Publication: Can Venture Capital and Private Equity Work for You? Six Simple Steps to Guide SMEs in the Western Balkans
Loading...
Published
2020-04-02
ISSN
Date
2020-04-09
Author(s)
Editor(s)
Abstract
Access to finance is ranked as one of the constraints on businesses in the Western Balkans region (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia). Across the region, up to 99 percent of enterprises are small or medium-sized (SMEs). SMEs are a primary source of economic growth, innovation, and most importantly, job creation in the region. To attract funding from investors and grow their businesses successfully entrepreneurs need the necessary skills to become investment ready. However, in the Western Balkans, entrepreneurs lack investment readiness for different reasons, including lack of knowledge about the availability of external sources of finance; hesitation to surrender partial ownership and control of their business; and lack of knowledge of how to sell their ideas to potential investors. This guide is targeted at SME owners and managers of SMEs in the Western Balkans who are interested in developing their businesses and are considering whether venture capital (VC) and private equity (PE) could be an option.
Link to Data Set
Citation
“Bacaj, Zana; Hirata Barros, Ana Cristina. 2020. Can Venture Capital and Private Equity Work for You? Six Simple Steps to Guide SMEs in the Western Balkans. © World Bank. http://hdl.handle.net/10986/33560 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Private Equity and Venture Capital in SMEs in Developing Countries : The Role for Technical Assistance(World Bank, Washington, DC, 2014-04)This paper discusses the constraints for private equity financing of small and medium enterprises in developing economies. In addition to capital, private equity investors bring knowledge and expertise to the companies in which they invest. Through active participation on the board of directors or in partnership with management, private equity investors equip companies with critical improvements in governance, financial accounting, access to markets, technology, and other drivers of business success. Although private equity investors could help to create, deepen, and expand growth of small and medium enterprises in developing economies, the vast majority of private equity in such markets targets larger or more established enterprises. Technical assistance, when partnered with private equity, can unlock more investor commitments and considerably enhance the ability of small and medium enterprises in emerging markets to raise private equity capital. Technical assistance provides funding that allows private equity funds to extend their reach to smaller companies. Technical assistance can mitigate some level of risk and increase the probability of successful investments by funding targeted operational improvements of investee companies. Dedicated technical assistance facilities financed by third parties, such as development finance institutions, governments, or other parties, have emerged to fill this critical need. The paper discusses the provision of investment capital twinned with technical assistance, which is now more accepted by limited partners and general partners or fund managers and is becoming more of a market model for private equity finance focused on small and medium enterprises.Publication Supporting Innovation in SMEs in Lebanon through a Public/Private Equity Fund : The iSME Fund(World Bank, Washington, DC, 2013-02)Lebanon is a typical example of a country where the banking sector is stable with high levels of liquidity, and where the government has put in place various incentive mechanisms and programs to encourage lending for small and medium enterprises (SMEs). These include subsidized interest payments, exemptions on compulsory reserves on creditors, and a credit guarantee program-yet lending still largely remains confined to large firms. Lebanese start-ups suffer from three substantial gaps in their country's financial environment: 1) funding at the early concept stage where entrepreneurs need to develop their ideas into a viable concept and product; 2) early stage seed funding needed when starting a company; and 3) absence of venture finance needed for the firm to reach its growth stage and beyond. The project's main component comprises an innovation in SMEs funding program (the iSME fund). The iSME fund will provide two sources of financing: US$2.5 million for Concept Development Grants (CDGs); and US$25 million for equity investment in seed, early/venture, and growth stage firms. The remaining project amount will support project management, strategic training activities, marketing, and outreach to the business community, venture capital partners, the diaspora and community at large to promote the project and the fund's beneficiary entrepreneurs.Publication Accounting for Growth in Latin America and the Caribbean : Improving Corporate Financial Reporting to Support Regional Economic Development(Washington, DC: World Bank, 2010)In the Latin America and Caribbean (LAC) region, as in the rest of the world, reliable financial information is the cornerstone of a robust market economy and efficient public sector. This book presents both an analysis of the broader trends derived from the individual country-level studies produced under the Report on the Observance of Standards and Codes (ROSC) Accounting and Auditing (A&A) program and a synthesis of lessons learned from the Bank's experiences working with policy makers and other stakeholders to implement the ROSC A&A recommendations. This first chapter introduces the book by showing how sound A&A practices in the private and public sectors contribute to LAC development agenda, and by describing the regional economic context. It then presents three case studies of successful financial reporting and auditing reforms within LAC, showing how these reforms have benefited the countries. It describes drivers of reform that have led some countries to adopt global standards of good A&A practice and others to take a more conservative, wait and see approach. Finally, the chapter describes the objectives and methodology of this study, and the structure of the book.Publication Ghana Private Equity and Venture Capital Ecosystem Study(World Bank, Washington, DC, 2018-10)This paper discusses the landscape for private equity and venture capital financing in Ghana. It provides an overview of the private equity and venture capital market in the country, describing key players, including funds, fund managers, investors, and public sector entities. The paper provides an analysis of key market drivers and impediments, as well as legal, regulatory, and taxation drivers and impediments that affect Ghana’s private equity and venture capital industry.Publication Ghana Private Equity and Venture Capital Ecosystem Study(World Bank, Washington, DC, 2016-06)Private equity/venture capital was introduced in Ghana in 1991. In conjunction with this entry of a new asset class, the Government of Ghana (GoG) created a legal/ regulatory framework for VC funds in the early 1990s, regulated by the Bank of Ghana. In late 1991, USAID sponsored a venture capital fund in Ghana, along with the Commonwealth Development Corporation (CDC). The initiative set up two companies, a non-bank finance company to hold the funds, the Ghana Venture Capital Fund (GVCF), and a separate management company, Venture Fund Management Company (VFMC), to make the investments. This initiative created the impetus for legal/regulatory framework for venture capital funds which was defined by the Financial Institutions (Non- Banking) Law of 1993, and “Draft Operating Guidelines for Venture Capital Funding Companies” which were published by the Bank of Ghana in 1995. Ghana is generally touted as an attractive investment destination on the continent because of its stable government and relatively strong business environment. However, there are also some market impediments specific to private equity/venture capital in Ghana. The country’s strong business environment is reflected in its ranking of 70th out of 189 countries in the 2015 World Bank Doing Business Study, above both Kenya (136) and Nigeria (170). However, Treasury bill rates in Ghana have been around 25 percent (91-day and 182-day), making it harder to justify investment in riskier and more illiquid alternative assets by domestic institutional investors. There has been significant depreciation (approximately 75 percent) in the Ghana cedi since the currency was redenominated in 2007 after the significant loss of value of the Second Cedi, which was advanced in 1967. This depreciation in the Ghana cedi has made business fundamentals unsupportive for investment. The objective of this study is to assess the private equity/venture capital (PE/VC) ecosystem in Ghana and to provide recommendations aimed at fostering a robust private equity and venture capital environment that can provide risk financing for competitive small and medium enterprises (SMEs). PE/VC firms are investment managers that mobilize fixed pools of capital to invest in a variety of companies, often across many industries. These firms typically comb the market for high potential investment opportunities through their network of intermediaries, and by developing business linkages and competencies in specific sectors. Apart from providing financing, PE/VC funds tend to take a “capital plus” approach, in that they help the companies in their portfolios to enhance management capacity, improve market focus and presence, strengthen governance, and manage growth. Although PE investment styles may vary considerably, many firms seek financial returns by supporting and financing the growth of the companies in their portfolios. As such, these firms are widely linked to job creation.
Users also downloaded
Showing related downloaded files
Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.