Mechanisms of venture investing in startups

The article presents the research results of the mechanisms of startups venture capital investment. The role and significance of venture capital investment in the startup ecosystem and the innovation ecosystem in general are considered. The economic essence of the concept of venture investing is presented. In the process of research, the peculiarities of venture capital investment for startups were analyzed and a comparative characteristic of venture capital investment and classical investment was given. Mechanisms of financing and support of innovative startups at different stages of the life cycle are analyzed. The main and auxiliary success factors of startups by stages of the life cycle are described. The research examines models of venture capital investment in innovative enterprises. In particular, the following options were considered: the model of capital transfer (partial participation), the model of joint investment and the fund of funds model. For each model, the implementation mechanisms of investing in startups are described and described schematically. Key stakeholders and all stages of the investment process are listed. The models of joint investment in startups are described, in particular the model of a public-private venture capital fund and the model of joint investment in a private venture capital fund. The three selected models have many common elements, but differ from each other in terms of their dependence on specific contractual mechanisms, financing and access tools, and in some cases, exit mechanisms from the investment process. They also differ in terms of overall complexity, with the “fund of funds” model being more complex than the other two models. When considering specific models of the organization of venture funds, the work used the practices and experience of a number of jurisdictions, including Australia, Israel, Tunisia and Great Britain. Recipients in the implementation of any of the considered investment models should be startups, academic spin-offs, technological enterprises at an early stage of development, innovative enterprises that carry out technology transfer. Projects may involve the development of new products or technologies or the expansion of existing operations to commercial scale.