Determinants for allocations to Central Eastern Europe venture capital and private equity limited partnerships

Alexander P. Groh and Heinrich v. Liechtenstein

Venture Capital, 2010, vol. 13, issue 2, 175-194

Abstract: Growth expectations and institutional settings in Central Eastern Europe (CEE) seem favorable for establishing a vibrant venture capital and private equity (VC/PE) market. However, the risk capital supply there is rather small in relation to the growth prospects. We examine the determinants of institutional investors' CEE allocation decisions through a questionnaire addressed to limited partners worldwide. Investors in CEE VC/PE limited partnerships are very knowledgeable about the region, they also appreciate other emerging regions, they regard entrepreneurial opportunities in CEE as very favorable, and they attribute local general partners in CEE with a high level of professional quality. In more detail, they appreciate team independence and the match of fund strategies with the teams' backgrounds. As economic growth expectations are fairly high in all emerging regions, investors focus on other allocation determinants, notably on the potential of institutional and cultural characteristics to turn the economic growth into entrepreneurial activism.

Date: 2010
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DOI: 10.1080/13691066.2011.558359

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