Venture Investment in IT Sector: the Comparative Analysis of Developed and Emerging Capital Markets

<p>This paper analyses the differences in the venture investment in IT sector between countries with emerging and developed capital markets. The main aim of this paper is detection of the main differences between two groups of countries and their detailed analysis. There are several tasks, which were done during this research: Literature review was conducted, database was collected, econometric research was conducted to define significant determinants, comparative analysis was done and, finally, there was provided interpretation of all the results of the empirical research.</p><p>In this paper were used two groups of countries, based on the GDP growth rate. Among developed countries are USA, Canada, France, UK, Ireland, Japan, Netherlands, Switzerland, Finland, Germany, Belgium and Spain. Among emerging countries are China, Israel, Russia, Singapore, Taiwan, India, Indonesia, Turkey and Argentina.</p><p>As the factors was selected the set of specific determinants. Dependent variable is size of venture capital deal, and among independent variables are stage of investment, such techniques of investors as diversification, use of experience and qualification of their professionals. Besides dummy variable of IT sector and the amount of investors involved in deal were used in the analysis.</p><p>Results of the research defined significant differences between the treatment groups. The main approach based on different structure of risks in emerging and developed countries. According to the results, the main methods to eliminate measurable risk are stage financing (because in this type of financing it is possible to use monitoring of projects) and higher level of qualification of their specialists. A little less significance has the investor experience. In emerging countries, in contrast, the main factor is investor experience, which can influence on so-called &laquo;sixth sense&raquo; of investor, which allows countering the immeasurable risk. Remarkable, that diversification, having the same significance in two groups of risk, have different character of connection with deal size in different types of countries (positive connection in emerging countries and negative in developed). IT Variable also have positive connection with deal size in emerging countries and negative in developed countries.</p><p>Results analyzed in details in paper, they are clear example of effective strategies of investors in different situations. Furthermore, in this paper considered the venture investment support from government. Some papers analyzed in this direction and summary provided in the final chapter.</p>