Venture capital for entrepreneurship financing

While the widespread view in the middle of last century had been that the bigfirms were going to dominate the economy so as to obtain economies of scale, toutilize foreign markets? resources and to catch the technology, nowadays this trendhas started to turn into the opposite. A commercial exploitation of innovative ideas isthe driving force of the market economy. New small firms with pioneering ideas andwith a flexible structure can react to concers of the customers more appropriatelythan old established enterprises. The importance of small and medium sized entities(SME) is increasing day by day.Being the back bone of economies SME have been experiencing somedifficulties because of their structural features. The most important problem that theSME face with is inadequate financing.It can be seen that SME often use methods of equity financing which is aninadequate form of financing. Another important financial tool for this kind of firmsis the bank credit. However, interest rates and maturities of these credits offered tothese fims are not favourable because of their high financial risk. Moreover, that theSME can not meet the entry requirements at all in capital markets and the demandfor their securities lack cause SME not to find enough sources from capital markets.As it is the case in the US and other developed countries, it is thought thatventure capital financing model can be used for solving SME?s financial problemsalso in Turkey.Scope-limited regulations about venture capital in our country can notprovide effective means of functionalizing venture capital financing model whichplays a vital role for solving of SME?s financial problems.In this study, it is attempted to prove, by means of current laws, regulationsand factual cases, that the venture capital investment trust model is not satisfactoryenough for the improvement of venture capital as well as to provide solutions forproblems as the reasons of these insufficiencies are depicted.