Proceedings of Eurasia Business Research Conference
4 - 6 June 2015, Nippon Hotel, Istanbul, Turkey, ISBN: 978-1-922069-77-1
How to Diversify Risk in Emerging Markets: In the Case of
Venture Capital
Guldem Gokcek
It is true that venture capital drives job creation and economic growth as well as
innovation. It is expected that high growth economies create higher entrepreneurial
activity in the countries. This could be true for the most developed markets but is it also
valid for the emerging markets? Emerging markets were created due to the failure of
state-led economic development and the need for capital investment. It has been
observed by many experts in the area that emerging markets countries have been trying
to undertake domestic reforms to support sustainable economic growth. It is expected
that if the economy grows quickly, then there may be more attractive opportunities for
entrepreneurs to start new companies, thereby, increasing the demand for VCs.
However, venture capital sectors as well as management style of venture capitalists differ
across countries so as the risk. There are also factors which affect venture capital
decision making in emerging markets such as depth of capital markets, initial public
offerings, labor market rigidities, private pension funds, macroeconomic factors, financial
reporting standards, and government funded programs. Therefore, the literature is
divided into groups based on the factors that affect venture capital in emerging markets,
and the survey organized accordingly to examine behavior of venture capitalists in
emerging markets in order to diversify the risk. As a conclusion, based on the findings,
this research is concluded by determining how venture capitalists diversify risk in
emerging markets.
Keywords: Venture Capital, IPO, Entrepreneurship, Emerging Markets
JEL classification: E22, F43, G21, G23, G24, L26
Conference Stream: Venture Capital, Entrepreneurial Finance
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Dr.Guldem Gokcek(aka Dr.Gulden Gokcek), Honorary Lecturer, Management School, University of
Liverpool, UK
Associate Professor, Financial Economics & Econometrics, Division of Graduate Business Program, New
York University, USA, Email: ggokcek01@gmail.com