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Development of a Methodology for Analyzing the Effectiveness of Venture Capital Investment Based on Option and Fuzzy-Sets Approaches

  • ECONOMIC POLICY
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Studies on Russian Economic Development Aims and scope

Abstract

The article is devoted to the development of a methodology for analyzing the effectiveness of venture capital investment based on the option and fuzzy-sets approaches. Venture capital financing plays a huge role in the process of innovation transition from the research stage to the production of innovative products and services. A feature of innovative projects is the high uncertainty in achieving positive technological and economic results in the course of their implementation. In this regard, in order to assess the commercial effectiveness of such projects, it is advisable to use methods that allow taking into account the uncertainty factors that affect the dynamics of project indicators. One of such methods is the apparatus of fuzzy sets, as well as an optional approach. Combining the methodology of real options with fuzzy set analysis allows, in our opinion, to obtain more reasonable results in assessing the financial efficiency of innovative projects. The article proposes the main directions for the development of a theoretical and methodological approach to evaluating the effectiveness of innovative projects financed by venture capital funds, using option and fuzzy-sets analysis.

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Notes

  1. This scheme does not pretend to describe all options for organizing the work of venture capital investors and is based on data on the activities of the network of EBRD venture funds that were created and operated in Russia in the 1990s and early 2000s.

  2. It should be noted that private equity funds have much in common with venture capital funds. Both types of funds operate on the same principle – the difference is only in the objects for investment. If a venture fund, as a rule, chooses new projects, then for a PEF it is preferable to partner with established companies that need to raise capital to develop their business or improve their financial condition. In this regard, as a rule, private equity funds operate with larger volumes of investments.

  3. Various versions of the definition of a real option are given in [5, pp. 84–92].

  4. A call option is the right (but not the obligation) to buy an asset, such as a stock, at a predetermined price at or before a certain point in time.

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Funding

The work was carried out according to the research plan of the Institute of Economics and Industrial Engineering, Siberian Branch, Russian Academy of Sciences, project 5.6.6.4. (0260-2021-0008) “Methods and models for substantiating the strategy for the development of the Russian economy in the context of a changing macroeconomic reality” no. 121040100281-8.

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Authors and Affiliations

  1. Institute of Economics and Industrial Engineering, Siberian Branch, Russian Academy of Sciences, 630090, Novosibirsk, Russia

    A. O. Baranov & V. N. Pavlov

  2. Novosibirsk State Technical University, Novosibirsk, Russia

    E. I. Muzyko

Authors
  1. A. O. Baranov
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  2. E. I. Muzyko
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  3. V. N. Pavlov
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Correspondence to E. I. Muzyko.

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The authors declare that they have no conflicts of interest.

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Translated by S. Avodkova

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Baranov, A.O., Muzyko, E.I. & Pavlov, V.N. Development of a Methodology for Analyzing the Effectiveness of Venture Capital Investment Based on Option and Fuzzy-Sets Approaches. Stud. Russ. Econ. Dev. 34, 565–572 (2023). https://doi.org/10.1134/S1075700723050039

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