Problematic issues of determining the parties of relations of venture investment into innovation activities
Authors: Zhornokui Yurii 
Published: October 2021

Problem setting. Nowadays, given that public relations, as a rule, are ahead of the development of legislation that does not have time to adapt and modernize to new economic relationships, such relations do not receive adequate legal provision. Relations on venture investment into innovation activities are no exception. It is related both to the lack of a mechanism for legal provision, as well as scientific and practical best practice of its basic categories, one of which is the parties of the relevant legal relations.

Analysis of recent researches and publications. The current state of the research on the selected issues indicates the imperfection of the current legislation and the lack of legal doctrine in the context of determining the parties of relations of venture investment into innovation activities. The doctrinal works of domestic and foreign experts, although contain analysis and reasoned conclusions about the participants of innovation relations, but do not provide unambiguous answer to the question on their parties.

Target of research. The purpose of the research is to outline the parties of relations of venture investment into innovation activities.

Article’s main body. The venture capital market is represented by two sectors: formal (venture funds) and informal (individual investors). Studying the essence and specifics of venture entrepreneurship is due to the fact that different countries have their own specifics of its implementation, and, accordingly, different parties of the relevant relations. It is mainly applied to organizational and legal forms of legal entities. At the same time, the implementation of corporate venture investments provides a significant number of new opportunities for a corporations, related to the reduction of costs for the purchase of new technologies, reduction of risks from the development of technologies, etc. The parties of venture investment into innovation activities can be represented by institutional investors, which should be understood as financial institutions that attract a large number of investors to combine them into a single money pool with the subsequent placement at the securities market and (or) investing into real estate. Thus, one can distinguish two groups of institutional investors depending on the subject matter of activity: universal investors (commercial banks, professional participants of securities market) and specialized investors (venture funds, incorporated investment funds, asset management companies, private pension funds).

Conclusions and prospects for the development. There is currently no clear definition of organizational and legal forms of venture funds, because they are created as legal entities (corporate funds) or a set of assets (share funds) according to the current legislation. Venture funds should be created and should operate exclusively as legal entities – corporate investment funds. It provides certain guarantees to their individual investors, since the legislator establishes special conditions for the participation of individuals in venture funds. Organizational and legal forms of legal entities in the field of venture entrepreneurship should be a joint stock company or a limited liability company. The entities of venture investment into innovation activities are: 1) entities that bring the object of intellectual property to the status of an innovative product; and 2) entities that implement innovations and / or produce innovative products.