Evolution of the venture capital financing for growing small and medium enterprises in Central and Eastern Europe countries: the case of Macedonia

The objective of this paper is to examine and analyze the differences between Venture Capital development in Macedonia and several Central and Eastern Europe countries, to determine the reasons, and hence extract certain conclusions that will serve as a guideline in Macedonia’s venture capital industry development. Venture capital is an important intermediary in financial markets, providing capital to firms who otherwise have difficulties attracting financial support. Moreover, venture capital funds provide managerial expertise to the company they are investing in, and have impact on the overall economy through innovation, job creation, economic growth, increased competition and improved corporate governance. Private equity and Venture capital funds are present for over 20 years in Central and Eastern Europe. The institutional investors evaluate the individual countries’ attractiveness to identify the best investment opportunities for their asset allocation. On the basis of the performed analysis in this paper regarding the PE/VC fundraising and investment activities, conducted interviews, and Country Attractiveness Index (including the economic activities, depth of capital market, taxation, investor protection and corporate governance, human and social environment and entrepreneurial culture and opportunities), Macedonian small and medium size enterprises are obviously not on the PE/VC investors` map, according to the small amount of their investments up to now.