International Venture Capital in Emerging Markets
International venture capital (defined broadly to include investment in non-publicly traded companies, including (1) seed or initial capital, (11) startup capital, and (m) expansion or growth capital) with a focus on the emerging markets has grown considerably over the past fifteen to twenty years. Beginning in the late 1980s, emerging markets have increasingly become the target for direct foreign investment. Initially, strategic investors and investors in publicly traded securities were the principal players in these markets. International venture capital investors, however, have followed in their tracks and today are important sources of foreign investment in these markets.
U.S. institutional investors have been on the forefront of the growth in international venture capital in emerging markets. These investors are attracted to this sector because of the perceived high growth/return opportunities in these markets, as well as the perceived need to diversify their holdings internationally. This interest by institutional investors has led to the formation of many pnvate equity funds focused on investments in the emerging markets. As more and more investors and fund managers become involved in international venture capital, there is a growing need for attorneys to focus on this area. Attorneys specializing in international venture capital participate in these projects both during the formation of the investment fund and through participation in the investments made by these funds.
Attorney
Roles in International Venture Capital in Emerging Markets
Many
attorneys focus on the representation of fund managers and/or institutional
investors during the process of formation of the fund. These attorneys
generally must be sensitive to the many tax and regulatory issues associated
with the establishment of cross-border investment funds.
Representation of the venture capital funds in the implementation of their investment programs is the second arena where attorneys are generally very active. These attorneys generally have expertise in the acquisition and sale of emerging market companies and, frequently, expertise with respect to the sector in which the investment is being made.