Title: Venture capital in Brazil: early experience of emerging company investment funds

Authors: Walter L. Ness Jr., Valdir De Jesus Lameira

Addresses: IAG/PUC-Rio, Rua Marques de Sao, Vicente, 225, 22453-900 Rio de Janeiro, RJ, Brazil. ' Comissao de Valores Mobiliarios and IAG/PUC-Rio, Rua Dona Delfina, 64/202, 20511-278 Rio de Janeiro, RJ, Brazil

Abstract: This article examines the recent Brazilian experience with Emerging Company Investment Funds, created to permit Brazilian institutional investor participation in venture capital. Such funds began to be authorised in 1994. Twenty funds existed at the end of 2003. They have raised only slightly more than $US100 million in capital to date and have invested in 74 different firms. To date the funds have given investors, on balance, slightly negative nominal returns. This performance is hardly encouraging for investors in venture capital in Brazil. The effect of fund structure on fund returns is examined through multiple regression analysis. It is found that approximately 30% of the variability of returns can be attributed to structural factors, leaving the remainder of the variability to be explained by investment selection.

Keywords: venture capital; Brazil; emerging companies; return on investment; ROI; emerging companies; entrepreneurship; innovation management; risk investment.

DOI: 10.1504/IJEIM.2006.010369

International Journal of Entrepreneurship and Innovation Management, 2006 Vol.6 No.4/5, pp.341 - 355

Published online: 17 Jul 2006 *

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