is much shorter (approximately 2 - 5 years). In my opinion, at the same time, venture capital can be considered as an alternative to classical lending. The company has approached the breakeven point.
3. They also allocate funding for a specific operation, which is performed as a one-time act. As a rule, funds are allocated for a very short period of time (for example, two years). For example, financing of the acquisition of enterprises: funds are allocated for the takeover of another company. High-yield bonds or bank loans can also be used for this purpose. Buyout Financing: Funds are provided to a group of managers to acquire the business of a public or private company through a share buyback. This type of financing also includes intermediate investments that ensure the company's activities in the period between other types of investments.
A clear separation of the above types allows the venture investor to significantly reduce the risk of their investments.
There are other types of venture capital that do not fit into any of the above groups. These include: rescue financing, which provides for the allocation of funds for the implementation of measures to ensure the revival of an enterprise - a potential bankrupt; replacement financing, intended to replace part of the firm's external resources with equity; financing of operations related to the company's entry into the securities market.
Highly an important factor is that venture capital is primarily people, venture capitalists themselves. Venture capital is probably the most "human" business of all known, and the success of investment companies depends solely on the talent, intuition and knowledge of the venture capitalists themselves. Contacts with entrepreneurs, analysis of companies, decision-making - all these processes are difficult to formalize and remain extremely personal. If there is a certain system or structure behind investment transactions in the stock market or bank loans, then there are specific people behind each venture. For example, veteran venture capitalist John Dorr has invested in companies such as Sun Microsystems, Netscape, Lotus, Amazon, Compaq. Profitability in the venture business can be the most fantastic, so often it is non-standard and bold, "human" decisions that make business. For example, in 1987, by investing in Cisco, Don Valentino of Sequoia Capital went against the opinion of many of his colleagues. However, today the $2.3 million invested in Cisco is worth $166 billion.
The human factor is so important also because venture financing is focused on new companies that create demand for something new. For example, in the 1980s, the CD craze began, and immediately venture capitalists began to invest heavily in this industry, willingly and on favorable terms for companies. Then this fashion began to fade, and the influx of investment dried up. The same pattern was observed when the craze for mobile phones appeared.
New markets are being created. Thus, venture financing contributes to the formation of a new proposal, the development of innovations and creates serious competitive advantages not only for companies, but also for the national economy.
Also, the fact of receiving investments from venture capitalists will certainly create an image for the firm: other services immediately become available to it. "Venture lawyers" agree to work almost for free, in the hope of a high income in the future. Accounting firms work with new small firms at low rates. And even traditional bankers raise the credit rating of such firms. Even after the venture capitalist sells his shareholding, he continues to play an active role in the management of the firm for many years.
Thus, the concept of venture capital consists of not only economic, but also social, and even psychological components. It is the personality of the investor and the investee that plays a decisive role, along with the very idea of future production.
Venture capital has such characteristics as long-term, risk, expectation of high profits after the company's shares are listed on the stock exchange. It can be said that the main goal of venture financing is that the financial 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 entrepreneurs in a new company.
2.2. History of venture capital and investments
The idea of venture investments appeared during the Second World War in England and in the United States. It was connected mainly with state military orders. But gradually the state withdrew from this sphere of investment, and this capital turned into absolutely private.
The first private venture project was the personal fund of Arthur Rock (a former employee of a Wall Street investment firm), created by him in 1957. Rock received a letter from Eugene Kleiner, an engineer at Shokley Semiconductor Laboratories in Palo Alto. Kleiner offered to finance the production of a qualitatively new silicon transistor, and the technology was completely different from that supported by the owner of the company, William Shockley (Nobel Prize winner in 1957). Rock initiated the creation of the first venture fund. Everything was built on the trust that arose when meeting people. Under the project, it was decided to create a specialized company with equity capital of 1.5 million US dollars. In search of the necessary money, I had to go around about three dozen investment companies. Everyone expressed interest, but no one wanted to participate in the fund, since it was the first experience of creating a special company for a completely new idea, moreover, in the form of financing a theoretical project. The necessary funds were provided by Sherman Fairchild, founder and owner of Fairchild Semiconductors, America's first semiconductor firm. The project turned out to be successful.
In 1961, Arthur Rock founded the first venture capital fund, which itself began to look for and finance projects and young companies. The size of the fund was only $5 million, but there were very few large US venture capital investors at that time. The results of the work of the Arthur Rock Foundation were stunning: having collected 5 million and spent 3, and only two years later returned 90.
The most rapid growth of venture capital in the US was observed in the mid-70s, when the government allowed pension funds to use up to 5% of assets for "risk investments".
Thus, the process of recognition of rapid investment in young companies took twenty years. As a result, a stable mechanism for raising funds for the development of firms began to take shape in the United States.
In Europe, venture business appeared in the late 70s. In Great Britain. In 1979, English investors invested 20 million British pounds in the development of promising technologies. But by 1987, the total amount of venture capital in the country exceeded 6 billion pounds. The UK, which accounts for almost 50% of all venture capital investments, is currently the undisputed leader in Europe in terms of the size of the venture capital industry.
Today, in 20 European countries, there are over 500 specialized venture funds and companies that have invested about $46 billion in the economy of the continent over the past decade alone.
Thus, the history of venture capital, spanning a little over fifty years, has evolved from purely public to private sources.
In Russia, venture capital is still in its infancy, however, as in developed countries, it is potentially one of the main sources of funding for the commercialization of scientific and technical developments. In general, the starting point of the venture industry in Russia should be considered 1993, when at the Tokyo summit between the governments of the G8 countries (at that time - the G7) and European Union An agreement was adopted to support newly privatized enterprises under the State Mass Privatization Program, under which about 15,000 small and medium-sized enterprises passed into the hands of owners.
“We have pledged to provide funds,” the final memorandum on future plans for reform support in Russia, said, “to create a $300 million SME Fund in close cooperation with the EBRD. We recognize the importance of improving market access for the development of economic reforms in Russia…”. This was written down at the mentioned meeting of ministers of states.
At the final press conference held after the meeting of the ministers of the G8 states, the then President of Russia B. N. Yeltsin expressed his attitude to the initiative of the leaders of the Western countries as follows: “This (financial) package must be paid by the end of the current year or the beginning of 1994 True, this is only $ 300 million. Of course, it is not enough, but over time there will be more. ”
Fulfilling the decision taken at the Tokyo summit to develop the allocated $300 million, the EBRD launched a program of regional venture funds (RVF). A year after the summit, on July 7, 1994, this bank announced the creation of the first of thirteen regional venture funds, which was the Smolensk Regional Venture Fund, managed by Siparex Gestion et Finance (SIGEFI). The purpose of this and subsequent funds was defined as "to help strengthen privatized companies through direct equity investment."
Each regional venture fund served a geographic area of Russia assigned to it, each had a capital of about $30 million, to which an additional $20 million of technical assistance funds were added to cover the costs associated with the operation of management companies and the preparation of selected responsible firms for investment . These additional funds were allocated by the government of the country where the Management Company or a consortium made up of companies from a particular region.
Each fund was required to invest between $240,000 and $2.4 million in companies with between 200 and 5,000 employees that were privatized under the Russian government's mass privatization program
The established Funds paid special attention to companies focused on local consumer goods markets, mainly food or related (packaging, after-sales service, etc.), but not the science and technology sector.
The first investment was made in 1995. However, the investment process was hampered by the following factors:
Early stage of market economy development.
Direct investment mechanisms have not been developed and understanding of the process is limited. Company managers were wary of outside investors.
The Fund Managers were not adapted to Russian conditions and the creation of management teams proceeded slowly.
Lack of direct contacts between Fund managers, their disunity.
The created situation led to the fact that in 1997 the Russian Venture Investment Association (RVCA) was created by the Regional Venture Funds.
The following tasks were set before the RAWI (Fig. No. 1.2.).
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Rice. 1.2. Tasks of the Russian Venture Investment Association (RVCA)
2.3. Typical legal forms used in Central and Eastern Europe
2.3.1. Resident structure
* Regardless of whether a transparent or non-transparent structure is used, it is very important that the fund does not operate in the country in which it invests through a resident structure, if the presence of a resident structure in the country of investment could lead to such taxation, which cannot be reduced by a double taxation treaty
* In such cases, the fund must be managed from outside - from a country where the presence of a resident structure will not entail adverse taxation
* Such countries can be not only the English Channel and Cyprus, but also Great Britain or Holland
* Under these conditions, a management team operating in one of the CIS countries will only advise a foreign management company, and investment decisions and divestment will be accepted in the country of which the management company is a resident, in the same way as will be signed, in many cases, investment agreements and divestment
* This aspect requires special care and consultation with local experts.
2.3.2. transparent structure
2.3.2.1. Limited partnership. The main transparent structure is a limited partnership that can be created under the laws of England, the English Channel, Delaware and various offshore companies like the Cayman Islands or Bermuda
These are extremely flexible organizational and legal forms, especially suitable for the creation of funds with a limited lifespan.
A fund in the form of a limited partnership in some countries is not recognized as transparent for taxation and cannot (at least without significant problems) be listed on the stock market
2.3.3. Opaque structures
2.3.3.1. British Investment Trust. This is an investment company registered in the UK, whose shares are listed on the stock exchange
* She enjoys exemption from UK capital gains tax, subject to certain requirements for such companies
2.3.3.2. Jersey companies. This category includes companies of many other offshore zones.
* Such companies can be used and listed on the stock exchange. The main problem with them is that such companies do not allow the use of double tax treaties. Therefore, when investing in Eastern European countries, if you want to avoid local taxation, such companies have to act through intermediaries
2.3.3.3. Cyprus companies. Cyprus is a country where taxes are low and at the same time you can take advantage of double taxation treaties
2.3.3.4. Dutch B.V. A Dutch BV company allows you to enjoy the following benefit: a company does not pay taxes in Holland if it owns more than 5% of the shares of invested companies. However, in case of distribution of income to investors outside the Netherlands, the tax is withheld. Income distribution (even in liquidation) is treated as profit, not capital gain
2.3.3.5. Others. The main non-transparent structures are described above, but the legal forms that exist in Malta, Madeira or Luxembourg may also be of interest.
2.3.4. American investors
2.3.4.1. Partnership.
2.3.4.2. The Employees' Income Pension Insurance Act. In cases where pension funds The US participates in a fund with more than 25% pension funds (including overseas) and the fund must meet the requirements for a “venture capital company”
* To do this, the fund must have management rights in at least 50% (according to the purchase price) of its investments
* If the fund has the right to appoint a director to the board of directors of the investee company, then this may be enough
* However, other rights may also constitute the necessary amount of management rights for these purposes.
2.3.4.3. Taxable non-operating income.(Unrelated Business Taxable Income - UBTI). Tax-exempt investors in the US make sure the fund does not have UBTI
So, if the fund directly receives income from the purchase and sale, and not just income from investments, then this can be considered as UBTI
* Another (albeit not obvious) way for UBTI to appear: if a fund invests with borrowed funds, then under certain circumstances dividends and income from such investments can be considered as UBTI
2.3.4.4. Law on investment companies. Both US investors and other participants in the fund will require detailed disclosure of certain information.
2.3.4.5. Controlled Foreign Corporation (CFC). If the share of participants of the fund from the USA is more than 50%, then such a fund can be considered as a CFC
* Where such a fund has a controlling stake in the investee, the latter is also treated as a CFC, and therefore US investors must comply with certain registration and tax requirements.
* A large proportion of investment funds in Central and Eastern Europe target US investors, many of whom are tax-exempt
* Such US investors must meet a number of requirements, including the following:
2.3.4.6. Partnership. If the investment is made through a partnership, it is very important that it qualify as a partnership for US tax purposes. These requirements are becoming easier to meet and generally require the general partner to have an equity interest in the fund of approximately 1% of the size of the fund, although some other requirements may need to be checked.
3. Features of the functioning of venture capital in Russia
3.1. The General Macroeconomic Situation in Russia as a Potential for the Development of the Risk Capital Industry
To understand the place and role of venture capital in Russia, it is very important to assess the overall macroeconomic situation in the country. The economic upheavals of the 1980s and 1990s put Russia in front of the need for radical structural transformations, requiring a transition to a new model of economic growth, where technological, product, organizational and managerial social innovations should play a qualitatively transformative role. In order to ensure an annual GDP of at least 4-5% over 20-25 years, Russia must restructure its economy on a modern technological basis. The issue of investments directed to the innovation sphere is particularly acute, due to the fact that the crisis has severely affected industries that work for the domestic market and, to a much lesser extent, are export-oriented (resource-extracting industries). This transition is based on intensive forms of venture capital use.
Today in Russia there are the necessary prerequisites for creating a system of venture investment focused on raising capital (mainly national) in the innovation sector of the Russian economy
(Figure No. 2.1.).
Rice. 2.1 Favorable trends for the development of venture capital investment in the Russian Federation
The private sector in Russia has become quite influential. The role of small enterprises in the national economy is given much more importance than before. In 2003, total industrial production was estimated to be 4.2% higher than in 2002, while the output of large enterprises decreased by 2.8% compared to the previous year. This means that small businesses were getting back on their feet much faster than the big ones were falling apart. There was a significant increase in the production of consumer goods (7.8%). The service market experienced growth of about 1.5% per month. In these two sectors, small businesses play a major role. But venture funds focused on small businesses are more dynamic in their development, just as the object of their interest is more dynamic.
The favorable situation for small business funds is determined today by the enormous need for investments for almost all enterprises, therefore there is no shortage in the choice of the recipient (for example, the St. Petersburg fund for equity participation in small enterprises has considered more than 1000 applications for investments during its existence). It is obvious that in such a mass of proposals there are necessarily 1 - 2% of highly profitable low-risk projects. It can also be assumed, for the same reasons, that the first "exits" of venture capital will occur in small businesses.
The corresponding scientific and technical potential, despite the difficulties of the transition period, has been preserved, which serves as the basis for the successful implementation of venture investments. There are 70 technology parks and about 50,000 small technology firms employing 200,000 people. The total volume of sales of the latter is 30 billion rubles.
A network of regional innovation and technology centers is being created. Now there are 18 of them (they unite 250 small firms), and another 17 are in the process of being created. A feature of the creation of the latter is that they are formed without state financial participation. The Ministry of Science of Russia, together with other consulting and expert organizations (for example, NPK "Innovation Agency"), has formed a package of data on innovative projects that have prospects for highly efficient commercialization.
The existing infrastructure for supporting small innovative companies, including both funds that provide financial support at relatively early stages of development (R&D and expansion of production), and a relatively new phenomenon in the Russian venture capital industry - Russian Venture Fairs.
The fair is an event at the federal level, which provides an opportunity to connect business and capital and establish partnerships between them, obtain comprehensive information about the latest trends and prospects of the venture industry not only in Russia but also abroad, get an idea of the technological potential and economic attractiveness small innovative business. When preparing companies for the Fair, a special training is developed - a course that is mandatory for top managers of all companies selected for presentation at the Fair. The full training cycle, which the company - an exhibitor of the Fair receives, begins with introductory seminars, which give the basics of venture entrepreneurship. Further, remote training is held, during which companies receive individual consultations and recommendations on the preparation of presentation materials. And directly at the Venture Fair, after determining the nominees - the final analysis and evaluation of the results of the presentations by the members of the Judging Commission.
The first Russian Venture Fair was held in Moscow in 2000. 28 companies from 8 cities were presented to 40 investors. Two companies received investments. At the Second Russian Venture Fair, held in St. Petersburg in 2001, 46 companies from 14 cities were presented to 60 investors. Only one company has already received investments after six months. The third Fair was held in October 2002 in St. Petersburg. 60 companies from 20 regions of Russia were represented at it, several companies received investments.
In general, the fair is attended by small innovative companies with an annual turnover of 20 thousand dollars and a need for investments up to 5 million dollars.
As for investors who attend the fair, we can highlight:
1. Venture funds that are looking for an investment object.
2. Large corporations that are looking for strategic partners.
3. Banks - in order to study the prospects of a new market and search for promising customers.
4. As well as individual investors - "Business - angels", whose investments make up the bulk of venture capital in Russia. According to a number of studies, they are one of the main sources of venture capital in our country. Thus, according to foreign studies, about three percent of the adult population consider themselves informal investors in Russia, which is a good result.
Venture capital fairs are also held at the level of districts of the Russian Federation. Thus, on April 14-15 last year Samara hosted the third district fair "Business Angels". Some of the projects that were presented by the exhibitors are presented in Table 1.
Table 1
Projects of the third district fair "Business - angels"
| Name of the participant of the fair |
Name of the project and its brief description |
| AVTOVAZ |
The first electric car in Russia - a car powered by a hydrogen engine |
| Small Aviation Association |
Lightweight aircraft |
| Samara State Medical University |
Composition for the effective treatment of fractures. This remedy is based on an extract from cadaveric bones |
| Department of Chemistry SamSTU |
Beer "Vozrozhdenie" of our own production with various flavors - juniper and hemp |
| OOO "Viardo" |
A new type of cermet bearings, which reduces the weight of the part by 2-3 times |
| Cryogen LLC |
Kit "- an installation with which you can easily clean various surfaces from oil contamination, for example, a car engine |
The main goal of the mentioned fair was reflected in the motto: “Russian capital for Russian innovations”. That is, the main thing for its participants was to attract investors - "Business - angels" - in innovative business.
In total, about 300 people participated in the fair. Among them were industrialists, entrepreneurs developing their business, representatives of government, financial, consulting and educational structures. In addition to Russian participants, international organizations have shown interest in the exhibition, wishing to bring their experience to the creation of an infrastructure to support innovative business.
From all of the above, we can conclude that in Russia there are the necessary prerequisites for venture capital investment. Of course, this is a very risky business, but if you choose the right strategy, the results can be impressive.
3.2. Sources and general mechanism of venture investments in the Russian Federation
Venture capital is a mechanism that reduces the time it takes for money to appear for the development of companies. But one of the main issues remains the problem of sources of money for venture capital financing. It is customary to distinguish between such sources of venture capital as the formal and informal sectors of the economy. If we look at the venture capital market in the US and Europe, we will see that the sources of venture capital funds are mainly the following entities.
1) Pension funds, insurance companies, banks (formal sector of the economy). In this case, the resources of a number of investors are pooled by venture capital firms (or funds), representing partnerships in the legal form. These specialized organizations have their own management companies, which are engaged in the placement of capital. They receive annual commissions of up to 2-3% of net assets. In addition, the management company receives up to 20% of the fund's profit. But this percentage is not paid to them until the investors are fully reimbursed for their investments in the fund and the agreed income. In addition to these professional financial intermediaries, subsidiaries of large corporations operate in the market, tracking new technologies and investing in them.
2) Government agencies and private investors - Business angels (informal sector). "Business angels" are, as a rule, professionals with experience in business: some are successful entrepreneurs, others are highly paid business professionals (accountants, consultants, lawyers, etc.) and hold top positions in large companies. Informal investors, as a rule, make investments at the "germ" stages, i.e. initial and early stages of project development.
In Europe, the main investors in European venture capital funds are banks (with the exception of the UK), and in the US - pension funds, insurance companies, sponsors and individuals.
There are a lot of "Business Angels" in Russia. According to a number of studies, they are one of the main sources of venture capital in our country. “Business angels”, for obvious reasons, do not advertise their activities, and statistics on their investments are not kept.
As for the formal sector in the Russian Federation, it is fully represented by foreign capital. The formation of Russian venture funds with the participation of national capital is in its infancy, although domestic pension funds, insurance companies, and banks are ready to participate in this work. One of the problems that does not allow them to effectively use their funds in this sector of the Russian economy is the lack of an appropriate legislative framework.
In Figure No. 2.4. the scheme of sources of venture investment in Russia is presented.
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Rice. 2.2. Sources of venture capital in Russia
Currently, more than 40 foreign venture funds are declaring their presence in Russia (however, only 15 are actually functioning) with total assets of at least $4.3 billion and there are representative offices of about 30 management companies.
All operating foreign funds can be divided into three groups:
Funds whose capital is fully or partially formed by the European Bank for Reconstruction and Development ( EBRD funds) with the participation of other international financial organizations;
Funds actively operating in Russia, in the creation and operation of which, along with corporate and private investors, the state participates in one form or another (" active" funds);
Funds that have declared their interest in the presence on the Russian market, but have not yet shown significant business activity (" passive" funds).
Naturally, the division of funds into "active" and "passive" is very conditional and is based on the available information about the number and volume of investments made in Russia. At the same time, it should be taken into account that funds, like any serious commercial structures, are very restrained in providing information about their activities. Therefore, it is not entirely correct to determine activity only by the indicated characteristics. It is obvious, for example, that a venture fund that is not currently investing, but is actively developing a dynamic strategy for its activities in Russia, cannot be classified as "passive".
The EBRD is likely to be the main investor in venture capital funds operating in Russia. First of all, there are Regional Venture Funds and Small Enterprise Direct Investment Funds (SEEFs), where the EBRD is almost 100% investor, and some other direct financing funds, where the EBRD acts as a co-investor.
Active funds - this group includes 6 funds with a total capital of about 1.26 billion dollars, which have so far made direct investments totaling at least 430 million dollars in several dozen Russian companies. The composition of the group is very representative:
Two funds - TUSRIF (The United States - Russia Investment Fund) and Defense Enterprise Fund - were formed from the funds of the US government and the US Department of Defense, respectively;
The activities of the Investment Fund for Central and Eastern Europe (Denmark) are supported by the state, the composition of the board of directors of the fund is approved by the Minister of Foreign Affairs of Denmark;
The share capital of Agribusiness Partners International is guaranteed by the US Government Agency for agriculture and the Overseas Private Investment Corporation (OPIC).
In other words, these funds, in their activities, are largely guided by the government strategies of their countries (USA and Denmark).
Passive funds - this group (as already mentioned, very conditionally) includes 16 funds with a total capital of at least $ 2.2 billion. Despite the declared interest in activities in Russia, there is no reliable information about large-scale investments made by these funds to the Russian economy.
Distinctive feature of these funds is complete independence in making decisions on investments - basically their capitals are formed by non-state corporate and private investors. The main condition is the satisfaction of shareholders' interests, primarily ensuring a high return on invested capital. Therefore, the reasons for the uncertainty of their position on the issue of activities in Russia are quite obvious:
High risks associated with the instability of the political and economic situation in the country;
Underdevelopment of the securities market;
Customs tariffs and restrictions, etc.
3.3. The main problems of the functioning of venture funds in Russia
So, based on the theory and experience of developed countries, venture capital and technology business seem to be created for each other, but in Russia the interaction between them is far from desirable. Russian venture funds often do not risk contact with high technologies, giving their preference to ordinary business with a good return. Investments in small high-tech firms are considered questionable in terms of results. Statistical data characterizing the influx of foreign investment into the Russian economy indicate that knowledge-intensive industries are not the most attractive for investment. According to the State Statistics Committee of Russia, of the total volume of foreign investments in the Russian economy in 2002 ($19,780 million), about half (44.5%) falls on the trade and Catering, 9.6% - for the oil industry and 12.5% in total for ferrous and non-ferrous metallurgy. The share of other sectors of the economy is much smaller. So, for example, in 1998 - 99 the main projects of venture funds were: participation in the organization of production of the now popular mineral water"Holy spring" (installation of cleaning filters, provision of taro - packaging); development of the forestry complex in the Arkhangelsk region (construction and organization of the work of sawmills, boiler houses, etc.); construction of a modern climatic installation (greenhouse) in the Arkhangelsk region, etc. And only the project for the development of a satellite and cable television system in the city of Severodvinsk can be called high-tech with a certain degree of conventionality.
In various literary sources analyzing the weakness of the venture capital industry in Russia, the issues of market conditions, lack of specialists in this field, imperfect legislation, etc. are put in the first place. But, in my opinion, it is worth starting with the very attempt to introduce a system of venture financing in Russia.
In the 1990s, the state policy towards small enterprises, the main objects of venture capital investment, was based primarily on ensuring its fiscal interests, and not on the development of innovative business, employment growth or curbing the process of market monopolization. The existing tax system, on the one hand, pushes enterprises to hide real incomes, preventing the creation of a civilized stock market, for which the transparency of financial reporting is important, and not "tax optimization", and on the other hand, it hinders the growth of enterprises' self-financing.
An essential point is that the venture industry was introduced into our country from outside. Its emergence turned out not to be the result of a rational private initiative responding to the internal needs of the development of local entrepreneurship and the market, but the result of political and administrative decisions, behind which there was a desire to instill the sprouts of a market economy in the country's transforming economy.
The purpose of exporting this exotic financial instrument to our country was formulated quite clearly - to assist privatized enterprises. The sizes of objects of potential financing (for EBRD funds) were determined and their main characteristics (enterprises privatized during the mass privatization program) were indicated. In my opinion, at that time no one really thought about the intricacies of the differences between the stages of development of companies and the corresponding forms and methods of financing. The bar for venture financing was fixed at a predetermined height, but this inevitably led to the transfer to Russian soil of the peculiarities of managing funds of this type, the nature of the interaction between funds and their investments, and the behavior of management companies in the emerging Russian market.
Currently, venture capital investment in technology businesses is also hampered by a weak entrepreneurial culture in many Russian firms. Many of them involved in the commercialization of their intellectual property often limit themselves to selling their own inventions. Even with the creation of small innovative firms, negotiations with venture capitalists end in failure due to the reluctance on the part of company heads to lose control of the business. As a rule, they prefer to use bank loans or preferential loans from the Assistance Fund and other government funds to support entrepreneurship. It also affects the unsettledness of intellectual property rights between its developers and the scientific institution, within the walls of which the scientific work. In light of this, as participants in the venture business in Russia note, one of the priorities for successful investment is a strict delineation of functions between inventors and innovation managers.
4. State support for venture capital in the Russian Federation
The experience of developed countries shows that the success of the development of venture entrepreneurship largely depends on the attitude of the state to this area of entrepreneurship.
Oddly enough, in no country (with the exception of Hungary and India, where there is a special law on venture activity, which provides for the licensing of venture funds and management companies and strict regulation of their activities.) there are no special laws regulating risky investments. There are no such laws in Russia, and according to a number of opinions, the development of venture financing in Russia does not require a separate law, it is only necessary to refine the old ones, while at the same time liberalizing Russian business, tax and customs legislation as a whole.
It is recognized that the specific Russian legislation regulating venture business is weaker than, for example, in Israel, Finland or the USA. But, nevertheless, it is enough for direct investments. In this connection, all amendments that may be required can be made to existing documents: the Tax Code, the federal law"On joint-stock companies".
It should be noted that attempts were made to develop a bill regulating venture activities, but since the bill envisaged the introduction of licensing of this type of activity, as well as the creation of other regulatory mechanisms, they did not find support in the State Duma, since the proposed norms would become an additional barrier to venture investments. This, in my opinion, is an absolutely true statement. I believe that in the "troika" - a venture fund, a management company and a source of innovation (venture enterprise) - the state should not have the right to regulate and set the rules of the game. This condition is dictated by international experience. The competence of the state should be limited to the development of a liberal and fair legal framework. In most countries where venture capital systems exist, this is exactly what happens. Perhaps that is why, after the adoption of the law on venture activities in Hungary, only one venture fund was created.
In this regard, in my opinion, it can also be assumed that if some act regulating the activities of venture funds by the state (something like registration, licensing, reporting, etc.) is nevertheless adopted in our country , then most likely the business community will simply ignore it and create structures that are more comfortable for carrying out such activities, but beyond the limits of state encroachment.
I believe that at the moment, highest value has the creation of a legal framework for venture capital investment by pension funds and insurance companies. The experience of countries such as the United States, Finland and Ireland shows that changes in legislation allowing pension funds to invest in venture capital have significantly increased the supply of venture capital within a few years.
It is also necessary to reform the accounting system and the system of taxation of enterprises. The corporate taxation system in Russia is still quite young, but is still based on many procedures from the Soviet period that do not meet the requirements of a market economy. Taxation should encourage companies to make a profit and, most importantly, show profit, which is the main indicator of the effectiveness of their work for investors. As for the accounting system, in most cases in Russia it is outdated, too bureaucratic, does not meet the needs of a dynamic business life, is focused only on fiscal goals, and not on helping the company's management - maintaining such accounting creates additional difficulties. Reports based on the Russian accounting system are not very useful for investors or business owners. The accounting report includes some rates or standard prices that do not reflect the real costs at all. The ability to reflect real business costs is very limited.
Legal regulation of accounting, to a certain extent, is necessary to ensure that the financial position of the enterprise is correctly reflected in the accounting data, and also so that the enterprise can attribute the costs of scientific and technical research to the cost of production.
The state should also pay attention to improving corporate laws. In order to attract foreign or local external investors to finance a business, it is also necessary to resolve a number of small legal and practical issues, such as, for example, as:
Protecting the rights of shareholders who do not have a controlling stake. Today in Russia, the protection of the rights of shareholders with less than 25% of the shares is very weak, which limits the ability of investors to make small contributions to small companies. This is disadvantageous for both parties.
Contractual obligations of shareholders. Shareholders' contractual obligations should have stronger legal protection in Russia. If all shareholders are unanimous on any issue, it should be accepted as law. An agreement between shareholders can be used to strengthen the protection of the rights of shareholders who do not have a controlling stake, by giving them more opportunities in deciding how to manage a real business.
As far as registration and authorization are concerned, Russian official procedures are often based on many cumbersome and unclear registration and authorization steps, which are lengthy and costly. There are bodies that have introduced their own procedures for private investors, such as the Central Bank, the State Registration Chamber, the Ministry of Antimonopoly Policy, the Federal Securities Commission, in which the chain of approvals and registrations sometimes lasts up to 5-6 months. This situation often leads to a break in the deal. At least for small companies and their investors, these procedures should be simplified.
The state can provide direct and indirect support to venture entrepreneurship (Fig. No. 3.1.).
Rice. 3.1 Measures of state support for venture entrepreneurship
Possible forms of direct state support for venture capital entrepreneurship include:
1. Direct investments provided to venture innovative enterprises. Such investment can be carried out, in particular, through the acquisition of shares both directly by venture capital enterprises and firms - investors of venture capital. The state, investing in the development of venture business, pursues, as a rule, other goals than private investors. The main goals of financing from the budget are, as practice confirms, the creation of new jobs, the development of new technologies important for the development of the national economy, as well as the creation of new enterprises. Business profitability becomes a secondary, dependent goal. For venture capital companies, the attractive thing about public funding is that these investments are inexpensive and not focused on generating significant profits. However, these funds can be useful for investing in companies at an early stage of development.
In the case of financing strategically important high-tech and science-intensive projects, it is possible to use the scheme of partnership participation of the state and private investors, implemented, in particular, through the creation of a special fund. This fund could be formed on a parity basis at the expense of equal amounts, on the one hand, from the budget, and on the other, from banks, insurance companies, pension funds and other financial institutions.
2. Provision of public creditors either directly to venture capital firms or venture capital firms. Of interest is the 1954 technical development loan program introduced in the Netherlands, which provides access to venture capital for innovative companies and projects. In particular, this program provides for the provision of subordinated loans with a maturity of 10 years.
3. Providing a tied loan, on which the entrepreneur pays interest if the project is successful, and reimburses only a part of the loan amount if the project is not successful. Lenders (such as, for example, in the Republic of Korea are state-supported corporations) and the entrepreneur agree on the amount of interest and compensation when assessing the risk and expected income from the project.
4. Leasing.
5. Providing grants to venture enterprises implementing high-tech projects. It is extremely important to provide such support at the first, initial, stage of the venture project implementation. As practice shows, the provision of grants is justified for operating expenses, for project evaluation, for direct support for the management of a venture enterprise.
Measures of indirect state support for venture capital investment could include:
1. Provision of state guarantees for venture investment, i.e. guarantees to the venture investor to cover part of the venture investments he makes in high-tech venture projects. For example, in the Netherlands, within the framework of the government decree on loan guarantees for small and medium-sized businesses, a special program has been developed to provide long-term bank guarantees for innovative companies of the second stage of growth under state guarantees.
2. Tax incentives, such as the provision of investment tax credits for venture capital enterprises, tax cuts on capital gains and on investment from pension funds, as provided for in the United States, Taiwan and Canada. In modern economic conditions, the use of tax incentives should be focused on minimizing the additional burden on the federal budget and be compensatory in nature.
3. Privileges on customs duties, which should be extended, in particular, to the import of equipment and components by venture enterprises.
4. Prevention of double taxation of venture capital and income from it.
One of the first steps of the state to stimulate the venture capital industry should be, in my opinion, the development of a market for exits from companies. The fact is that the possibility of "exiting the company" is very important, since sooner or later a venture fund must sell its shares. Stock exchanges are the most suitable place for this operation. The Russian government should create conditions for maintaining stock exchanges in the country.
State support for the examination of innovative projects and the development of consulting services for small enterprises in the scientific and technical sphere, the development of an information environment that allows small innovative firms and investors to find each other is also very relevant. This could increase the number of projects that meet the requirements generally accepted among venture capitalists. This also includes projects to create networks of "Business Angels". In Great Britain, for example, the development of information services about business agents (informal investors) is estimated at 30-40 billion dollars. per year, i.e. 8-10 times the venture capital pool.
Also, the state could take part in organizing and financing activities for the training of relevant personnel. This means promoting education in the field of venture activity by training specialists in relevant business schools, as well as universities. Since today there is a shortage of professionals in this area of economic relations in the country, this measure would increase literacy when choosing investment projects to be financed;
Of course, one should not lose sight of the fact that a number of projects aimed at developing venture financing are already being implemented. Among them, for example, the work of the State Fund for Assistance to the Development of Small Forms of Enterprises in the Scientific and Technical Sphere, headed by I.M. Bortnik. This fund provides financial support to small innovative firms on a reimbursable basis. In 1998-1999 this fund conducted a program to develop consulting services for small innovative enterprises.
Along with it, the Russian Fund for Technological Development (RFNT) was formed.
By order of the Government of the Russian Federation of March 10, 2000, the first "fund of funds" was created - the Venture Innovation Fund (VIF), whose task is to help create regional / sectoral funds with Russian and / or Western capital. Some funds are allocated by the Ministry of Science and Technology and the Ministry of Education for the development of innovation activities. The Ministry of Education of the Russian Federation actively supports entrepreneurial activity in the university environment.
Also, the Government of the Russian Federation, in order to increase the innovative and technological potential of Russia, improve non-budgetary financing of science, and develop small business in the scientific and technical field, is taking the following steps:
· Established an interdepartmental working group on the development of venture capital investment in Russia, which is deployed on the basis of the Ministry of Science and Technology.
· Develops a Concept for the Development of Venture Investment in Science, Technology and Innovation and an Urgent Action Plan for its Implementation.
· Preparing a resolution<О развитии в Российской Федерации системы венчурного инвестирования>.
Some success in introducing the mechanism of venture investments in the Russian Federation has been achieved through cooperation, for example, between the Ministry of Science, the Russian Fund for Technological Development and the Innovation Agency. Together they organized an open competition of innovative scientific and technical projects on the topic " New technology– a specific industrial enterprise”, financed from the Russian Fund for Technological Development.
Currently, several projects are also being implemented in Russia, which are initiated and financed, in addition to the state, by foreign charitable foundations that support the development of entrepreneurship in Russia. For example, the British Council is now implementing programs that help bridge the gap between science-intensive projects and venture capital investments.
Thus, the creation of venture networks based on effective partnerships between small and large enterprises, financial institutions and the state is an important task for the development of the economy of our country. The federal government and regional administrative bodies in Russia can and should take decisive steps to support small businesses, which are the driving force in the country's economic development, by creating a favorable infrastructure in the early stages of the development of new technologies, products, and services.
A mechanism has been successfully operating all over the world for many years, allowing efficient investment in innovative projects with minimal risks. Because the risks do not fall as a heavy burden on the shoulders of one specific investor or lender, but are evenly distributed among a large number of investors. This mechanism is called venture capital investment.
Typically, venture capital investment is carried out by acquiring a part of the shares of the enterprise - the client or providing him with loans. The venture capitalist works with the company until it becomes attractive to potential buyers. Then, he either sells shares on the stock market, or sells the company or part of it outright to the buyer who is ready to purchase it at a price that provides the investor with the amount of profit he planned. With this type of investment, the time factor plays a huge role, and personal qualities of a venture investor should also be given great importance - it is these factors that determine the amount of profit from the funded object.
The date of the emergence of this type of financing in our country is considered to be the Tokyo summit of the G8 countries in 1993, at which it was decided to provide Russia with $300 million to support privatized enterprises. Fulfilling the decision taken at the summit, the EBRD founded 13 regional venture funds, becoming the main source of foreign venture investments in the Russian Federation. The rest of the sources are represented by the IFC, various foreign government capital, funds of individuals, etc. The very fact of the existence of these funds, in my opinion, is some incentive for the development of venture business in our country. Also, among the most important prerequisites for its development, one can single out a rather powerful scientific potential and capital in the amount of about 3 billion dollars. In my opinion, against the backdrop of an acute shortage of innovative investments, these factors are significant enough to expand the venture capital market and attract the attention of foreign investors. In my opinion, a huge positive factor is the established trend towards the growth of the private sector in our country: the fact is that, according to the experience of foreign countries, it is small innovative firms that become recipients of venture capital investments. Not the last place, I think, is given to the infrastructure to support innovative companies, mainly in the early stages of development. Venture fairs related to them are becoming more and more popular year by year.
Despite the emergence of some necessary prerequisites for the venture industry, in Russia its development is constrained by a number of negative factors. It can be assumed that its very origin was already due to a number of problems. That is, initially the attempt to introduce a purely market mechanism into the "non-market" economy of Russia in the 1990s was not thoroughly thought out and planned. I believe that it was not acceptable to consider the capital of regional venture funds as sources for the development of privatized enterprises. Innovative, high-tech projects - this is the niche of this kind of funds. Now, more than a decade later, this wrong strategy is making itself felt - today, the vast majority of venture capital investors prefer to invest in any less risky industries than innovation.
Regarding the monopoly of foreign investors, despite their unconditional experience and support, it should be noted that the RHF financed by them are practically budgetary organizations, which is why they are not able to function organically in a market economy. Along with this, an indisputable fact is the reluctance of foreign companies to concede competitively advantageous market segments to Russian enterprises. And along with the imperfection of the legal regulation of venture capital, the way to such markets for other, Russian investors is practically inaccessible. I mean banks, insurance companies and pension funds. Thus, we can conclude that the issue of improving the legislative regulation of risk capital is very acute.
It should also be noted the lack of qualified personnel and the low culture of entrepreneurship in general. The lack of knowledge and specialists is present not only among the owners of funds, it is also inherent in firms applying for these funds. That is, a company that develops an innovative project sometimes finds it difficult to prove to investors the profitability of cooperation with them, to present a complete, well-founded project, which, in its essence, has the properties of a finished market product. In this situation, it is necessary, involving competent specialists, to organize special courses, develop programs to improve the skills of investors and their potential clients in the venture industry.
Also, in my opinion, a serious obstacle in this area is the difficulty in entering the international high-tech markets and the imperfection of the stock market in our country. The fact is that stock exchanges are an integral element of the venture capital mechanism. It is necessary to eliminate their inherent speculative nature in order to attract investors.
The slow resolution of these and other tasks is reflected in the complete absence of Russian venture funds with national capital, which, in turn, also leads to a number of problems.
Of course, some steps taken by the venture industry community and government agencies at various levels have already contributed to the development of small and medium-sized businesses. But the experience of foreign countries shows that the state has yet to carry out a number of reforms, primarily in terms of vesting pension funds and insurance companies with the prerogative of venture investment.
In general, measures of state regulation of venture investment are divided into direct and indirect. Direct measures are direct investments provided to innovative ventures. Indirect ones include in general: the development of stock markets, the simplification of the procedure for the formation of venture capital funds, etc.
In my opinion, only the measures of the state regulation(but not intervention) contribute normal development innovative investments in our country. When forming the structure of the venture system, the state should not be involved in this system from the point of view of regulation, i.e. there should be no licenses, no government regulations, no audits, etc. However, at the same time, the state is obliged to create an appropriate legal field that outlines the boundaries of the activities of the participants in the venture system (let them build their relationships on their own) and then eliminate it.
Venture capital supports the most dynamically developing industries that provide the country with international competitiveness; he made possible the development of new industries such as personal computers and biotechnology. It is no coincidence that countries with a developed venture financing market (USA, Japan, Germany, Great Britain, the Netherlands) act as the largest exporters of high-tech products. Venture capital also serves to support entrepreneurial ventures, promote the emergence of new innovative companies, their rapid growth and market, as well as the creation of new jobs.
The lack of information does not allow us to give an exhaustive and completely objective description of the functioning of venture funds in our country and the risk capital industry as a whole. In this connection, probably, not all participants in this business came into view when writing this work. Despite this, with a certain degree of confidence, we can conclude that in the Russian investment sphere, venture financing demonstrates an innovative approach and, despite today's small volume, plays an important role in the development of promising sectors of the "new economy".
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In the context of ever-increasing international competition and globalization of Russia, it is no longer possible to ensure the growth of the welfare of society only through the export of natural resources. A transition to the creation of products with high added value is required. The success of this transition will depend not only on the level of scientific and technological development of the country, but also on its ability to finance research, commercialize their results, and introduce them into the production process.
An effective and widespread form of innovation activity abroad in recent decades, aimed at intensifying the process of using inventions and other innovations, is venture activity or venture business.
Venture small businesses search for fundamentally new products and processes, operating in conditions of high commercial risk, and also undertake the refinement and experimental development of scientific and technical innovations that do not require large capital expenditures.
Modern venture firms are flexible organizational structures characterized by high entrepreneurial activity, which is determined by the direct interest of inventors and their partners in the venture business in the speedy commercial implementation of inventions, and with minimal development costs.
In terms of the pace of development of inventions, neither large, nor even medium and small industrial firms, which for the most part have very insignificant experimental production facilities, can compete with them.
Venture small businesses search for fundamentally new products and processes, operating in conditions of high commercial risk, and also undertake the refinement and experimental development of scientific and technical innovations that do not require large capital investments.
The development of venture investments in our country began in the late 90s. The pioneers were foreign companies. Later, the state also joined this work. So, in accordance with the order of the Government of the Russian Federation of June 7, 2006 No. 838-r. In order to stimulate the creation of its own venture investment industry, the development of innovative sectors of the economy and the promotion of Russian science-intensive technological products to the international market, the Russian Venture Company (RVC) was established. The total number of funds formed by RVC JSC has reached twelve (including 2 funds in foreign jurisdiction), their size is more than 26 billion rubles. The share of JSC "RVC" - more than 16 billion rubles.
The main tasks of the RVC were:
- - an initiative to create in Russia its own venture investment industry;
- - improvement of innovative sectors of the economy;
- - development of new technologies and science-intensive technological products;
- - Creation and expansion of new innovative companies;
- - formation of a culture of innovative entrepreneurship, etc.;
On the principles of public-private partnership, seven venture funds were formed for a period of 10 years, in which 49% belong to RVC, and 51% are funds from private investors. In addition, the Venture Innovation Fund (VIF) was created, and within the framework of a public-private partnership, regional venture funds were formed for a period of 7 years. The structure of the funds' assets: 25% - federal budget funds; 25% - funds from the regional budget; 50% - investments of private investors. At the direction of the President of the Russian Federation, at the end of 2007, the Russian Investment Fund for Information and Communication Technologies (RIFICT) was created (see Table 1).
Today there are 108 venture funds operating in Russia. Of these, only 43 are active. And the volume of capital of these funds is only 2 billion dollars. "This is quite a bit on the scale of a country like ours, in comparison with other funds that are available in developed countries," President D.A. Medvedev. Estimates of actual venture capital investment in Russia are even worse. In 2009 they amounted to only 300 million dollars. For comparison, in the US it is 21.4 billion dollars, in the EU - 4.6, and in China - 1.9.
Table 1. State venture funds of the Russian Federation
It must be understood that venture funds are a kind of triggers for the introduction of innovations. Their successful activity, in turn, will create incentives for domestic financial and industrial groups, commercial banks and insurance companies to enter the capital market.
In order to encourage entrepreneurs to invest in venture funds, RVC voluntarily limits its income from invested funds at the level of 1/5 of the refinancing rate of the Central Bank of the Russian Federation, the rest of the income will be received by private investors of venture funds. The activities of RVC are aimed at innovative modernization of the domestic economy. Its functions include the selection on the basis of a competition of private venture management companies and the acquisition of shares of venture funds in the form of closed shares of investment funds created by venture management companies.
According to the concept of this model of state support for investment development, the result of RVC's activities will be the creation of its own industry of venture financing within a few years.
Financing from venture funds has a number of advantages. Among them:
- - the possibility of investing at an early stage, when the company is not ripe for an IPO, but it is already necessary to raise funds in order to expand the business;
- - the process of raising funds is much faster: if it takes at least three to four years to enter an IPO, then it takes a year and a half to receive funds from a venture fund;
- - cooperation with a venture fund can become a kind of preparatory stage, allowing the company to approach the IPO already prepared;
- - venture funds, as a rule, give good professional advice on doing business.
The main problem of regulation of venture activities is the effective combination of the goals of the state associated with the development of science-intensive industries and new technologies, while maintaining and developing the scientific and technical potential in the country, with the goals of the entrepreneurs themselves, whose main incentive is the efficiency of investment. This requires legal norms and economic conditions that would provide entrepreneurs with an adequate degree of compensation for all the risks associated with this type of investment.
Along with the creation of state venture funds on the principles of public-private partnership, the most important tool for influencing the innovation environment is the creation of three types of economic zones:
- - technical and innovative;
- - industrial production;
- - tourist and recreational.
The mechanism of the special economic zone provides for preferences in key business areas: tax and customs benefits, public financing of infrastructure, and reduction of administrative barriers. It is the combination of these factors that makes the regime of the special economic zone quite attractive for investors.
Federal Law No. 116-FZ of July 22, 2005 “On Special Economic Zones in the Russian Federation” provides for a number of benefits for residents of these zones. Residents of industrial and production zones are exempt from paying land, property and transport taxes for five years, and income tax is reduced by 4-20%. In addition, imported materials and equipment brought into the territory of the special economic zone are not subject to customs duties. For technology-innovative special economic zones, the UST rate will also be reduced from 26 to 14%.
At present, two production and industrial, four technical innovation and seven tourist and recreational zones have already been created in Russia.
Therefore, state support for the development of Russian venture capital, which is in its infancy, is essential. Improving the mechanisms for the development of venture business in Russia should become one of the main priorities of the national innovation policy, since it is high-risk business that is a powerful lever that can use the entire scientific potential of the country and all its technological power.
In July 2010, Russian President Dmitry Medvedev, opening a meeting of the Commission for the Modernization and Technological Development of the Russian Economy, proposed a number of measures for the development of venture business in our country:
“Firstly, the transition to an innovative economy complicates the forms of doing business,” he said. “Emerging venture funds and start-up companies are dealing with much more high levels risk enter into more complex relationships. And we need new effective organizational and legal forms."
Secondly, it is necessary to develop a system of expertise and a whole range of services. This concerns, first of all, legal, information and accounting support. "Any start-up without such support, without the ability to conduct business in a civilized manner is doomed to failure," the head of state said. And if only the nascent innovative business has to hire a staff of lawyers and accountants, then this inevitably leads to collapse.
The third measure is the expansion of areas financed by the Fund for Assistance to the Development of Small Forms of Enterprises.
Fourth. It is necessary not only to actively attract foreign investment, but also to develop the domestic financial market, create conditions that will allow attracted capital to remain in Russian companies, regardless of the circumstances on international markets, Medvedev believes.
Certain steps have already been taken here. Legislative decisions were adopted to protect investors from the bankruptcy of financial organizations; measures of tax incentives for scientific, experimental design and technical innovation activities have been introduced. The president promises to continue work on reducing the regulatory burden on investment funds and liberalizing the export of innovative products.
Fifth, Dmitry Medvedev urged to ensure the continuity of the work of all links in the innovation chain and the coordination of development institutions. So far, he does not have the feeling that venture and innovation work as a system. "There is a feeling of some fragmentation," he said. More often than not, young people just happen to meet in the right place and somehow find the means to realize their idea.
We note another significant reason hindering the development of venture entrepreneurship - the lack of feedback between large industrial production and the developers of an innovative product. The creation of only the appropriate infrastructure, which allows to link together the interests of the customer and the executor of venture projects, will make it possible to overcome the technological gap between Russia and the United States, the developed countries of Europe and Asia. And here the opportunities are very wide: the development of venture funds, the holding of targeted forums, the wide coverage of the conditions of various tenders, etc.
Investments in venture entrepreneurship lead to an increase in employment, especially for highly qualified specialists, and to equalize the living standards of various segments of the population. The global venture capital market crossed the $100 billion mark in the mid-1990s. Venture capital plays an important role in the implementation of innovations in knowledge-intensive industries. In terms of the structure of funding sources and the conditions for providing funds, it differs significantly from traditional methods of attracting investments. Venture business creates a new type of investment mechanism for innovation and increases the efficiency of the economy as a whole. The advantages of venture capital are also used by large corporations.
For example, the General Electric Company includes about 30 venture capital enterprises operating in various fields, the total capital of which is $ 100 million. Many companies create start-up firms, presenting them with unlimited industrial independence. The parent company acts as the main shareholder of the new company, establishing full financial control over its activities, and receives exclusive rights to implement the results of the innovation process.
As the world experience of various countries (USA, Japan, Israel, Finland, India, etc.) shows, venture business can radically change the quality of economic growth, helping to overcome the shortage and high cost of investment resources.
The gap between Russia and developed countries in terms of the main indicators of the development of small business in general and small innovative business in particular remains significant. The number of small and medium enterprises in Russia is 23 times less than in the USA, 77 times less than in Japan and almost 2.5 times less than in France. The number of people employed in the sector of small and medium-sized businesses in Russia is almost three times less than the same indicator not only for developed countries, but also for some countries with economies in transition.
Thus, only after the creation of conditions for the normal implementation of venture activities, we can talk about the transition to an economy based on innovation. As the experience of most economically developed countries shows, the success of the development of the venture capital industry depends not only on the level of thoughtfulness and timeliness of government decisions, but also on the willingness of private investors to take on increased risks and invest in the creation of domestic revolutionary products and technologies.
List of used literature
venture capital fund development
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- 2. Baidakov A.N., Zaporozhets D.V., Nazarenko A.V. Forecast scenarios as a necessary component of the risk management system // Bulletin of the APK of Stavropol, No. 3 (3), 2011, p. 55-58
- 3. Baidakov A.N., Nazarenko A.V. Scenario forecasting in the management of agrarian economic systems // Bulletin of the Institute of Friendship of the Peoples of the Caucasus "Theory of Economics and Management of the National Economy". 2011. V. 4. No. 20. S. 21-26.
- 4. Belikova I.P., Sakhnyuk T.I. Study of the problems of innovative development of the Russian economy // Bulletin of the North Caucasian State technical university, 2011, No. 3. pp. 219-224
- 5. Belikova I.P., Sakhnyuk T.I. Small business and innovation// Bulletin of the North Caucasian State Technical University, 2012, No. 3. pp. 207-211
- 6. Belikova I.P., Sakhnyuk T.I. Problems of small business in Russia // Bulletin of the agro-industrial complex of Stavropol. 2011, No. 2 P. 52-54
- 7. Zaporozhets D.V. Indicators of entrepreneurship development in mobile communications // Regional economy: theory and practice. Finance and credit. Moscow. 2009. No. 37. pp. 53-59.
- 8. Zvyagintseva O.S. Assessment of the investment risk of the region// Bulletin of the Moscow State Regional University. Series: Economy. 2010. №2. pp. 66-74
- 9. Zvyagintseva O.S. Assessment of the level of investment attractiveness of regions based on a comprehensive methodology for determining the investment indicator // Problems of the modern economy. 2010. №1. pp. 301-306
- 10. Kosov M.E., Sigarev A.V. The role of the state in the development of the venture industry // Finance and credit. 2010. No. 20. P.41-45.
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Introduction. Theoretical part
Venture business: concept and characteristics
1 Concepts of venture business
2 Venture business: characteristics and features
Analysis of venture business and its development in Russia
1 Place of venture financing in project financing
2 The role of venture financing and the stages of development of venture business
Prospects for the development of venture capital in Russia
1 Venture capital development trend
2 Venture investment. Methods and mechanisms.Practical part
Development of an innovative project
Conclusion
Bibliography
Introduction
The modern economy is developing so rapidly that no technology, no project can wait - money for business development, as a rule, is needed either immediately or never. Venture capital is precisely the mechanism that reduces the time for the appearance of money for the development of companies, and therefore, the study of risky investments is becoming more and more relevant both in developed countries and in Russia.
Like any other innovation, venture financing is beginning to attract more and more interest. The following two important trends confirm the relevance of this topic. First, the leading role in research and development funding is shifting from the public to the private sector. Second, profit maximization in R&D does not mean passive, aloof, and tech-incompetent institutional investors. On the contrary, there is a growing number of intermediaries specializing in the analysis, selection and management of technological innovation projects. At the same time, everyone's attention is directed to venture capitalists, since it is they who play the most important role among such intermediaries.
Currently, Russia is facing economic problems that are associated with the lack of an established system for financing innovation activities in the country. In this regard, the study and analysis of non-traditional sources of investment, one of which is venture capital, are beginning to become increasingly important in our country.
Using the methods of comparisons and analogies, an analysis of venture capital investment in Russia was carried out, the study of which is the object of analysis in this paper. At the same time, the flow of venture capital money directed to Russian funds should be considered as the subject of analysis. It is necessary to analyze the volumes in which these funds were received for a certain period, as well as their dynamics and the factors determining it.
In this paper, such tasks of analysis are set as a theoretical consideration of the concept of venture capital and the history of its emergence in developed countries and Russia. Also, the theoretical significance of the project is to substantiate the presence of prerequisites for the development and successful functioning of the venture industry within the current macroeconomic situation in our country. Further tasks are to study the sources of venture capital in Russia and the specifics of this mechanism. Particular attention is paid to the analysis of the obstacles that arise in the way of the formation and functioning of venture funds in the Russian Federation today, and ways to overcome them, which characterizes the practical significance of the project. Finally, the role of the state in the development of the venture capital market is revealed.
AT modern conditions scientific and technological development, special attention is paid to the development and development of innovations. The importance of the development of the venture industry lies in the fact that most of the discoveries in high-tech industries have been achieved through venture capital and venture capital enterprises. The activities of many economically developed states are aimed at creating economic mechanisms that contribute to the introduction of the latest achievements of scientific and technical potential into production. One such mechanism is venture capital.
The relevance of the topic is due to the increasing role of science-intensive products to increase the competitiveness of countries, since the political status of the country is determined by the level of achievement of scientific and technological progress.
Target term paper is to study venture business.
To achieve this goal, it was necessary to solve the following tasks:
Determine the essence and content of venture business
Reveal the features of venture business
Explore the mechanism of venture capital investment
Determine the significance of the venture industry for Russia
The object of research is the process of formation of the venture industry in the current economic conditions of Russia. Subject: Venture business and its features.
When covering theoretical issues, the works of domestic and foreign authors on this topic were used: Kashirin A.I., Semenov A.S., Folomiev A.N., Fursenko A.A., Cooper I., Lerner J., Poterba J. , Roberte E., Fried W.
Follow-up methods: the work consists of an introduction, chapters of the theoretical and practical parts, conclusion, list of references.
I. Theoretical part
1. Venture business: concept and characteristics
1 Concepts of venture business
Venture business is a form of investment that has a history of half a century, but in Russia this business began to develop relatively recently, dating back to 1993.
Venture business has significant differences from a strategic partnership or bank lending that has become familiar.
The very essence of the venture business is partially reflected in its name, translated from English "venture" - "a risky enterprise, a risky undertaking or undertaking."
What is the risk and profitability of venture business?
This kind of investment is beneficial to carry out in small companies, and on terms that have nothing to do with banking: enterprises do not provide any collateral. As a rule, venture investment has as its object private or privatized enterprises, the shares of which are the property of shareholders and do not appear on the stock markets. There are several forms of investment:
in exchange for a block of shares;
in the form of an investment medium-term loan for a period of three to seven years;
a combination of these two options.
There is also a difference between venture investments and strategic partnerships, since a strategic partner most often seeks to obtain a controlling stake and bears not only
financial, but also full responsibility for the company. The venture investor does not seek to gain full control over the company, leaving this function to the managing managers, and thus stimulating them to achieve high financial performance and further develop the company with the funds invested by them. The main goal of a venture investor is to increase the company's profits, increase its value in the market, for this purpose he invests his money, without incurring any responsibility, except financial.
For the sake of this, a venture investor is not interested in the periodic distribution of profits (dividends), preferring to invest the earned funds in the further development of the company. Company management, pricing, development, increasing the profitability of the business, as well as the risks associated with its conduct - everything lies on the shoulders of managing managers. The main and only risk of a venture investor is financial, because if his calculations did not come true and the company's management did not lead to a positive result, he simply loses the invested funds or sells his block of shares at the original price.
Venture investment is considered a successful investment, as a result of which, after 5-7 years, an investor can sell his block of shares at a price several times higher than the initial one. Thus, the venture business is attractive both for entrepreneurs who receive additional capital for the development and expansion of the company, and for the investor, for whom right choice of the investment object, the final financial result significantly exceeds the potential risk.
1.2 Venture business: characteristics and features
In a market economy, there are various organizational forms of enterprises focused on solving scientific and technical problems and specific tasks with a clearly defined end result. Acquaintance with them, of course, is of great practical interest, since venture business is a part of production, investment management, and strategic management of an organization.
One such form is venture capital firms. These are small, but very flexible and efficient enterprises that are created to test, refine and bring to a commercial condition and industrial implementation of "risk technologies" - ideas, inventions, utility models and other innovations, the creation of which is associated with a certain risk. Venture capital enterprises are most common in knowledge-intensive sectors of the economy, where they specialize in scientific research and engineering development, i.e., in the commercial testing of scientific and technical innovations.
Venture firms are created on a contractual basis and with funds obtained by temporarily pooling capital, as a rule, of several legal entities or individuals, or with loans or investments from large companies and banks. Funds are invested in venture business without any material support and without guarantees - at the own risk and peril of capital owners. In case of failure, investors lose significant resources. This, at first glance, unusual investment of funds by entrepreneurs is explained by the fact that they seriously believe in the success of venture activities and, having no conditions (time, specialists of the required profile and qualifications, necessary experimental base) for their own research and commercial implementation of promising technology, they expect use this development to modernize their products with the least risk and minimum time and cost. As a result, investors with positive results of the venture firm's activities will receive large profits and recoup their investments many times over. For example, the average rate of return of American venture capital firms is about 20% per year, which is about 3 times higher than the average for the US economy as a whole. The amount of profit is determined by the difference between the market value of the share of shares of the innovator firm owned by the risky investor and the amount of funds invested by him in the project. This share is stipulated in the concluded contract and can reach up to 80%. In essence, the financial institution becomes a co-owner of the innovator company, and the provided venture capital becomes a contribution to the authorized capital of the enterprise, part of the latter's own funds.
There are two organizational forms of venture enterprises: independent firms and those located inside large enterprises. But, regardless of the organizational form, they are temporary structures aimed at a certain final result of activity. As a rule, the basis of the team of employees of the company are highly qualified specialists from related industries.
Modern venture enterprises are flexible and mobile structures and are characterized by extremely high and purposeful activity, which is explained by the direct personal interest of the company's employees and partners in the venture business in the speedy successful commercial implementation of the developed idea, technology, object, invention, and at minimal cost. In the pace of bringing the development to commercial implementation, neither large, nor even medium and small industrial firms can compete with them. Typical examples are developments in the field of metallurgy (for example, continuous casting and beam melting) and in the automotive industry (heat-insulated steering wheel, automatic transmission, silent rear axle) created by small venture enterprises that are not recognized by giant firms.
It was small venture firms that gave a start to life to such inventions as electrography, vacuum lamps, a ballpoint pen, penicillin, a jet engine, color photographic paper, ferrite printing, etc. Statistics say that venture firms were the “parents” of more than 60% of major innovations of the 20th century. . So, venture firms are a serious source of innovation. To create them, you need four components:
commercial idea (the essence of the future innovation);
public need for this innovation (product, technology, object, service);
an entrepreneur who is ready to create a venture firm based on the expected innovation;
"risk" capital to finance the venture firm.
Venture capital has a number of significant differences from banking and industrial. First of all, its investors agree in advance to the condition of “approved risk”, it is placed not in the form of loans, but as a share in the authorized capital of the company being founded, and finally, venture capital is invested in order to receive not entrepreneurial, but founding income, as well as the acquisition rights to all innovations arising in the course of the funded project or enterprise.
The most important mechanism for controlling the activities of a financed company is a phased scheme of capital investments. The venture capitalist does not invest all the funds at the same time, but each time allocates an amount just enough to reach the next stage. Thus, in case of periodic reassessment of the prospects of the projects being implemented by the company financed, he may decide to stop investing, which disciplines the company's management, excluding the possibility of investing in inefficient projects. Such a control scheme in the financing process is often carried out in the form of syndication of venture capital investments. This allows, firstly, to reduce the risk level of venture investments by forming a portfolio of different projects, and secondly, to conduct cross-checks of financed companies by venture capitalists.
A venture investor finances the creation of a company, then supports its development, at a certain stage assists in issuing shares for sale on the stock market in order to make a profit. To ensure the necessary liquidity of shares or sell a small high-tech company at a high price, it must go through five successive stages of the life cycle: development of an investment project; attracting venture capital; development up to the start of production of new science-intensive products; expansion and sustainable operation based on the successful sale of manufactured products, the sale of the company and the return to the investor of the invested funds and the payment of profits.
The life cycle of investments in venture business usually does not exceed 5-7 years. During this time, the company must achieve such economic results that would allow venture investors to fully return the funds and exit the business with a profit.
A venture firm is created to solve a specific problem, and after the completion of this work, it either disbands and ceases its activities, or is absorbed by a large firm (often one of the founders), or independently, with a favorable commercial environment and a clear competitiveness of the created product, enters the market and by selling a commercial development strengthens its financial position, creates its own production and organizes commercial operations on the basis of modified innovations. In this case, the former venture company organizes the production of small batches of products, sells them profitably, fulfills its obligations to investors and, through the sale of licenses, raises the necessary funds to expand its own production.
The name "venture" comes from the English "venture" "risk venture or undertaking". The term “risk” itself implies that there is an element of adventurism in the relationship between the capitalist-investor and the entrepreneur who claims to receive money from him. And it really is. Risk (venture) investment, as a rule, is carried out in small and medium-sized private or privatized enterprises without providing them with any collateral or pledge, unlike, for example, bank lending. Typically, venture capital is invested in those projects that have no chance of getting funding from a lending institution. A bank would never take on the risk that exists in a venture investor's project. Thus, when a large group of projects appears that do not have a chance to find their investor, then a venture investor appears who is ready to take risks and have the opportunity to receive large incomes for this.
Venture funds or companies prefer to invest in companies whose shares are not freely traded on the stock market, but are fully distributed among shareholders - individuals or legal entities, are directed either to the share capital of closed or open joint-stock companies in exchange for a share or block of shares, or provided in the form of an investment loan, usually medium-term by Western standards, for a period of 3 to 7 years. The interest rate on such loans is either not set, or is LIBOR LIBOR - London Interbank Offered Rate, literally - the London Interbank Offered Rate - the average interest rate at which banks in London provide loans against placing deposits with them. + 2-4%. In practice, however, the most common form of venture investment is the combined form of investment, in which part of the funds is contributed to equity capital, and the other is provided in the form of an investment loan.
Venture investors (individuals and specialized investment companies), with the help of experts, analyze in detail how investment project, and the activities of the company offering it, its financial condition, credit history, quality of management, the specifics of intellectual property. Particular attention is paid to assessing the degree of innovativeness of the project, which largely determines the potential for increasing the value of the company.
As a rule, a venture investor invests in enough a large number of unrelated projects in various fields of activity and industries, thereby diversifying their contributions, achieving a reduction in overall risk. This allows him to make investments without being constantly involved in the management of the enterprise, saving himself from numerous problems associated with this. Thus, a portfolio of a venture investor is formed, consisting of heterogeneous projects. A venture investor, as a rule, does not seek to acquire a controlling stake in a company (at least in the case of initial investment). And this is its fundamental difference from a "strategic investor" or "partner". The latter often initially wants to establish control over a company that interests him for one reason or another.
The purpose of the venture capitalist is different, by acquiring a block of shares or a share less than the controlling block, the investor counts; that the company's management will use his money as financial leverage in order to ensure faster growth and development of their business. Neither the investor nor his representatives assume any other risk (technical, market, managerial, price, etc.), except for the financial one. All of these risks are borne by the company and its managers. At the same time, another preference of a venture investor is the ownership of a controlling stake by the company's managers. Having a controlling stake, they retain all incentives for active participation in business development. If the company, during the period of being in it as a co-owner and partner of a venture investor, succeeds, i.e. if its value within 5-7 years increases several times compared to the initial one before the investment, the risks of both parties are justified and everyone receives an appropriate reward. If the company does not live up to the expectations of the venture capitalist, then he can completely lose his money (in the case when the company declares itself bankrupt), or, at best, return the invested funds without receiving any profit. Both the second and third options are considered failures. The profit of a venture capitalist arises only when, after 5-7 years after investing, he will be able to sell his block of shares at a price several times higher than the initial investment. Therefore, venture investors are not interested in distributing profits in the form of dividends, but prefer to reinvest all the profits in the business.
The very process of selling in venture business also has its own name - "exit". The period of stay of a venture investor in the company is called “cohabitation”. Sharing of joint risks between a venture investor and an entrepreneur, a long period of “cohabitation”, and open declaration by both parties of their goals at the very initial stage common work- terms of quite probable, but not automatic success. However, this approach is the main difference between venture capital investment and bank lending or strategic partnerships. A potential venture investor should invest in those company projects where there is a chance to earn extra high money, he is a more informed investor than any other financial intermediary. Risk capital investors constantly monitor the trends in the development of science and technology, react to the slightest changes in economic policy and market conditions.
The banking or equity financing model for venture capital firms has clear advantages in terms of venture business prospects and the creation of financial conditions to accelerate innovation processes. However, it is worth noting the unambiguously positive role of state support for the development of venture funds.
2. Analysis of venture business and its development in Russia
Venture capital business can bring huge profits - or end in failure. The American and European economies owe much of their growth at the end of the 20th century to the flourishing of the venture capital business.
In our country, a political and entrepreneurial climate favorable for venture capital and direct investment is gradually being formed. A number of steps taken by the venture industry community and government agencies at various levels contribute to the development of small and medium-sized businesses (in particular, in the high-tech sector), which, in turn, can give impetus to the development of the Russian economy as a whole.
With the support of the state, the private sector and international organizations, structures of the research sector of the market type, such as technology parks, innovation and technology centers, legal and consulting companies, were created.
New tools and mechanisms were also created related to the functioning of budgetary and extrabudgetary funds to support fundamental and applied research and development, their competitive financing, and the protection of intellectual property rights.
One of the main economic instruments that have ensured the innovative development of the leading industrial countries of the West over the past decades is the mechanism of venture (risk) financing.
The basic ideas underlying this mechanism in its modern sense were first successfully tested in the United States in the late 1940s and early 1950s. In the future, interest in risky financing increased for three reasons. First, in a number of cases, investors received real income many times greater than the possible income from traditional credit and financial transactions.
Secondly, the specifics of the objects of financing - high-risk entrepreneurial projects - gave impetus to the development of special management methods that help minimize investment risks. Thirdly (which is apparently the most important from an economic point of view), the venture mechanism provided a practical opportunity to finance new innovative ideas and developments at the initial stages of their implementation.
With the support of venture capital investors, many of the largest radical and improving innovations of the 20th century, related to microprocessor technology, personal computers, the Internet, genetic engineering, etc., found their way to the market. Microsoft, Apple, Digital Equipment Corporation, Compak, Sun Microsystems, Lotus, Federal Express, Genentech, Yahoo, Netscape and many others.
The problem of developing venture financing mechanisms has attracted Russian researchers and management specialists for more than 15 years.
The share of innovative projects in the portfolio of such investors rarely exceeded 5%, which was due to objective economic reasons. The author noted at that time that the created innovative banks would not be viable if they did not start to engage in traditional commercial lending for the sake of self-preservation. The subsequent course of events confirmed the legitimacy of this conclusion.
The radical economic reform that had begun opened the way for the development of entrepreneurial initiative, but a civilized stock market did not yet exist. In addition, inflation that at times exceeded the 20% mark per month made any investment for a period of more than a few weeks economically meaningless.
Nevertheless, the privatization carried out at a “shock pace” attracted the attention of foreign venture capital investors, but not in the field of financing initiative innovative entrepreneurial projects, but in the direction of overcoming the crisis and increasing the efficiency of privatized enterprises (which is also one of the traditional areas of venture business). At the initiative of the European Bank for Reconstruction and Development, 11 regional venture funds were created in Russia, which specialized mainly in acquiring stakes in small and medium-sized enterprises under privatization in order to provide them with the necessary assistance in adapting to the conditions of the transition economy. It was assumed that after some time the purchased shares could be sold at a higher price.
In March, the pioneers of the venture capital business in Russia united into the Russian Venture Investment Association (RVCA). There have been reports of the creation of the first venture funds based on the funds of large Russian banks and diversified holdings.
However, the emerging progress was stopped by the financial crisis that broke out in August 1998, which sharpened the problem of liquidity of risky investments and delayed the spread of the venture capital mechanism in Russia for at least a few years. One of its negative consequences was the loss of confidence of the general population in the institutions of the stock market.
Under these conditions, the initiative to develop the venture industry was taken over by the state. On March 10, 2000, the government issued a decree on the establishment of a venture innovation fund - a non-profit organization to form the organizational structure of the venture investment system.
One of the goals of this organization is to promote the creation of industry and regional venture funds through equity participation in their authorized capital.
According to official data from the Ministry of Industry and Science of the Russian Federation, over the past 10 years, venture capital investments in Russia amounted to a total of about 1.5 billion euros and were used to finance more than 250 enterprises. To date, there are about 30 venture capital funds, most of which represent foreign investors.
The contribution of small businesses to the Russian economy is growing every year. According to the State Statistics Committee, as of January 1, 2003, the number of small enterprises amounted to 882.3 thousand, which is 4.7% higher than the corresponding indicator of the previous year. The number of individual entrepreneurs without forming a legal entity increased by 2.7% and covers 4.6 million people.
Investments in fixed capital of small enterprises grew by 14.4%, including in industry - by 28.3%. The volume of products (works, services) produced by small enterprises increased by 36% and amounted to 1159.9 billion rubles. Tax revenues from small businesses also increased by 11% and amounted to 28.4 billion rubles.
It is obvious that these figures do not yet compare with the scale of the venture capital market in the US and other industrialized countries.
The following factors hinder the development of the venture capital industry in Russia today:
poor development of infrastructure that provides a fruitful symbiosis of venture capital with small and medium-sized innovative businesses;
lack of significant Russian sources of venture capital;
low liquidity of risky investments, lack of the market mechanism necessary for this (special stock market);
insufficient economic incentives to attract venture capital to the implementation of high technology projects;
low prestige of entrepreneurial activity in the field of small science-intensive business;
weak information support of venture business;
lack of qualified managers of innovative projects, including those carried out with the involvement of venture capital;
problems with registration of venture funds, etc.
To remedy the current situation, the Ministry of Industry and Science of the Russian Federation developed and at the end of 2007 submitted for consideration a draft Concept for the Development of the Venture Industry in Russia, which is, in fact, a state system for stimulating venture investments. According to this Concept, in 2007-2011. it is planned to establish 10 regional and sectoral venture funds with state participation. In addition, the state will take on a significant part of the efforts to create the infrastructure necessary for the successful development of the venture business, create a favorable economic environment for attracting venture investments in the innovative sector of the economy, ensure the liquidity of risky investments, and increase the prestige of entrepreneurial activity in the field of small and medium-sized businesses.
Will the global decline in the risk capital market affect the creation of the venture business industry in Russia? It is difficult to answer this question unambiguously today. If this crisis ends in the coming years, the successful implementation of the outlined Concept will contribute to the formation of private venture capital of Russian origin, without which it is difficult to count on the development of small innovative businesses in the country. If the recession drags on for a longer period, then the infrastructure formed with the assistance of the state can, in our opinion, be used to attract the large reserve of venture capital accumulated in recent years abroad, which is now looking for new areas of application outside their countries.
However, in this case, the state will have to find additional ways to maintain market liquidity (for example, by allocating additional financial resources from the budget or by providing investment tax credits to large industrial investors).
1 Place of venture financing in project financing
Traditionally, it is customary to distinguish four types of project financing:
Debt financing (including leasing)
Equity investment
Funding from the company's own funds
Funding from public sources
Without dwelling on the question of how successful the division into project financing methods is, let us determine the place of venture financing among the four methods indicated. The first is equity investment.
Venture financing in varying proportions may include debt financing, as well as financing in the form of leasing and partially financing from public sources. However, the focus is on equity investment and some participation in the project.
Equity investments, as you know, can be of two types: exchange (or portfolio) and over-the-counter (or direct).
Exchange (portfolio) financing through equity investments is carried out by various investment funds, such as Mutual Investment Funds (PIFs) and the recently introduced General Banking Management Funds (BFBU), which make portfolio investments in the shares of listed enterprises on the stock market.
In some cases, portfolio investors (eg insurance companies) may invest in the equity of OTC businesses (ie small and medium-sized enterprises). In such cases, we can talk about high-risk direct investments, very similar to venture capital investments.
In general, "business angels" annually invest in the United States, according to some estimates, an order of magnitude more than all formal venture investors taken together (about 30-40 billion dollars).
2 The role of venture financing and the stages of development of venture business
Direct financing (“direct equity” or “private equity”) and its variety of venture financing (“venture capital”) today has received the greatest development in the countries of precedent systems, primarily in the USA, Great Britain, Canada, Austria.
Of greatest interest to Russia is the unique experience of the development of venture capital financing in the United States, which has the largest venture capital market today.
Small and medium-sized businesses, for which venture investment is primarily intended, are practically deprived of other opportunities to receive long-term (3-6 years) investments without security, especially in the absence of a "credit history". Meanwhile, it is small and medium-sized businesses that are able to develop most dynamically, creating jobs.
The zero stage of venture financing is associated with the birth of an idea and the costs of its initial development. As a rule, these costs are small and are covered by the inventor or entrepreneur who came up with this idea. The initial costs are more likely to be associated with the time spent on thinking over the idea, on its analysis, on making calculations, on drawing up sketches. If the idea is patentable, then its author will also spend time and money on drawing up an application for an invention and registering it with the patent office.
One of the most important resources in an innovative business is the entrepreneur's personal time. After analyzing his creative idea or discussing it with his assistants, the entrepreneur decides on its implementation. To prove the possibility of implementing the idea and determining the main characteristics of the innovative object, they proceed to the first stage of innovation development.
The first stage in the development of a venture business is called the stage of pre-start financing, or the stage of sowing (seed). At this stage, research work is carried out, usually by small teams of scientists and engineers. The main purpose of the work is to substantiate the practical and commercial significance of an innovative idea, to create a laboratory sample of a product, technology or service. At the first stage, the main management personnel of the enterprise are formed and initial marketing research is carried out. About two-thirds of all new ideas are discarded at this stage. As a rule, investors are afraid to invest money at the seeding stage.
It should be borne in mind that those ideas that have proven their viability bring the greatest profit to investors in the future. The main investors at this stage of financing are, as a rule, business angels. The degree of risk is high. The work of the first stage is aimed, in particular, at solving such problems as:
the possibility of creating an innovative object;
identification of the resources necessary to create an innovative object;
layout of individual elements and the object as a whole;
the possibility of manufacturing an innovative object based on existing technologies;
development of new technologies for the manufacture of individual elements and the object as a whole;
future demand for an innovative product;
impact on environment and possible methods to prevent environmental pollution;
mutual relations with other industries and the possibility of their implementation;
possible expansion of existing production facilities;
general investment climate;
availability and cost of financial and labor resources.
In parallel with these works, a device (method) is being checked for patent purity and patenting of new devices (methods) developed in the process of research work. Typically, device patents create new products, and process patents create new technologies. If during the patent clearance process it turns out that the design of the innovative object contains parts or assemblies for which patents have already been issued to your subcontractors, then you need to purchase licenses allowing the use of patented parts or assemblies from the patent holders. The cost of a license is estimated by the special methods given below. If patentable parts or assemblies are used in the innovative object being developed, then they must be patented. This can bring additional profit when you sell a license to use them to your subcontractors.
During the seeding phase, all commercial, technical, financial, economic and environmental prerequisites must be identified and critically assessed based on alternative solutions. The criterion for such assessments is the economic benefit.
The second stage of venture business development is the start up stage. Investments at this stage are attracted to expand production on a commercial scale and organize the sale of products. Investors are business angels and some venture capital companies. The risk level is still very high. Most investors are afraid to invest in venture capital projects at this stage. Work at the seed funding stage can be directed to:
development of design and technological documentation;
production on the basis of this documentation of individual parts, assemblies and the object as a whole;
purchase of materials and components;
creation of equipment for testing;
If new devices (methods) are obtained in the process of development work, then they must be patented.
The third stage of venture business development is financing the growth and expansion of the business. This is the stage of initial expansion (early expansion), requiring significant funds needed to acquire assets. At this stage, part of the innovative equipment is put into operation and its operation begins. Advertising is developing, sales networks are being created. At the stage of initial expansion, the profit from sales still does not cover the current investment costs, the risks are high enough, so the work is still financed by venture investors.
At the stage of growth and expansion, the following issues are resolved:
legal, financial and organizational bases are established;
if necessary, land is acquired;
technologies are acquired;
additional research and development work is being carried out;
technological documentation is being finalized;
contracts are concluded;
the necessary buildings and structures are being built;
purchase and installation of equipment;
marketing is carried out;
administration is formed;
staff is recruited and trained.
The fourth stage in the development of venture business is the stage of rapid expansion. The work on expanding the business, started at the previous stage, continues. The business begins to make a profit, the degree of risk decreases. The capital is directed to the main expansion of the company (buildings, facilities, equipment, machinery, etc.), which increases sales and, accordingly, profits. At this stage, investors are more willing to start financing the project. Commercial banks can act as investors.
The fifth stage of venture business development is the liquidity stage. In countries where there are over-the-counter securities markets, venture capital firms enter these markets. To work on the stock exchange, a company must go through a listing operation. For newly created firms, such an operation may be overwhelming. Therefore, in different countries over-the-counter securities markets are being created. In the US, this market is called the National Association of Stock Dealers (NASDAQ) Auto Quote System. The conditions for entering this market are simpler than for the stock exchange. Upon reaching the liquidity stage, a venture investor can exit the project by selling their shares on the OTC markets. Sometimes shares are acquired by an innovative enterprise.
The sixth stage of venture business development is the stage of maturity, when the financing of the project practically stops. The stage is devoted mainly to making a profit.
3. Prospects for the development of venture (risk) entrepreneurship in Russia
1 Venture capital development trend
Today in Russia there are the necessary prerequisites for creating a system of venture investment focused on raising capital (mainly national) in the innovation sector of the Russian economy
Rice. 2. Favorable trends for the development of venture investment in the Russian Federation
The favorable situation for small business funds is determined today by the enormous need for investments for almost all enterprises, therefore there is no shortage in the choice of the recipient (for example, the St. Petersburg fund for equity participation in small enterprises has considered more than 1000 applications for investments during its existence). It is obvious that in such a mass of proposals there are necessarily 1 - 2% of highly profitable low-risk projects. It can also be assumed, for the same reasons, that the first "exits" of venture capital will occur in small businesses.
The corresponding scientific and technical potential, despite the difficulties of the transition period, has been preserved, which serves as the basis for the successful implementation of venture investments. A feature of the creation of the latter is that they are formed without state financial participation. The Ministry of Science of Russia, together with other consulting and expert organizations (for example, NPK "Innovation Agency"), has formed a package of data on innovative projects that have prospects for highly efficient commercialization.
The existing infrastructure for supporting small innovative companies, including both funds that provide financial support at relatively early stages of development (R&D and expansion of production), and a relatively new phenomenon in the Russian venture capital industry - Russian Venture Fairs.
November 2013 within the framework of the forum, the XIV Russian Venture Fair was held, which provided small and medium-sized companies interested in attracting investments for the development of their innovative business, a unique opportunity to present their project to the attention of investors operating in the private equity and venture investment market in Russia. According to experts, the projects presented at the exposition can seriously compete not only on the Russian, but also on the international market of new technologies, and some of them have no analogues in the world
The development of venture financing and venture entrepreneurship can solve a whole range of tasks that are strategically important for the implementation of positive qualitative changes in the Russian economy. First, it means an additional influx of investments, including from abroad. Secondly, there is an opportunity to revive and significantly activate the national innovation potential, gradually turning it into the main "locomotive" for the development of the domestic economy, expanding its tax and export base. Thirdly, there will be a convergence of the Russian and international business environment on the basis of the most modern forms and directions of economic activity, interaction with direct developers of innovative products. With venture capital, Russian entrepreneurs receive not only Western money, but also the advanced management experience and extensive business contacts necessary for the international commercialization of their own technological developments, while maintaining control over the company in their hands.
In this regard, the active involvement of the state in the implementation of the venture financing model is natural. One of the methods of state support for innovation is currently being practically tested in Russian conditions. The state created a joint-stock company with 100% state participation - the Russian Venture Company (RVC). At the expense of its funds, in turn, sectoral venture funds are formed (capitalized), managed by private management companies selected on a competitive basis. The requirements for them are as follows: the presence of a high-quality investment strategy, high professionalism of experts, whose opinion will determine the adoption of a specific investment decision.
venture business risk financing
3.2 Venture investment. Methods and mechanisms
The mechanism of venture financing is designed to support innovative companies at the most problematic stage of the innovation process - between scientific developments and mass production. It assumes the highest risks for the investor, which he would prefer (as world experience shows) to share with the state. Most often, in such cases, the state assumes half of the risks of venture investment, and the profit goes to private venture investors (this is an important element of public-private partnership).
Experts believe that in the near future the waves of venture business development will be:
security technologies in a broad sense (personal, informational, corporate, state, etc.);
nanotechnology;
biotechnology.
After the decline in the development of the new economy in the United States, venture entrepreneurs again began to invest mainly in start-ups (new venture capital firms) and not in established companies. The main investments are in wireless technologies (Wi-Fi, Wi-Max, Bluetooth and new standards), radio identification technologies, next generation Internet projects, biotechnologies, social networks.
Foreign venture investors (especially US funds) are showing interest in venture business in Russia. Large foreign venture funds organize subsidiaries in Russia, which finance, provide them with their brand and technical assistance. To a lesser extent, the VIF of the Ministry of Industry and Science finances state venture funds, which obviously does not have enough own funds.
In Russia, high-tech industries capable of becoming centers of growth for the post-industrial economy could, in principle, be created on the basis of two sectors of the economy and science:
) academic institutes and their pilot productions;
) enterprises of the military-industrial complex (DIC).
As regards the development of venture business, the government of the Russian Federation plans to: - ensure effective coverage of the activities of this sector of the economy;
allow institutional investors, such as insurance companies and pension funds, to invest part of their funds in venture capital funds;
continue developing the regulatory framework for regulating the activities of venture investment institutions;
adopt the law "On Special Economic Zones in the Russian Federation";
stimulate the mutual flow of technology in the production of civilian and military products through the use of private capital.
The Ministry of Economic Development of the Russian Federation identifies the following obstacles to the development of venture business:
insignificant presence of Russian capital;
low liquidity of venture investments due to insufficient development of the stock market;
weak economic incentives to attract direct investment in high-tech enterprises;
slow resolution of issues of regulatory and legal regulation of the formation of funds and the process of venture investment;
insufficient efforts to establish an entrepreneurial culture and popularize venture business.
The state is faced with the task of developing effective forms of participation in the development of the venture industry, based on international experience, taking into account the specifics Russian conditions. The various forms of public instruments that can be used to encourage venture capital investment are mainly measures to develop common market institutions and improve the investment climate.
At the same time, it is possible to identify specific mechanisms aimed primarily at the development of venture capital investment. These include: liberalization of the rules that determine the range of investors who are allowed to invest in venture funds; creation of technical innovation zones; development of a concept for the development of venture investment based on the principles of non-intervention of the state in the exclusively private sector, which is venture financing.
A more effective way to ensure the mutual flow of technologies is to partially integrate state defense enterprises and non-state enterprises that produce civilian products, as is the case today in aircraft and shipbuilding.
An obstacle to the mutual flow of high technologies is the imperfection of the legislation on the protection of intellectual property rights.
The given plans and tools for the development of the venture business of the government of the Russian Federation are rather scholastic.
In Russia, there are still no main conditions for the development of a venture capital business that is competitive at the global level.
Hinder the creation of venture business:
a weak state without clear goals and development strategy, without understanding the main obstacles to the country's market development and the creation of a post-industrial economy;
criminal-bureaucratic structure of the country's economy;
a sharp decline in the level and quality of the country's human capital in terms of its educational, scientific and innovative components;
the lack of a general favorable environment for the development of entrepreneurship in general, and venture business with its windfall profits in particular;
there is still no pragmatic and competent state long-term program for the development of venture capital in the Russian Federation;
there are no professional venturers (venture capitalists and managers), as well as an understanding of how to educate them;
there is no end-to-end program and, accordingly, a system for training venture capitalists;
centers for the development of venture business with especially favorable conditions have not been created.
In view of the foregoing, the prospects for creating a venture business in the Russian Federation are not yet clear. They depend entirely on the probability of creating a strong and
II.Practical part
Development of an innovative project
Goals and objectives of the project. The purpose of this business project is to organize leisure activities for young people in the city of Kaluga by building a specialized sports and entertainment complex - a skatepark, on the territory of the microdistrict. Northern.
Construction of a sports complex with a specialized training ground extreme views sports;
Development of appropriate infrastructure for visitors, which includes a cloakroom, toilets, a store with equipment and equipment for extreme sports and recreation areas for athletes;
Development of a complex of marketing activities to attract customers.
Description of the project. A skatepark is a specially built area for people involved in extreme sports (skateboarding, aggressive rollerblading, BMX - a bicycle for performing tricks) to ride and perfect tricks. A skate park can include shapes such as ramps (half pipes), dispersal (quarter pipes), railings (hand rails), funboxes (trik boxes), pyramids (pyramids), steps (stairs) and other figures for performing tricks . Initially, it is necessary to equip a large hall with an area of 1100 square meters. m. The room will be an air-supported structure, which is much cheaper to build than a typical hangar and is perfect for sports facilities. The next step is to sign a design contract. It is supposed to declare the company "SKPARK" (Moscow) as the design and construction of the skatepark. The company's specialists are ready to develop a project for any given parameters of the site. The SPARK company will carry out a full-fledged working or preliminary design project of a skatepark in the following sections:
architecture;
design;
engineering equipment.
The next stage is the construction and installation of skatepark equipment. In the design of skateparks, there are several main important features. First, there are the figures themselves. The geometry of each figure, its height, width, angle of inclination and length depend on which figures surround it. In order to imagine how and what figures should be placed in a skatepark, it is not enough to be a good designer, you also need to skate yourself. The team of the "Sparkarc" company combines both professional engineers and leading athletes of extreme sports, which allows us to create skateparks of the European level.
In the construction of equipment for indoor skateparks, the following is used:
Coverage for the area of the skatepark - asphalt or concrete cover. It is applied as the main covering for rollerdromes and skateparks.
The figures are covered with plywood of the FSF brand of high moisture resistance and a high index of physical and mechanical properties, resistance to various aggressive environments, treated with a special composition to prevent decay.
The bearing framework - wooden.
Calendar plan for the implementation of the project. Prior to the commencement of work on the installation of an air-supported structure, preparatory work is carried out, which includes the entire range of works on cleaning the territory, laying a concrete strip base, preparing a concrete or asphalt base for coating, and supplying engineering networks.
The air-supported shell is attached to a concrete base reinforced with a metal frame using an anchor system. Anchors are included in the delivery.
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Stage name |
Work results |
Deadline, days |
Cost, rub. |
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Substrate preparation (asphalt, concrete) |
Laying the base for an air-supported structure |
The presence of a prepared place for the construction of the structure |
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|
Construction of an air support structure |
Construction of a sports complex |
Availability of premises prepared for equipping |
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Installation of sports equipment |
Carrying out the final stage of equipping the sports complex |
Availability of a ready-made sports complex - a skatepark |
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Financial plan. This section provides financial projections for the first year of operation. These projections represent the most likely estimates of future financial results. The company expects a profit in the first month of its first year of operation and expects to be profitable throughout the year, even if the business is seasonal.
When forecasting the volume of services provided, it was assumed that the park will be occupied by 60 people per day in the autumn and spring seasons, 30 people per day in summer season and 90 people a day during the winter season. The price of the entrance ticket is supposed to be set at 150 rubles. It should also be taken into account that 200 sq.m. The area of the building will be leased out as a cafe and an equipment store.
A loan will be taken for 5 years on the basis of a preferential interest rate (10%) in order to purchase fixed assets in the amount of 8,430,000 rubles.
The break-even point is 54 people per day.
The payback period is 1.5 years.
Table. Main financial indicators of the project, rub.
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winter season |
spring season |
summer season |
autumn season |
Total for the year |
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|
Revenue from the sale of entrance tickets |
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Revenue from renting vacant space |
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Wage |
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Interest on a loan |
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|
Net profit |
Marketing strategy. The main strategy of our company should be a comprehensive strategy to provide high quality services at lower prices, as well as expanding the range of services. Based on this, the strategy of expanding demand is chosen as a marketing strategy by stimulating sales volume, pricing policy, creating a positive image of the skatepark, and widespread use of non-price factors of competition.
Pricing. Our company intends for the first year to adhere to the strategy of neutral prices, which involves the establishment of average market prices. In the second year of our activity, we may increase prices by 10-15% due to an increase in the flow of customers and an increase in the quality of services provided. However, at the same time we plan to introduce the use of club cards for regular customers. Therefore, we expect that this will not lead to an outflow of regular customers and can expand the range of services, incl. to open a cafe-bar and specialty shop at the skatepark and increase the number of working hours.
information and flyers in specialized stores;
distribution of leaflets, stickers;
The link between innovative discoveries, developments in the field of high technologies and their implementation is the venture business mechanism.
The bold statement that risk is a noble cause was apparently invented by venture investors. Those who invest in risky innovative projects, having no guarantee that they will multiply, but even that they will return back. This is the essence of venture business. This is a system of public and private structures that invest in innovative projects. It has three heights: high risk, high technology, high profit (in case of successful implementation).
History of appearance
This type of business came to the Russian economy relatively recently. It is gaining momentum in connection with the movement by leaps and bounds of technical and technological progress. New projects in these areas, including successful start-ups, face the problem of a lack of funding at the stage of their formation, since they are not yet able to use such common methods as a bank loan or public offering of their shares. All they have to do is look for investors who are ready to invest in venture business. What this is can be explained by the example of America, where, thanks to venture capital investment, “Silicon Valley” arose, which laid the foundation for this type of business.
Silicon Valley is part of the state of California, where more than 50% of all high-tech companies in the country are concentrated, specializing in developments in the field of computer science and electronics. Silicon Valley receives one-third of all venture capital investment in the US.
One of the so far rare successful examples of Russian venture capital investment in biotechnology was the domestic investment fund RBV Capital (it was created on the basis of the state RVC fund and with the participation of the R-pharm group). RBV Capital has invested in RetroSens Therapeutics, a US-based gene therapy company. It was this developer that was bought in September 2016 by the generic pharmacological giant Allegran for $60 million (!).
Stages of development
A venture company in the process of its development goes through several stages:
- at the "seed" stage a project or an innovative business idea is singled out, a company is created, a team is selected, a concept is developed, R&D is carried out - research and development work;
- at the launch stage prototypes are created and tested, production is established, marketing activities are carried out and brought to the market;
- at the stage of early growth commercial implementation is launched, it is natural here: reaching the break-even point and the beginning of profit growth;
- under expansion a stable position in the market is taking place, significant financial injections are required for further development;
- at the exit stage or a stable stage of investment begins to bring high stable profits, the company takes a strong position in the market.
Venture investors
Entities investing in high-tech ventures fall into three categories.
- Business angels- individual (private) investors. Their capital investments, in exchange for a certain share of equity ownership, act as the main source of "seed capital" for emerging companies. The seed capital is the earliest investment. They are the most risky, but also the most highly profitable if successful;
- venture funds - funds - investment market participants working with risky projects;
- corporate investors - entire corporations financing venture projects.
Russian venture business
In Russian realities, investments alone are not enough for successful development; a whole system is needed to develop and maintain innovations. The creation of RVC - the Russian Venture Company (State Fund of Funds), helped to solve this problem, it is a member of RVCA - the Russian Venture Investment Association.
The purpose of RVC is to create new funds and manage existing ones, on the one hand, and to develop and maintain conditions for their successful functioning, on the other. The mission of RVC is as follows:
- investing in technologies for life: medicine and biotechnology, energy saving and energy efficiency, aviation and astronautics, information and intelligent systems;
- not ready to take risks, domestic investors are afraid to make capital investments at the “seed stage” of business development, while RVC, on the contrary, pays special attention to newly born projects;
- organizes events where investors can share experience and receive information about new promising projects;
- domestic innovators do not know how to "sell" ideas, they do not even understand how to do it, and, most importantly, why, so RVC organizes educational activities and teaches students and young scientists the basics of technological entrepreneurship. This is how investors and innovators learn to find common ground.
- RVC actively attracts foreign investors to promising ideas.
