The paper presents the study of Latvian Venture Capital (VC) funds’ investment trends in particular industries.The literature analysis reveals five main factors influencing VC funds’ managers preferences towards particular industries: three external factors (existing clusters in the investment region; high growth industries; availability of other funding for companies from specific sectors) and two internal (factors driven by VC funds’ limited partners profile; possession of specific industry related knowledge). The results of the practical part of the study show that 52% of Latvian VC funds’ investments (total amount) went to Services sectors, 45% to Manufacturing and 3% to other industries. From the total amount invested in Services according to the classification of Eurostat, investments in High-tech knowledge-intensive sectors account for 46%, Knowledge-intensive services - for 10% and less knowledge-intensive sectors – for 44%. Breakdown of investments in Manufacturing is as follows: 26% in High-technology firms, 24% in Medium-high technology; 15% in Medium-low technology and 35% in Low technology. Investment patterns of different Latvian VC funds’ managers vary substantially. For example, investments in High-technology and High-tech knowledge-intensive sectors were made only by three of five Latvian fund managers. Other two invested heavily in Low Technology and Less knowledge-intensive sectors. Industry-related knowledge and experience accumulated in particular fund management team presumably is an explanation of the variances in the patterns.
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