Barriers of FDI inflow in venture capital and private equity in the Czech Republic

Bo?ena Kade?ábková () and Ond?ej Ptá?ek ()
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Bo?ena Kade?ábková: Faculty of Civil Engineering, Czech Technical University
Ond?ej Ptá?ek: Faculty of Economics, University of Economics in Prague

No 3205873, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: The barriers that negatively affect the PE and VC investment activity in the Czech Republic include the following aspects. Few sources for funds from traditional fund raisers such as pension funds or insurance companies, which is caused mainly by legislative restrictions. Insufficient project quality causes high proportion of transaction cost to investment amount ratio. Insufficient project quality, lack of projects due to little interest from the potential investee companies caused by imperfect information all mean higher risk for investors causing their risk aversion to concentrate mainly on larger projects. Insufficient fundraising conditions lead also to few opportunities for exits. These are the main reasons of the Czech Republic?s little PE and VC market activity, which is limited to 10-20 investments per year in total.

Keywords: venture capital; asset management; private equity; financial markets; market failure; government failure (search for similar items in EconPapers)
JEL-codes: G24 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2016-03
New Economics Papers: this item is included in nep-cfn and nep-ppm
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Published in Proceedings of the Proceedings of the 5th Economic & Finance Conference, Miami, Mar 2016, pages 125-137

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