EnglishНа русском

Ефективна економіка № 10, 2017

УДК 330.341.11:339.727.22

 

T. Gviniashvili,

PhD (Economics), Associate Professor at the Department of Economics, entrepreneurship and enterprise management,

Oles Honchar Dnipro national university, Dnipro

 

INCREASING THE EFFICIENCY OF BUSINESS ENTITIES' INNOVATIVE ACTIVITY ON THE BASIS OF VENTURE FINANCING

 

Т. З. Гвініашвілі,

к. е. н., доцент кафедри економіки, підприємництва та управління підприємствами,

Дніпровський національний університет імені Олеся Гончара, м. Дніпро

 

ПІДВИЩЕННЯ ЕФЕКТИВНОСТІ ІННОВАЦІЙНОЇ ДІЯЛЬНОСТІ СУБ’ЄКТІВ ПІДПРИЄМНИЦТВА НА ЗАСАДАХ ВЕНЧУРНОГО ФІНАНСУВАННЯ

 

The article analyzes the foreign experience of business entities' venture financing of innovative development and outlines the peculiarities of the functioning of venture funds in Ukraine.  It is determined that the activities of venture funds are concentrated in innovative sectors of the economy, characterized by prospects for achieving a high level of profitability, but at the same time - the riskiness of projects. The expediency and effectiveness of venture financing in advancing along the way of building a knowledge economy is substantiated. It is proved that this form of financing is characterized by increased risk, which is compensated by the probability of obtaining a higher rate of return than by alternative investments. In addition, the article proposes specific target recommendations on ways and means of improving the efficiency of innovative development in the context of both direct support aimed at business entities and indirect ones, which is carried out through the formation of infrastructure support.

 

Сьогодні одним з напрямів підвищення ефективності функціонування національної економіки стає зростання інноваційної активності суб’єктів підприємництва. В статті здійснено аналіз інноваційного розвитку вітчизняних суб’єктів підприємництва та визначено, що на сьогоднішній день рівень їх інноваційної активності є незадовільним, що зумовлено відсутністю у суб’єктів підприємництва як власних, так і позикових фінансових коштів для проведення НДДКР, зміною форми власності, безпосередньою ліквідацією підприємств в разі їх збитковості тощо. Тому актуальна проблема щодо переходу економіки країни на інноваційний шлях розвитку не може бути вирішена без формування збалансованої інноваційно-інвестиційної політики. В статті здійснено аналіз показників активності Європейського венчурного ринку, венчурного ринку США та рівню розвитку венчурного інвестування в Україні, результати якого свідчать про ефективність і доцільність венчурного інвестування при реалізації інноваційних проектів. Визначено основні проблеми, що перешкоджають розвитку венчурного бізнесу в Україні: проблеми фінансового та нормативного характеру; проблеми надання супутніх послуг, пов’язаних з інноваційною діяльністю суб’єктів підприємництва, а також проблеми обґрунтування доцільності фінансування в розрізі підтримки малих суб’єктів підприємництва, які здійснюють технічно-економічне обґрунтування проектів. Доведено, що діяльність венчурних фондів зосереджено в інноваційних секторах економіки, що характеризуються перспективами досягнення високого рівня рентабельності, але і у той же час - ризикованістю проектів. Обґрунтовано доцільність та дієвість венчурного фінансування при просуванні по шляху побудови економіки знань. Визначено, що дана форма фінансування характеризується підвищеним ризиком, що компенсується ймовірністю отримання більш високої норми прибутку, ніж чим по альтернативним вкладенням. Крім того, в статті запропоновано конкретні цільові рекомендації щодо шляхів і способів підвищення ефективності інноваційного розвитку в розрізі як прямої підтримки, націленої саме на суб’єктів підприємництва, так і непрямої, що здійснюється за допомогою формування інфраструктурного забезпечення.

 

Keywords: venture funds, venture capital investment, innovation development, business entities, innovation and investment policy.

 

Ключові слова: венчурні фонди, венчурне інвестування, інноваційний розвиток, суб’єкти підприємництва, інноваційно-інвестиційна політика.

 

 

Formulation of the problem. The current state of development of economic systems is characterized by the presence of significant global and local imbalances, which become one of the dominant factors of instability, which complicate the transition to a trajectory of balanced and economically safe development of the country as a whole. The direction of increasing the efficiency of functioning in such conditions is to increase the efficiency of innovation activities of business entities. Topical problem concerning the transition of the country's economy to the innovative way of development cannot be solved without the formation of a balanced innovative-investment policy. The significance and importance of this problem facing our state has not yet led to its deep, systematic and comprehensive study in the economic literature: there is no development of the theoretical positions on the planning of a coherent development of investment and innovation activities of business entities, the factors and indicators of innovative activity are not fully investigated, the methodology for estimating its effectiveness is not formed. The above-mentioned reasons caused the urgency of development and formation of proposals for increasing the efficiency of innovative activity of business entities on the basis of venture financing.

The analysis of recent research and publications. Venture investment funds were the subject of scientific interest of many experts and scholars who investigated various aspects of their functioning in Ukrainian realities. These scholars are A. Veremienko, D. Osmolovsky, V. Rudenko, O. Starichenko, E. Nosov, O. Sukhorretsky, O. Kovalyov, I. Buzagy, A. Slobodyan, E. Kovalev and others. However, most of these scholars investigated mainly the theoretical aspects of the functioning of venture funds, without paying attention to the practice of using such funds in Ukraine.

The scale of the scientific work on improving the efficiency of innovative development of business entities is really impressive. The works of such scientists as O. Kotko, T. Grynko, O. Kovalenko, M. Koshevogo, Yu. Lavrinenko, O. Rud, L. Sivolap and others are devoted to important issues of development of theoretical and practical aspects of innovative development of business entities. At the same time, a large number of methodological and theoretical aspects of innovative development of business entities in modern conditions remain insufficiently researched and do not meet the adequate strategic challenges and threats from the dynamic environment that requires continuous improvement of the tools and mechanisms for activating innovative activity.

The purpose of the paper is to analyze foreign experience in raising the efficiency of business entities' innovative activity on the basis of venture financing, as well as to determine the specific features of their functioning on the domestic market.

Description of the main research material. In modern economic conditions, the dynamic development of the economy is possible only through the introduction of innovations with a high level of efficiency, which increases the significance of the study of innovative processes and ways of their financing in order to achieve a high level of economic security of business entities [2]. At all levels of governance he importance of the development of the innovative sphere, the priority of the tasks of strengthening the innovative potential of the country, the increase of the efficiency of scientific and innovative development and research is constantly emphasized. In general, the modernization of the innovation sphere is a strategic direction of the long-term economic policy of any state [13].

The implementation of innovative processes traditionally takes place using a system of research and development, presenting now multifunctional services focused on the interests of society and the economy. At the same time, the scientific activity, which forms the intellectual capital of the country, can be characterized as the most dynamic sphere of services, which determines the activity of the tertiary sector as a whole.

The total number of organizations that carried out research and development in Ukraine in 2015 was 963 units, 45.8% of which belonged to the state sector of the economy, 39.0% - business, 15.2% - higher education [8]. The dynamics of the number of organizations that carried out research and development in Ukraine for the period 2008-2015 is shown in Fig.

 

 

Fig. 1. Dynamics of the number of organizations that carried out research and development

in Ukraine for the period 2008-2015, % [8, 9]

 

Today, the level of innovative activity in Ukraine is unsatisfactory. Ukraine is far behind the advanced countries of the world. This is evidenced in particular by the global innovation index. This is evidenced in particular by the global innovation index. Therefore, internationally, in the GII-2015 rating, Ukraine ranks 50th among 127 countries against 56th in 2014 (among 128 countries) and 64th in 2013 (among 141 countries in the world) [10, 11, 12].

The low indicators of the number of organizations that carried out research and development in Ukraine are due to the lack of both own and borrowed funds for entrepreneurship for R&D, change of ownership, direct liquidation of enterprises in case of their loss-making, etc.

It is important to keep fast-growing companies aware of the changes that are taking place in order to better understand market trends and provide the necessary support to entrepreneurs offering the most effective ideas. The development of technologies and the need to find new sources of growth that will help to overcome post-crisis problems, contribute to the accelerated transformation of the business environment.

As it is known, today the US is the leader in the number of venture capital investments in the world. The dynamics of venture investments and the number of transactions in the US over the past ten years are shown in Fig. 2

 

 

Fig. 2. Dynamics of venture investments and the number of transactions in the

United States for the period of 2006-2015 [7]

 

According to the analysis, we can conclude that in the United States there is a significant volatility of venture capital investments. Thus, under the influence of the economic crisis of 2006-2007, venture investments in the US decreased from 29 billion dollars in 2006 to 22 billion dollars in 2007. Dynamics of US venture financing is identical to the dynamics of the global venture capital market: growth in the 2008-2009 period, 2011-2013, alternating with the decline in 2010 and 2014, respectively, except in 2015, when global venture investments reached record levels, and investments in the US did not exceed the level of 2013. In 2015, the amount of venture financing in the US was to 74 billion dollars. The similarity of the dynamics of global and American venture investments is due to the fact that the US venture market is the largest in the world. Therefore, the situation on the market of venture capital in the US significantly affects the world market.

The European venture market is much smaller than the American one. As of 2014, the US venture market is more than 10 times the size of the European market (61 billion dollars against 4.8 billion dollars, converted from the euro at the average rate). The dynamics of venture investments of the EU countries over the past ten years are shown in Fig. 3

 

 

Fig. 3. Dynamics of venture investments of EU countries for the period of 2006-2015 [1, 16]

 

The peak of European venture capital investments is in 2000 (19.6 billion euros) and 2004 (17.3 billion euros). The economic crisis of 2006-2007 significantly influenced the amount of venture financing: in 2010, the historic minimum of this indicator (3.4 billion euros) was fixed. At the same time, unlike the US, the European venture industry did not get stable from the effects of the crisis - in 2014, the total amount of venture financing was to only 4.4 billion euros.

In Ukraine, venture capital investment funds have been functioning for more than 15 years, and the number of funds and capital in them exceeds similar indicators of all other collective investment institutions (CII) in dozens of times [4]. According to the Law of Ukraine "On Joint Investment Institutions", a venture capital fund - is a non-diversified, closed-end collective investment institution that exclusively provides private (closed) placement of securities of collective investment institutions (CII) among legal entities and individuals [3].

The level of development of venture investment in Ukraine can be characterized by indicators such as the number of registered collective investment institutions (CIIs) and the value of their net assets (NAVs). The dynamics of these indicators over the past seven years is shown in Fig. 4.

 

 

Fig. 4. Dynamics of the number of CII of Ukraine and their NAV for the period of 2009-2015 [6]

 

The data show the annual increase in the net asset value of collective investment institutions in Ukraine from UAH 112691 million in 2009 to UAH 263479 million in 2015. According to the Ukrainian Investment Business Association at the end of March 2016, out of 1228 registered CII, 1036 these were the very venture funds, the share of which in the aggregate CII reaches almost 85% [6].

A more accurate indicator of the size of the CII market is the value of net assets. As of June 30, 2012 the aggregate value of assets of the CII of Ukraine amounted to UAH 289352 million, of which UAH 200918 million is the NAV of the venture capital CII (almost 70%) [6].

Thus, Ukraine is significantly behind the leader in technological development - the USA - both in quantitative (in terms of venture financing) and in qualitative (sectoral structure of venture investments) aspects of the venture industry. Thus in 2015, the leading industries in the consumption of venture capital are the following: software - 26.7%, telecommunications - 7.9%, IT services - 6.6%, networks and equipment - 5.9%, semiconductors - 4.4%, computers and peripherals - 1.7%, electronics - 1.2%. [7]. In Ukraine, according to the data of 2015: computers and computer equipment - 18.8%, financial services - 64.8, natural sciences - 16.4% [6].

In the United States, there is a direct investment model for budget funds: state funding of innovative companies through venture capital investments in exchange for shares. In the Netherlands, project developers get long-term loans. The model of investment of budget financial resources through the placement of capital in venture funds functions in the United Kingdom, India and China (the formation of a venture capital fund at the state level, investing in innovative firms). In Israel and Singapore, there is a practice of creating a single fund that accumulates funds from several funds and places investments in venture funds at the same time as private investors. The programs of mixed financing of innovative development include capital gains tax privileges granted to venture capital investors (Japan, China, Great Britain, Canada) and the formation of a private-government venture fund that participates both in the establishment of other venture funds and in the practicing of innovative firms' direct financing (Finland). Means of guaranteeing the activity of venture companies: credit guarantees (USA); Guarantees provided by various forms of loans (EU); compensation for potential losses incurred by venture capital investors (the Netherlands, Japan); compensation for potential losses of venture capital investors by providing tax benefits in the amount of damages received (Singapore) [15].

Thus, world experience points to the efficiency and expediency of venture capital investment in the implementation of innovative projects. The problem is that often venture funds prefer financing not innovative risky projects, but investing in the implementation of business ideas of profitable business entities. Small business entities that implement innovations are not an object of interest to such investors, although they are the most dynamic and flexible innovators.

When analyzing examples of the evolution of innovative activity in other countries of the world, one should pay attention to the following laws:

- direct government investments in companies, engaged in innovation, as a rule, is a sign of developed market economies;

- in developed countries, the model of investment of state capitals through investments in venture funds is works effectively.

A venture investor is interested in receiving a profit, therefore, and the injection of venture capital does not require periodic payment of interest as in obtaining a loan. As a rule, investors are competent people who share risks together with the direct executor of the project. The structure of sources of venture capital is characterized by a strong specificity of different countries, which is a consequence of the peculiarities of legislative regulation. It should also be noted that financing problems are also relevant for those small innovative enterprises that are based on higher education institutions, since the size of their own funds is limited by a rather small statutory capital and small sums of profit; bank lending is also practically inaccessible, because banks assign these companies a high level of risk, besides, rates on loans for business are very high. Often, the actual financing of the activities of small business entities that implement innovations based on higher education institutions is implemented in the form of public investment and investment of non-profit funds.

Thus, the priority directions of increasing the efficiency of innovative activity of business entities to date is the development of mechanisms of venture capital investment. However, in Ukraine there are some problems that prevent the development of venture business:

1. Financial problems: there should be state support programs for small businesses entities, which should provide funding for the activities of such entities. However, the most effective way to obtain funding for small innovative business entities is either self-financing (possible only in conditions of a successful and profitable project) or attraction of investors' funds.

2. Regulatory issues: the imperfection of the regulatory framework can be eliminated by attracting specialists to the development of legislative acts, precisely in the field of activity of small innovative business entities.

3. Problems of providing related services: the priority tasks of the state and the innovative sphere as a whole are the development and growth of innovative infrastructure.

4. Problems of reasoning of expediency of financing: it is necessary to develop a system of support of small business entities that carry out feasibility studies of projects.

Under current conditions, to increase the efficiency of innovative development of business entities, the problem of the formation of infrastructure provision, which allows creating and implementing innovation on a widespread scale, is getting particular importance. Infrastructure provision of innovative development of business entities - a set of entities that promote innovation (including the provision of services for the creation and implementation of innovative products) and involves creating a network of organizations providing consulting, information, financial and other services aimed at support and development of innovative activity of business entities [5]. Depending on the demand on the infrastructure market on the part of the scientific and technical complex, infrastructure functions can be performed by small organizations established on the basis of existing scientific and educational institutions, as well as specialized organizations that have their own material and personnel base. Herewith, infrastructure support should facilitate the following functions:

- identification of needs of business entities for innovations, taking into account technological and market trends;

- selection of innovations from the set of external and internal proposals;

- definition of the type of innovative strategy (full copy, partial creative imitation, innovations with a high degree of novelty);

- development and implementation of training programs for personnel;

- adaptation of business processes, using innovative solutions;

- production of innovative products and services.

By the type of provided infrastructure services there can be identified the following interconnected systems:

- system of informational support of scientific-technical and innovative activity;

- examination system of scientific and technical and innovative projects and programs;

- system of financial and economic provision of scientific and technical and innovative activity;

- system of production and technological support;

- system of certification of science-intensive products;

- system of promotion of scientific and technical developments and science-intensive products in the market (technology transfer);

- system of coordination and regulation of development of scientific and technical and innovative activity.

Currently, there is a fairly extensive network of organizations that promotes the development of innovative activities of business entities and represents a set of production-technological, consulting, informative, credit-financial and investment, personnel and marketing components. Specifics of innovative development of domestic business entities cause differences in the model of innovative infrastructure, which differ both a set and the role of its participants, and the nature of their interaction.

Conclusions. The results of the research allow to formulate specific target recommendations on ways and means of increasing the efficiency of innovative development in the context of both direct support aimed at business entities, as well as indirect ones, which are carried out through the formation of infrastructure support, in particular:

- focus on supporting organizational, marketing and financial innovation, with an emphasis on the following stages of the innovative process: product upgrades, patents and withdrawal into markets;

- development of tools for venture financing of innovative activities with a focus on the creation and support of the activity of investment funds and venture capital structures in order to increase the role of extra budgetary sources of funding for innovative activities of business entities;

- strengthening of informative, scientific-methodical and consulting support of both business entities and objects of infrastructure of their support;

- facilitating the formation of a more tight and complex innovative network of cooperation at the state level, which involves a coincidence of interests of science and business.

Thus, the analysis of foreign experience shows that today venture funds are the main source of financing for innovative development of business entities. The most important feature of their functioning is the concentration of activities in innovative sectors of economy characterized by prospects for achieving high profitability, but at the same time - the riskiness of projects. Venture capital is intended to provide the inflow of funds from private investors into innovative business entities. This form of financing is characterized by increased risk, offset probability of obtaining a higher rate of return than by alternative investment. In addition, in many developed countries, venture financing proved its expediency and efficiency in advancing along the way of building a knowledge economy. Taking into account the above mentioned, the development of an effective innovative model of development, which should become a comfortable environment from the position of venture funds, that promotes the implementation of the innovative policy of the country as a whole, which should be directed further research at, becomes relevant.

 

References.

1. Annual activity statistics. Invest Europe, available at: https://www.investeurope.eu/research/activity-data/annual-activity-statistics/ (Accessed 20 February 2016).

2. Grynko, T.V. and Hviniashvili, T.Z. (2015) “Organizational changes in the enterprise in the conditions of its innovation development”, Ekonomichnyj chasopys-XXI, vol. 1-2 (2), pp. 51-54.

3. Hrinchenko, O.V. (2014) “Collective investment institutes: the essence, functions and place in the economic system”, Visnyk ZhDTU, vol. 3 (69), pp. 207-211.

4. Hryhorenko, Yе.O. (2014) “Development of innovative infrastructure as an element of crisis management by machine-building enterprises”, Ekonomika i rehion, vol. 5 (48), pp. 85-89.

5. Ladon'ko, L.S., Filipova, N.V. and Prkopenko, K.H. (2014) “Study of experience of foreign countries in activating innovation activity in the light of the European integration processes of Ukraine”, Naukovyj Visnyk ChDIEU, vol. 1 (21), pp. 58-63.

6. Official site of the Ukrainian Association of Investment Business, “Venture investment”, available at: http://www.uaib.com.ua/abcpeople/venchyra/what_vench/16977.html (Accessed 19 April 2015).

7. PwC MoneyTree Report. Price waterhouse Coopers, available at: https://www.pwcmoneytree.com/ (Accessed: 22 February 2016).

8. State Statistics Service of Ukraine (2015), “Nauka, tekhnolohii ta innovatsii: zdijsnennia naukovykh doslidzhen' i rozrobok 2015” [Science, technology and innovation: research and development 2015], available at: http://www.ukrstat.gov.ua. (Accessed 16 February 2016).

9. State Statistics Service of Ukraine (2016), "Naukova ta innovatsijna diial'nist' v Ukraini 2008. Statystychnyj zbirnyk" [Research and innovation activity in Ukraine 2009-2015. Statistical yearbook], Derzhkomstat, Кyiv, Ukraine, available at: http://www.ukrstat.gov.ua. (Accessed 16 February 2016).

10. The Global Innovation Index (2013) Effective Innovation Policies for Development. Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch [Eds.]  453 р.

11. The Global Innovation Index (2014) Winning with Global Innovation. Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent [Eds.] 451 р.

12. The Global Innovation Index (2015) Innovation Feeding the World. Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent [Eds.] 463 р.

13. The Verkhovna Rada of Ukraine (2002), The Law of Ukraine “About innovation activity”, available at: http://zakon4.rada.gov.ua/laws/show/2404-17 (Accessed 11 December 2015).

14. The Verkhovna Rada of Ukraine (2013), The Law of Ukraine “On Joint Investment Institutions”, available at: http://zakon4.rada.gov.ua/laws/show/2404-17 (Accessed 11 December 2015).

15. Wessner, C.W. (2007) “Innovation policies for the 21st century” Report of a symposium, The National Academies Press, Washington, D.C.

16. Yearbook 2012. Activity Data on Fundraising, Investments and Divestments by Private Equity and Venture Capital Firms in Europe. Invest Europe, available at: http://www.investeurope.eu/uploadedfiles/home/knowledge_ center/evca_research/Yearbook_2012_Presentation_EVCA_Public_120530.pdf (Accessed: 22 February 2016).

 

Література.

1. Венчурне інвестування / Офіційний сайт Української асоціації інвестиційного бізнесу. URL: http://www.uaib.com.ua/abcpeople/venchyra/what_vench/16977.html (дата звернення: 19.04.2015)

2. Григоренко Є.О. Розвиток інноваційної інфраструктури як елемента антикризового управління машинобудівними підприємствами / О.Є. Григоренко // Економіка і регіон, 2014. - №5 (48). – С. 85-89.

3. Гринько Т.В. Організаційні зміни на підприємстві в умовах його інноваційного розвитку / Т.В. Гринько, Т.З. Гвініашвілі // Економічний часопис-XXI. – 2015. – №1-2 (2). – С. 51-54.

4. Грінченко О.В. Інститути спільного інвестування: сутність, функції та місце в економічній системі / О.В. Грінченко // Вісник ЖДТУ, 2014. - №3 (69). – С. 207-2011.

5. Ладонько Л.С. Дослідження досвіду зарубіжних країн щодо активізації інноваційної діяльності у світлі євроінтеграційних процесів України / Л.С. Ладонько, Н.В. Філіпова, К.Г. Пркопенко // Науковий Вісник ЧДІЕУ, 2014. - № 1 (21). – С. 58-63.

6. Наука, технології та інновації: здійснення наукових досліджень і розробок у 2015 році. Державна служба статистики України. URL: http://www.ukrstat.gov.ua (дата звернення: 16.02.2016)

7. Наукова та інноваційна діяльність в Україні, 2009-2015 рр.: статистичний збірник / відп. за вип. О. О. Кармазіна. Київ: Державна служба статистики України. URL: http://www.ukrstat.gov.ua (дата звернення: 16.02.2016).

8. Про інноваційну діяльність: Закон України від 04.07.2002 р. № 40-IV. Відомості Верховної Ради України. 2002. URL: http://zakon0.rada.gov.ua/laws/show/40-15 (дата звернення: 11.12.2015).

9. Про інститути спільного інвестування Закон України від 05.07.2012 р. № 5080-VI. Відомості Верховної Ради України. 2013, № 29, Ст. 337. URL: http://zakon0.rada.gov.ua/laws/show/40-15 (дата звернення: 11.12.2015).

10. Annual activity statistics. Invest Europe. URL: https://www.investeurope.eu/research/activity-data/annual-activity-statistics/ (дата обращения: 20.02.2016).

11. PwC MoneyTree Report. Price waterhouse Coopers. URL: https://www.pwcmoneytree.com/ (дата обращения: 22.02.2016).

12. The Global Innovation Index 2013. Effective Innovation Policies for Development. Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch [Eds.] 453 р.

13. The Global Innovation Index 2014. Winning with Global Innovation. Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent [Eds.] 451 р.

14. The Global Innovation Index 2015. Innovation Feeding the World. Soumitra Dutta, Bruno Lanvin, and Sacha Wunsch-Vincent [Eds.] 463 р.

15. Wessner C.W. (2007) Innovation policies for the 21st century. Report of a symposium, The National Academies Press, Washington, D.C.

16. Yearbook 2012. Activity Data on Fundraising, Investments and Divestments by Private Equity and Venture Capital Firms in Europe. Invest Europe. URL: http://www.investeurope.eu/uploadedfiles/home/knowledge_center/ evca_research/Yearbook_2012_Presentation_EVCA_Public_120530.pdf (дата обращения: 22.02.2016).

 

Стаття надійшла до редакції 19.10.2017 р.