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National Research University Higher School of EconomicsStudent ThesesASSESSMENT OF EFFICIENCY OF VENTURE FINANCING

Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Ol`ga Gonchar
ASSESSMENT OF EFFICIENCY OF VENTURE FINANCING
Faculty of Economics
Bachelor’s programme
8
2014
The graduation thesis on the theme: «The Estimation of Efficiency of Venture Financing in Russia» contains 18 drawings, 7 tables, 2 appendicesand 4 formulas. The volume of work is 85 pages. For writing were used 47 sources. Keywords: venture capital Fund, a venture capitalist, an innovative project, the value of the company, the share of the investor, the project efficiency.The topicality of the research is caused by the fact that currently the formation and development of the industry of venture financing in the Russian Federation becomes one of priority directions of development of the innovation environment, the competitiveness of domestic industry and economy as a whole. From venture capital investment in efficient and promising projects depends on the development of innovative technologies in the country.Therefore, the hypothesis raised in the beginning, is as follows: venture financing of innovative projects is efficient from the economic point of view.

The aim of this work is to evaluate the effectiveness of investments in venture projects. The object of research is the Russian market of innovations and venture capital. Subject of research is the process of financing venture projects investment funds.The goal of the research work necessitates detailed analysis of the activity of the venture capital industry in General and the identification of current trends towards development, but also the study of the peculiarities of investing on it from the venture funds.Problems of innovative development, functioning of venture capital funds and venture financing of projects in various countries are widely presented in the literature.Practical significance of the research lies in the fact that the main findings of the research can be used by a wide range of investors: as management company’s private funds of direct and venture investments and state-owned companies, corporations and institutions development, financing venture capital projects, with the purpose of increase of efficiency of venture financing.In the first section of the paper the peculiarities of organization of venture financing in General are discussed. This Chapter explores the differences existing types of financing, participants of the process of formal and informal venture capital industry. Also, there are four groups of problems of venture financing in Russia and prospects of its further development.The second Chapter is used to consider only entrants to the formal market of the venture capital industry, namely funds and capitalists. As a result, the organizational structure of the venture capital Fundis considered, stepwise selection procedure venture projects capitalistsis overviewed, for understanding, what should be the project in order to receive funds from foundations. The analysis of activity of venture funds of the Russian Federation, on the basis of reports and Analytics companies, is used to identify the characteristics and trends of their activity. The analysis helps to explain the financial potential of venture funds, to understand if they had the means to provide innovative ideas, and whether there were effective to resort to venture financing to small business entrepreneurs.In the third Chapter is the assessment of economic efficiency of investment in venture project company "EcoZdrav". A full description of the proposed project is given, SWOT analysis, study of its competitors, analysis of possible risks of the project are described, and also the business plan of the company is calculated, the forecast profit and loss account is prepared, and financial performance of the project for further analysis of the effectiveness of venture capital investmentsare calculated. Based on these results, the analysis of possible outputs financed by venture capitalist project on the basis of economic calculations is conducted and offers the best of them from the perspective of the venture Fund is offered.Based on the analyzed data on the activities of venture capital funds of the Russian Federation is found that venture capital funds have all the possibilities for financing innovative and promising ideas. According to RAVI, by the end of 2013, running 173 funds are in total 5211 million dollars.

After analysis of the innovative "Acosta" it was established that the required venture capital investments in the amount of 6 100 000 rubles are needed to start the production of goods - novelties to the market. With the help of the specialized program Alt invest prim 5.0 the analysis of efficiency of the project in terms of indicators was made: NPV of the project, the internal rate of return (IRR), payback period (PP and DPP) and profitability index (PI). On the basis of the obtained results it was found that the project is effective from the economic point of view and attractive for investors.Becauseof venture financing is financing in the share capital of the companythe investor must make an exit forgetting profit. In the work the possible outputs from the project "EcoZdrav"were considered. For calculating the benefit of the investor to enter value of the company at the time of the investorwere calculated (65 367 360 rubles), and the share of the venture investor in the project is 61%.During the analysis it was found that venture capitalist investing in the proposed project, will be able to increase the invested funds at least 6.5 times, while the yield by sale to a strategic investor increases16 times when the company is on IPO. So he will be able to get his desired profit in the amount of 39 650 000 and 97 116 340 respectively, which shows the effectiveness of the implementation of venture financing.

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