Venture Capital Financing as a Mechanism for Impelling Innovation Activity

This paper aims to provide an insight into the foundations of the development of the institution of venture capital financing, as well as summarize and conceptualize the experience of more economically developed countries, where the more favorable conditions have been created for the conduct of venture capital business. The authors' summarization of theoretical, methodological, and empirical data has made it possible to formulate the major issues characteristic of the making of the venture capital sector in countries with a transitive economy (Russia, in particular), as well as propose a set of solutions aimed at optimizing the legal and institutional space in the venture capital sector with a view to boosting the innovation activity of businesses. The authors derive the following major inferences: Venture capital financing is a modern institution whose activity is aimed at accumulating and redistributing temporarily available investment resources that are sought after in the sphere of innovation entrepreneurship; Countries whose economy may currently be recognized as transitive are characterized by a set of uniform issues: underdeveloped infrastructure in the national innovation system; lack of sources of venture capital financing; businesses reporting decreased innovation activity levels due to lack of economic incentives; lack of personnel resources; The evidence from the experience of more economically developed countries suggests that to enable the proper making of the institution of venture capital financing in countries with a transitive economy a set of interrelated objectives may need to be undertaken, namely: Ensuring legal optimization; boosting investment attractiveness; altering the nature of partnership between the state, business, and science-And-education sector; reducing state participation in economic and research activity.