CONCLUSION AND RECOMMENDATIONS

The venture capital plays an important role on economy by facilitating required support for entrepreneurs. Every nation should consider venture capital as a tool on their way for prosperity. Taiwan government-backed venture capital industry is a success story for Turkish government to consider. The findings show that the differences mainly come from general economic development. In other words, the stronger the economy, the more favorable conditions are created for venture capital industry. Controlling these factors is time-taking and very complex, thus they cannot be short-term solutions to develop a VC industry in Turkey.

On the other hand, the faster solution might be that the Turkish government takes more actions to support venture capital industry considering the cases of Taiwan and Israel as an example. The basic two steps that Taiwan and Israel did might be followed, and the government directly supplies funds to venture capital funds, and gives attractive tax incentives for the investors until the industry matures. The Government might remove barriers to inflows of foreign venture capital finance, so that, the experienced VC companies might help the industry to structure.

On the supply-side, there is a full set of policy actions which can increase venture

stimulate the supply of entrepreneurs and venture investors. Government equity programmers can help leverage private sources of venture funding. Building links between business angel networks and other small firm initiatives such as technology incubators can improve the flow of funds. And exit routes for small firms can be provided through enhancing secondary stock markets. (OECD, 2000)

Turkish government should take the venture capital industry into consideration as a useful tool for the chase of prosperity. More liberal policies for institutional investors should be combined with improved standards for transparency and disclosure in order to minimize potential abuses. Doing this might help the foreign venture capital firms to enter the market providing necessary incentives.

The most important action that government equity programs should pump-prime private venture financing, until be phased out when private markets mature. In almost all OECD countries, venture capital investment started as a publicly-financed activity.

Government equity funds have been widely used to pump-prime private venture capital and reduce imbalances in the allocation of funds across different financing stages, sectors and regions. Particularly at the beginning, the risk profile of seed and start-up firms is generally too high to attract sufficient private equity capital, hence the need for risk-sharing between the public and private sectors. In some countries,

Business Investment Company (SBIC) program in the United States and YOZMA in

Israel. (OECD, 1996)

On the other hand, in order to support the demand side the Turkish government should create an environment for introducing new ideas to be commercialize. As the industry structure of Turkey based on classical industry, the government of Turkey should support universities and create research institutes for R&D to adapt more technology based industries.

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