Academic journal article Journal of Economics & Management

Venture Investments of Innovative Projects as a Progressive Form of Interrelation of Business Units in Real and Financial Sectors of Economics

Academic journal article Journal of Economics & Management

Venture Investments of Innovative Projects as a Progressive Form of Interrelation of Business Units in Real and Financial Sectors of Economics

Article excerpt

Objective: The goal is to investigate the possibilities of using the tools of venture financing as a progressive form of innovative interaction between financial and real sectors of Russian economy and its regions.

Methodology: The philosophical, scientific functions (historical and logical) and specific methods for the economy (scientific abstraction, functional analysis, modeling, method of graphic presentation) were used to achieve this goal. The method of scientific abstraction made it possible to consider the etymology of categories and concepts in the sphere of venture capital circulation. By applying functional analysis the cause-and-effect relations were revealed for the capital assets interaction of the real and financial sectors of the economy with the use of tools of venture capital industry. Modeling and method of graphic presentation gave the possibility to disclose the stages and phases of an innovation process, mediating by venture capital instruments.

Results: The reasons for the limitations of the number of traditional financing forms of economic entities innovative activity were investigated. The features of the origin of venture capital as a symbiosis of financial and human capital were disclosed. The peculiarities of the functioning of venture capital in the USA, Europe, and Russia were described. The authors presented the model of single-phase form usage of venture capital in the innovation process. They developed a formula to calculate the efficiency of a combined method of capital investing in an innovation process. The institutional capabilities of the venture capital model of financial and real sectors interactions in the Republic of Tatarstan (Russia) were revealed.

Originality: The author proposes a new systemic alternative to use the venture financing innovation in Russia in accordance with the phases and stages of the innovation process and with other traditional investment instruments.

Limitations in investments in traditional forms of business unit innovative activities are optimized by such an innovative form as venture capital. Works on etymology and economic contents of the term "venture capital" showed its organic bond with financial capital, structure of the latter being quite heterogeneous in general trends. From the moment of its emergence the financial capital consisted of banking and industrial capitals. Historically financial capital in certain conditions was presented only in a money form. Time proved that this category is specific by being enriched with new financial forms of the capital, which in term depend on development not only of banking and industrial capitals, but on other forms and markets (for example, fictitious capital and capital market). At present the transformation of financial capital is continued. It is becoming a special type of the capital, including trading capital based not only on monopolies financial assets, but on medium and small capitals.

Financial capital absorbs elements of such type of the capital as human capital resulting in provision of investors not only with money assets, but also with economical and organizational-management facilities (managerial skills, business conduct experience, etc.). It happens in terms of high uncertainty and risk of loss of the money assets. Human capital investments mean investing with personal health, knowledge, skills and motivation (of an investor and/or a hired specialist) in this or that innovative project. It results in specific symbiosis of financial and human capital - venture capital, providing effective use of innovations and taking into consideration character demands of the innovative process.

The initial meaning of the term "venture capital" was closely connected with etymological meaning of the English word "venture", which means an enterprise on the one hand and risk on the other. Research of the major theoretical and methodological approaches on determination of the capital category, extraction of its major characteristics, and study of the types of capital in their interrelation showed many sides and complexity of the term "venture capital" which in our opinion essentially excludes its usually known rendering. …

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