How Attractive Is Central Eastern Europe For Risk Capital Investors

This paper addresses the attractiveness of Central Eastern European countries for Venture Capital and Private Equity investors by the construction of a tailored composite index. The authors define six key drivers that determine an emerging country's attractiveness for this type of investment, based on a survey among institutional investors. The authors use 42 socio-economic data series as proxies for the six key drivers, and benchmark the Central Eastern European ("CEE") countries with EU- 15, Norway and Switzerland. They authors identify six tier groups of country attractiveness. The authors highlight socio-economic strengths and weaknesses of CEE, and hence, provide guidelines for policy improvements to attract more risk capital funding to spur innovation, entrepreneurship, employment, competitiveness, and growth in the emerging countries.