Private Equity and Venture Capital in SMEs in Developing Countries : The Role for Technical Assistance

Divakaran, Shanthi ; McGinnis, Patrick J. ; Shariff, Masood

World Bank, Washington, DC

关键词: ACCESS TO CAPITAL;    ACCESS TO INFORMATION;    ACCESS TO MARKETS;    ACCOUNTING;    ACCOUNTS RECEIVABLE;   

DOI  :  10.1596/1813-9450-6827
RP-ID  :  WPS6827

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper discusses the constraints forprivate equity financing of small and medium enterprises indeveloping economies.In addition to capital, privateequity investors bring knowledge and expertise to thecompanies in which they invest. Through active participationon the board of directors or in partnership with management,private equity investors equip companies with criticalimprovements in governance, financial accounting, access tomarkets, technology, and other drivers of business success.Although private equity investors could help to create,deepen, and expand growth of small and medium enterprises indeveloping economies, the vast majority of private equity insuch markets targets larger or more established enterprises.Technical assistance, when partnered with private equity,can unlock more investor commitments and considerablyenhance the ability of small and medium enterprises inemerging markets to raise private equity capital. Technicalassistance provides funding that allows private equity fundsto extend their reach to smaller companies. Technicalassistance can mitigate some level of risk and increase theprobability of successful investments by funding targetedoperational improvements of investee companies. Dedicatedtechnical assistance facilities financed by third parties,such as development finance institutions, governments, orother parties, have emerged to fill this critical need. Thepaper discusses the provision of investment capital twinnedwith technical assistance, which is now more accepted bylimited partners and general partners or fund managers andis becoming more of a market model for private equityfinance focused on small and medium enterprises.