Formal and informal venture capital investing in emerging economies in Southeast Asia

This paper assesses the development of formal and informal venture capital investing in the emerging Southeast Asian economies of Thailand, the Philippines, and Vietnam. We study the investment strategies of both venture capitalists (formal investors) and business angels (informal investors) who fac...

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Bibliographic Details
Published in:Asia Pacific journal of management 2015-09, Vol.32 (3), p.597-617
Main Authors: Scheela, William, Isidro, Edmundo, Jittrapanun, Thawatchai, Trang, Nguyen Thi Thu
Format: Article
Language:English
Subjects:
Angel investors
Business and Management
Developing countries
Development banks
Due diligence
Economic growth
Emerging markets
Entrepreneurs
Equity
Financial institutions
GDP
Gross Domestic Product
Investment policy
LDCs
Management
Organization theory
Private equity
Research methodology
Small & medium sized enterprises-SME
Studies
Venture capital
Venture capital companies
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Summary:This paper assesses the development of formal and informal venture capital investing in the emerging Southeast Asian economies of Thailand, the Philippines, and Vietnam. We study the investment strategies of both venture capitalists (formal investors) and business angels (informal investors) who face significant challenges when investing in emerging economies lacking the legal and financial institutions needed to support effective private equity investing. To do so, we synthesize previous research and more closely analyze data from seven previously-published papers that reported separately on venture capital research in three emerging economies in Southeast Asia. We developed summary tables for this paper based on our analysis of the data in each of the seven papers. All seven studies used a mixed-methods research methodology based on face-to-face semi-structured interviews. Based on our synthesis of the papers, we propose an investment strategy for both venture capitalists and business angels who are investing in emerging economies. This investment strategy is based on significant networking, in-depth due diligence and hands-on post-investment monitoring. The research provides several contributions. First, emerging economies in Southeast Asia represent some of the fastest-growing markets globally and accordingly need to receive increasing attention with respect to venture investing and private equity. Second, this paper applies institutional theory and examines the investment strategies of formal and informal venture capital investors, including business angels in Southeast Asia. Finally, our proposed investment strategy could be helpful as a model for venture investing in emerging economies and to suggest research on this key topic.
ISSN:0217-4561
1572-9958
DOI:10.1007/s10490-015-9420-5