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Barriers of FDI inflow in venture capital and private equity in the Czech Republic

Author

Listed:
  • Bo?ena Kade?ábková

    (Faculty of Civil Engineering, Czech Technical University)

  • Ond?ej Ptá?ek

    (Faculty of Economics, University of Economics in Prague)

Abstract

The barriers that negatively affect the PE and VC investment activity in the Czech Republic include the following aspects. Few sources for funds from traditional fund raisers such as pension funds or insurance companies, which is caused mainly by legislative restrictions. Insufficient project quality causes high proportion of transaction cost to investment amount ratio. Insufficient project quality, lack of projects due to little interest from the potential investee companies caused by imperfect information all mean higher risk for investors causing their risk aversion to concentrate mainly on larger projects. Insufficient fundraising conditions lead also to few opportunities for exits. These are the main reasons of the Czech Republic?s little PE and VC market activity, which is limited to 10-20 investments per year in total.

Suggested Citation

  • Bo?ena Kade?ábková & Ond?ej Ptá?ek, 2016. "Barriers of FDI inflow in venture capital and private equity in the Czech Republic," Proceedings of Economics and Finance Conferences 3205873, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:3205873
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    File URL: https://iises.net/proceedings/5th-economics-finance-conference-miami/table-of-content/detail?cid=32&iid=008&rid=5873
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    References listed on IDEAS

    as
    1. Di Carlo, Anastasia & Kelly, Roger, 2010. "Private Equity Market Outlook," EIF Working Paper Series 2010/05, European Investment Fund (EIF).
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    More about this item

    Keywords

    venture capital; asset management; private equity; financial markets; market failure; government failure;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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