Dynamics of Capital Markets: A Study on the Performance of Venture Capital Investment Trusts

Abstract

Purpose – The increasing trust of investors in Venture Capital Investment Trusts (VCITs) and the subsequent rising interest in the sector contributes to these partnerships raising more funds, promoting the growth of venture capital investments. In line with this objective, the study aimed to compare the perfor mance of 6 VCITs that have been operating in Turkey for the past five years and are listed on BIST. Design/methodology/approach – Based on the literature and the dynamics of the sector, performance criteria were determined as follows: from liquidity ratios – current ratio and cash ratio; from financial structure ratios – leverage ratio, financing ratio, debt/equity ratio, tangible assets/equity ratio, fixed assets/permanent capital ratio; and from profitability ratios – return on assets (ROA ), return on equity (ROE), earnings per share, and core business profit/total assets. In total, 11 ratios were identified. During the analysis phase, the Multi Multi-Criteria Decision Making (MCDM) methods were used, employing the CRITIC method for criteria weig hting and the COPRAS method for performance ranking. Findings – Based on the method's outcome, during the periods of analysis, the highest weight was observed in the Fixed Assets/Permanent Capital Ratio and the Tangible Fixed Assets/Equity Ratio. The reason for this is that affiliated partnerships and joint ventures, i.e., venture capital investments, are recorded under these items. In terms of performance ranking, Hedef VCIT consistently showcased success in its performance over the last five years. T his was closely followed by Gözde and Hub VCIT. Discussion – When examining the balance sheets of VCITs that ranked higher in performance, notable capital increases were evident. Capital increases can assist companies in meeting their financing needs, entering new markets, supporting R&D activities, and improving op erational processes. Higher capital increases can enhance a company's growth potential and competitiveness. Thus, it's inevitable that companies with a high equity share rank higher in the list.