Existence of an Equity Gap in Slovenia

Venture capital is an important factor in the development of entrepreneurship and in the establishment of new, knowledge-and-technology-based companies. In transition economies, the intensity of equity investing is far behind the developed market economies, making the EU and individual governments face the challenge of increasing this type of financing. Increasing the supply by publicly-financed funds is an intervention based on the assumption of an existing equity gap, which means that quantity demanded exceeds quantity supplied. However, the dilemma here is whether the demand was evaluated realistically and whether a gap actually exists. If this is not the case, the increased supply will be inefficient and market equilibrium will be destroyed. This article aims to answer the question whether an equity gap really exists in Slovenia.