Acta Oeconomica 47. (1995)
1995 / 3-4. szám - Karsai Judit: Open and Hidden Channels of Venture Capital Financing in Hungary
Acta Oeconomica, Vol. 47 (3~4), pp. 369-422 (1995) REVIEWS OPEN AND HIDDEN CHANNELS OF VENTURE CAPITAL FINANCING IN HUNGARY J. KARSAI It could be regarded as Heretical to state that venture capital has already played a considerable role in financing enterprises in Hungary. Experts often emphasize the lack of venture capital when analyzing enterprises’ problems in finding capital. The presence of venture capital is difficult to notice because in general the investors are not specialized venture capital corporations, venture capital funds or fund managers. Furthermore, a lot of investments in Hungary are very risky according to western standards; thus “normal” and “venture” investments overlap to Some extent. In many cases it can only be said after the passage of some years whether a particular investment was a strategic one (an investment to be kept in the long run), or whether it was a short- or mid-term investment, typical to venture capital, and serving only the attainment of market gains at the time of sale. In addition, venture capitalists have until now preferred areas different from those expected by domestic experts. They have shown no real interest in investing in small, starting ventures, nor in supporting innovation, nor in furthering privatization. Instead, their main targets have been the rehabilitation of companies in difficulties or under liquidation. This study aims to prove that this is not incidental at all. As, on the one hand, “venture capital investor” is still (legally) a non-existent category in Hungary, and on the other hand, the market prices of debts, shares and assets of ailing companies have become realistic (and thus acceptable for venture financiers), it is no wonder that this area is the most promising one for such investments. Concept and functions of venture capital In Hungary the concept of venture capital had for a long time been closely related to financing innovation, or to be more precise, to making risky investments in this area. ^ 0001-6373/95/$5.00 (c) 1995 Akadémiai Kiadó, Budapest