Venture capital operations and their potential role in LDC markets

The venture capital industry started and developed as an institutional response to rapid changes in the industrial sector and, in particular, to the emergence of small and medium-sized companies. Venture capital targets mainly small and also younger companies, primarily during their early stage, when they are developing new products and/or services. The main objective of the present paper is to provide Bank staff and policymakers in developing countries with complementary evidence on key issues in this subject. It focuses on the investment activity of the venture capital firms and the relationship between the venture capital firm and the investee firms. The paper reviews the role of government vis-a-vis the industry and concludes with some thoughts on the potential role for venture capital operations in LDC financial markets.