SMEs perspective on venture capital investment criteria - A study of Croatian SMEs

Abstract

The importance of small and medium sized enterprises (SMEs) for the economy is indisputable. However, SMEs worldwide, including Croatian ones, have difficulties in accessing financing sources, primarily the alternative ones like venture capital. Seeking venture capital for entrepreneurs is a big challenge because of the absence of unique venture capital investment criteria and investment process. Less than 3% of the entrepreneurs succeed in attracting venture capital. In order to increase the chances of obtaining venture capital in the first phase, this study seeks to explain the required venture capital investment criteria from the perspective of SMEs. To the author’s best knowledge, no studies have to date been undertaken specifically on venture capital investment criteria in Croatia. Final results suggest that that the SME manager/owner (manager/owner of SMEs) who seeks to attract venture capital is a male, aged between 35-44, has an BSc academic degree and the company is privately owned. Regarding the profile characteristics, the results show that, looking from the point of the SME manager/owner, goal orientation and hard work are the most important factors for seeking venture capital in the first phase, followed by innovation and reasonable risk-taking.