Makushina E.Yu. IDENTIFICATION OF DEPENDENCE BETWEEN FINANCIAL INSTRUMENTS FOR STRUCTURING AVENTURE ROUND OF FINANCING AND THE PORTFOLIO COMPANY’S INVESTMENT STAGE OF DEVELOPMENT
DOI: https://doi.org/10.15688/ek.jvolsu.2021.4.13
Elena Yu. Makushina
Senior Lecturer, School of Finance, National Research University Higher School of Economics, Pokrovsky Boulevard, 11, 109028 Moscow, Russian Federation, This email address is being protected from spambots. You need JavaScript enabled to view it. , https://orcid.org/0000-0002-8985-4058
Abstract. The purpose of this article is to identify the financial instruments that a venture capital fund uses when structuring а round of financing and the investment stages of development of a portfolio company. Based on a systematic literature review we investigated the portfolio companies’ investment stages, at which venture capital investments are made: seed stage, start-up stage, early stage, expansion stage. As a result of this study the definition of “venture investments” has been clarified. This article examines the financial instruments that venture capital funds use to structure a deal with portfolio companies’ founders on the venture stages of development. It has been established that the choice of financial instruments is the result of the negotiation process between the venture capital fund and new venture founders and depends on the risk of failure, which is determined by the investment stage of the portfolio company. Moreover, shortcomings of the national legislative regulation system were highlighted, and positive trends were noted in the national rule-making process – the adoption of a federal law that establishes the procedure for using a convertible loan. The possible ways of structuring the transaction between the founders and domestic venture capital funds formed under investment partnership agreements were identified. The results obtained can be used to build a venture infrastructure with operating mechanisms that are understandable for foreign investors.
Key words: venture capital investments, investment stages of development, rounds of financing, venture capital funds, financial instruments.
IDENTIFICATION OF DEPENDENCE BETWEEN FINANCIAL INSTRUMENTS FOR STRUCTURING AVENTURE ROUND OF FINANCING AND THE PORTFOLIO COMPANY’S INVESTMENT STAGE OF DEVELOPMENT by Makushina E.Yu. is licensed under a Creative Commons Attribution 4.0 International License.
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