Financing Opportunities for Innovative Companies in Latvia

Abstract

To increase their competitiveness, companies have to bring to the market new technologies, new products, and new solutions for services. In Latvia a company is considered innovative if it at least once in every three years develops a new competitive product or increases competitiveness of its production by introducing new technologies. These products have to be developed within the company—based on the company’s own knowledge and skill or in cooperation with research institutions. In addition, the company’s annual investment in new product or service development should be the equivalent of at least 2 % of its turnover. Access to finance is an important issue for innovative business, both in establishing a new company and the introduction of innovative products in an existing company. The purpose of this research paper is to evaluate the need for attracting financing and financing opportunities for innovative companies in Latvia. The paper includes an overview of the theoretical aspects of financial resources, including internal and external sources of financing; explains the principles of innovation; determines and analyzes different ways of innovative companies financing; and provides an insight into EU co-financed state support programmes for innovative companies. The research covers an analysis of the environment for innovation in Latvia from the point of view of the need for financing and the possibilities for companies to attract financing for innovation.