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Screening and valuing venture capital investments: evidence from Hungary, Poland and Slovakia

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  • Judit Karsai
  • Mike Wright
  • Zbigniew Dudzinski
  • Jan Morovic

Abstract

This paper examines the screening and valuation approaches used by venture capital firms in emerging markets using evidence from surveys of venture capital firms in Hungary, Poland and Slovakia. The results show notable differences in the state of development and operation of the venture capital markets both between the three countries and in comparison with the developed UK venture capital market, especially in relation to the degree of equity ownership sought by venture capitalists, the information used in deal screening and valuation methods.

Suggested Citation

  • Judit Karsai & Mike Wright & Zbigniew Dudzinski & Jan Morovic, 1998. "Screening and valuing venture capital investments: evidence from Hungary, Poland and Slovakia," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 10(3), pages 203-224, January.
    • Handle: RePEc:taf:entreg:v:10:y:1998:i:3:p:203-224
    DOI: 10.1080/08985629800000012
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    References listed on IDEAS

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    1. Igor Filatotchev & Irena Grosfeld & Judit Karsai & Mike Wright & Trevor Buck, 1996. "Buy‐outs in Hungary, Poland and Russia: governance and finance issues1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 67-88, May.
    2. Macmillan, Ian C. & Zemann, Lauriann & Subbanarasimha, P. N., 1987. "Criteria distinguishing successful from unsuccessful ventures in the venture screening process," Journal of Business Venturing, Elsevier, vol. 2(2), pages 123-137.
    3. Zahra, Shaker A., 1995. "Corporate entrepreneurship and financial performance: The case of management leveraged buyouts," Journal of Business Venturing, Elsevier, vol. 10(3), pages 225-247, May.
    4. Ooghe, Hubert & Manigart, Sophie & Fassin, Yves, 1991. "Growth patterns of the European venture capital industry," Journal of Business Venturing, Elsevier, vol. 6(6), pages 381-404, November.
    5. Tyebjee, Tyzoon & Vickery, Lister, 1988. "Venture capital in Western Europe," Journal of Business Venturing, Elsevier, vol. 3(2), pages 123-136.
    6. Macmillan, Ian C. & Siegel, Robin & Narasimha, P. N. Subba, 1985. "Criteria used by venture capitalists to evaluate new venture proposals," Journal of Business Venturing, Elsevier, vol. 1(1), pages 119-128.
    7. Gibb, Allan A., 1993. "Small business development in Central and Eastern Europe--Opportunity for a rethink?," Journal of Business Venturing, Elsevier, vol. 8(6), pages 461-486, November.
    8. Wright, Mike & Thompson, Steve & Robbie, Ken, 1992. "Venture capital and management-led, leveraged buy-outs: A European perspective," Journal of Business Venturing, Elsevier, vol. 7(1), pages 47-71, January.
    9. Rah, Joongdoug & Jung, Kyungjin & Lee, Jinjoo, 1994. "Validation of the venture evaluation model in Korea," Journal of Business Venturing, Elsevier, vol. 9(6), pages 509-524, November.
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    Citations

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    Cited by:

    1. Darek Klonowski, 2006. "Local Laws and Venture Capital Contracting in Transition Economies: Evidence from Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 18(3), pages 327-343.
    2. Aurélie Sannajust & Alexander Groh, 2023. "Pioneering management buy-out and entrepreneurial finance research: Mike Wright’s research legacy," Small Business Economics, Springer, vol. 60(1), pages 1-35, January.
    3. Groh, Alexander P. & Liechtenstein, Heinrich & Canela, Miguel A., 2008. "Limited partners' perceptions of the Central Eastern European venture capital and private equity market," IESE Research Papers D/727, IESE Business School.
    4. Kerstin Bernoth & Roberta Colavecchio & Magdolna Sass, 2010. "Drivers of Private Equity Investment in CEE and Western European Countries," Discussion Papers of DIW Berlin 1002, DIW Berlin, German Institute for Economic Research.
    5. Karsai, Judit, 2022. "A kelet-közép-európai startupok romló kilátásai a nemzetközi kockázatitőke-piacon [Eastern European start-ups looking for international venture capital]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 1009-1030.
    6. Elisabeth S.C. Berger & Andreas Köhn, 2020. "Exploring the differences in early-stage start-up valuation across countries: an institutional perspective," International Entrepreneurship and Management Journal, Springer, vol. 16(1), pages 327-344, March.
    7. Darek Klonowski, 2005. "The Evolution of the Venture Capital Industry in Transition Economies: The Case of Poland," Post-Communist Economies, Taylor & Francis Journals, vol. 17(3), pages 331-348.
    8. Mihaela DIACONU, 2017. "Private equity market developments in central and Eastern Europe," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(611), S), pages 131-146, Summer.
    9. Judit Karsai, 2012. "Development of the Hungarian Venture Capital and Private Equity Industry over the Past Two Decades," CERS-IE WORKING PAPERS 1201, Institute of Economics, Centre for Economic and Regional Studies.
    10. Salim Chahine & Samer Saade & Marc Goergen, 2019. "Foreign Business Activities, Foreignness of the VC Syndicate, and IPO Value," Entrepreneurship Theory and Practice, , vol. 43(5), pages 947-973, September.
    11. repec:diw:diwfin:diwfin03050 is not listed on IDEAS
    12. Andreas Köhn, 2018. "The determinants of startup valuation in the venture capital context: a systematic review and avenues for future research," Management Review Quarterly, Springer, vol. 68(1), pages 3-36, February.
    13. Groh, Alexander P., 2009. "Private equity in emerging markets," IESE Research Papers D/779, IESE Business School.

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