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Venture capital internationally
Venture capital is a financing tool which first appeared
in the USA in the 1950s and later made a dynamic entry
in the UK and other Western European markets. In Greece
it is a relatively new concept (the first legislative
framework was adopted in 1988 in the form of Law 1775/88),
but over the last five years it has been developing
rapidly. Following the stock exchange boom in Greece
and the transfer of large capital sums from bank deposits
to equity markets, investor enthusiasm has waned and
investors are increasingly turning, to medium-term
and long-term placements. This has also been the trend
in other markets where venture capital has a longer,
and successful, track record.
Venture capital financing is through participation
in the company's share capital, primarily by means
of a share capital increase. It may alternatively
be provided in the form of a convertible bond. Venture
capital funds generally do not invest in public (listed)
companies. The statutory framework currently in effect
governing venture capital funds and Attica Ventures
(Law
2992/2002) expressly prohibits investments in
public companies.
Venture capital firms seek to liquidate their investments
and re-invest the capital in new funds. They do not
hold on to their portfolio long-term. Investments
are made with a medium-term perspective but always
with a visible exit route.
The aim of venture capital funds is to contribute
as a strategic partner to the rapid development of
their portfolio companies, including improvement of
their financial structure and profitability.
Venture capital funds effectively share the risk
with the entrepreneur(s) and consequently expect to
be rewarded with high rates of return, equal to those
expected by the entrepreneurs themselves.
The legal framework for venture capital
in Greece
Law 1775/88 laid down the first legal framework and
was quite unattractive for investors. Law
2367/95, currently in force, attempted to reform
the operating framework for venture capital without
much success. For this reason, all serious efforts
at VC investments were based on off-shore funds, seeking
to overcome existing hurdles (primarily taxation issues).
Law
2992/2002 is the latest legislative reform in
the venture capital sector, providing favorable tax
arrangements and other incentives. Attica Ventures
was established under and operates within this framework.
At the same time, Ministerial
Decree No. 217550 (Government Gazette B/1544)
refines and lays down the terms and conditions under
which the New Economy Fund (TANEO) participates in
venture capital funds.
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