The impact of lending availability and conditions for SMEs on the global development of venture financing systems

RUDN University, Economic Faculty, Department of Economic and Mathematical Modeling, ul. Miklukho-Maklaya, 6, 117198 Moscow, Russian Federation

^* Corresponding author: lazyrin_ms@pfur.ru

Abstract

Research background: The current situation, which caused global economy recession, has shown that all participants of the venture capital market are not ready for such occasions. Small and medium-sized businesses found themselves in a in a pickle that completely limited the ability to conduct business in most sectors of the economy and venture investors had to urgently reassess their capabilities and their requirements for investment objects. Different events have been constantly influencing the venture financing system to change and develop during decades of its existence. The most important changes are happening today in new world order dictated by COVID-19.

Purpose of the article: The aim of this article is to analyse the current state of venture financing, find out how VC is related to the ICT development in European countries, compare VC to other lending mechanisms for SMEs and assume how the global venture industry may be changed by global isolation.

Methods: The ARDL model for panel data is used to assess the impact of ICT developments on VC. Comparative and statistical analysis of available datasets on financing mechanisms is conducted.

Findings & Value Added: The results show that the increase in value-added in the ICT sector is driving the growth of venture capital in leading countries in terms of innovation activity. Venture capital will be forced to transform towards globalization and centralization, but with the delegation of authority to local representatives, through new communication forms. Countries with high ICT development may be more attractive for venture financing.