Transition and Active Investors: Venture Capital in Hungary, Poland and Slovakia

The development of active investors has been argued to be a major factor in achieving efficiency in enterprises in transition economies. This article analyses the role of venture capital firms as active investors in Hungary, Poland and Slovakia. It outlines the development of the venture capital markets in each country and provides evidence on the extent, nature and constraints upon the active investor role of venture capital firms in each country. The article discusses the policy implications for the development of venture capital firms as active investors in the three countries concerned, notably suggesting the need to develop appropriate legislation, enhance financial reporting systems, develop the range of skills of venture capital executives and define carefully the role of public sector providers of venture capital.