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Local Laws and Venture Capital Contracting in Transition Economies: Evidence from Poland

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  • Darek Klonowski

Abstract

This study focuses on the legal structuring of venture capital deals in Poland. Three conclusions are derived. First, owing to significant imperfections in the Polish legal infrastructure, local venture capitalists need to consider how to structure their transactions. This represents a unique feature of venture capital investing in emerging markets. The study confirms the existence of three types of legal structures in venture capital investing (i.e. local deals, offshore deals and complex deals), with offshore deals being the predominant category. Second, local venture capitalists display different preferences for various deal structures based on venture capital firms' characteristics. Third, the placement of venture capitalists' rights varies across different legal documents, with the most pronounced difference being observed in local deals. The study is based on a survey of 64 venture capitalists.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:pocoec:v:18:y:2006:i:3:p:327-343
    DOI: 10.1080/14631370600881929
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    References listed on IDEAS

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    1. Mike Wright & Judit Karsai & Zbigniew Dudzinski & Jan Morovic, 1999. "Transition and Active Investors: Venture Capital in Hungary, Poland and Slovakia," Post-Communist Economies, Taylor & Francis Journals, vol. 11(1), pages 27-46.
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    8. Judit Karsai & Mike Wright & Zbigniew Dudzinski & Jan Morovic, 1999. "Venture capital in transition economies: the cases of Hungary, Poland and Slovakia," Chapters, in: Mike Wright & Ken Robbie (ed.), Management Buy-outs and Venture Capital, chapter 4, Edward Elgar Publishing.
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