Selected Determinants of Mezzanine Financing in Poland

Abstract

A very significant form of company activity determining its development and even survival is innovation activity. Raising capital for the implementation of innovation is an important but not the only factor in the introduction of innovation. Characteristics of innovation, and in particular the risk of failure, make for a significant difficulty in obtaining external financing, particularly from third parties, which is an obstacle to their development and implementation. The subject of discussion in the article is the hybrid formula mezzanine type of financing innovative projects implemented both in start-up companies and in already well established companies. The purpose of the article is to discuss the possibilities and to perform an analysis of the practices followed by mezzanine funds in Poland in respect to the innovation activities of Polish companies. Research presented in the article was conducted on the basis of information on investments performed by mezzanine funds in Poland. Of particular importance for the innovativeness of the economy is to have companies from the SME sector, and therefore we also carried out research in this group. Innovations are often initiated in special purpose companies, start-up, etc., that operate in the SME sector. Therefore, the financing of innovation cannot be ignored as a thread of innovation in SMEs. The study involved interviews in several companies in the sector. The study concerned the possibilities of financing innovation involving mezzanine, knowledge of hybrid forms of financing, preparedness for hybrid financing. Studies are not representative, but are rather sounding a view to clarify any further research. Hypothesis: mezzanine financing, utilizing its specific benefits, is increasingly used to finance the gap in the financing of innovation, in particular special purpose companies in the SME sector. So the hypothesis raises two strands of research. The first concerned the financing of innovation as seen from the mezzanine fund. The second concerns the willingness of enterprises to use this form of financing. The first part of the article is devoted to the embeddedness of mezzanine financing. For that purpose, the specific innovation feature decisive to the possibility of external financing was indicated. Various investment strategies of Private Equity Funds on a global scale were presented in a way intended to highlight the meaning and characteristics of mezzanine financing. Also, on the basis of statistical data, the

Mezzanine Financing Instruments in Comparison to the Classic Financing Sources

“…The above mezzanine financing instruments can be classified from the point of view of the corporate balance or from the point of view of public tradability. From the point of view of the corporate balance, we can differentiate equity mezzanine, including mezzanine financing instruments with a higher rate of equity, and debt mezzanine, including mezzanine financing instruments with a higher debt tendency (Dec & Masiukiewicz, 2017;Golej, 2016;Meluzin & Zinecker, 2009). From the point of view of public tradability, it is possible to distinguish private mezzanine, including mezzanine financing instruments that do not enter the open capital market, i.e.…”

Risk Management of the Project and the Use of Software in SME

“…SMEs are one of the essential parts of the knowledge economy. Golej [2] often characterized SME in Germany by a strong product orientation, technical expertise, and underexposure of process orientation and project management capabilities. Lückmann [3] OECD remark, that SMEs are a dominant force in economies worldwide, forming the backbone of wealth-generating activities in most industrialized nations [4].…”