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Private Equity and Venture Capital in SMEs in Developing Countries : The Role for Technical AssistanceThis paper discusses the constraints for
 private equity financing of small and medium enterprises in
 developing economies. In addition to capital, private
 equity investors bring knowledge and expertise to the
 companies in which they invest. Through active participation
 on the board of directors or in partnership with management,
 private equity investors equip companies with critical
 improvements in governance, financial accounting, access to
 markets, technology, and other drivers of business success.
 Although private equity investors could help to create,
 deepen, and expand growth of small and medium enterprises in
 developing economies, the vast majority of private equity in
 such markets targets larger or more established enterprises.
 Technical assistance, when partnered with private equity,
 can unlock more investor commitments and considerably
 enhance the ability of small and medium enterprises in
 emerging markets to raise private equity capital. Technical
 assistance provides funding that allows private equity funds
 to extend their reach to smaller companies. Technical
 assistance can mitigate some level of risk and increase the
 probability of successful investments by funding targeted
 operational improvements of investee companies. Dedicated
 technical assistance facilities financed by third parties,
 such as development finance institutions, governments, or
 other parties, have emerged to fill this critical need. The
 paper discusses the provision of investment capital twinned
 with technical assistance, which is now more accepted by
 limited partners and general partners or fund managers and
 is becoming more of a market model for private equity
 finance focused on small and medium enterprises.
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Enhancing Access to Finance for Technology Entrepreneurs : Analysis of Highly Innovative, High Growth Start-Ups in Vietnam, Cambodia, and NepalThe first part of the study provides
 contextual background to the financing gaps and associated
 barriers, which restrict access to finance for HI start-ups.
 These barriers are driven by both supply and demand sides of
 the financing equation. Supply side barriers include: high
 transaction costs associated with financing; high levels of
 credit risk associated with HI start-ups; high collateral
 required by financial institutions; non-conducive legal and
 regulatory environments for investment in HI start-ups; lack
 of start-up expertise and dedicated resources by financiers;
 and finance products that are not tailored to HI start-ups 
 needs and circumstances. Demand side barriers include:
 reliance by HI start-ups on informal financing sources; lack
 of awareness on the process to apply for funding from formal
 financing sources; low levels of financial literacy by HI
 start-ups; and the fear of losing control by involving
 external investors. This section also contains a broad
 overview of the country frameworks governing the start-up
 sector, together with some of the initiatives relating to
 access to finance. The second part of the study covers the
 fieldwork undertaken in Vietnam, Cambodia, and Nepal. The
 fieldwork gathered views from investee firms (irrespective
 of whether they were successful in raising finance or not),
 investors, and other stakeholders. The fieldwork was aimed
 at understanding the severity of the financing gap for HI
 start-ups, the stage(s) of financing impacted by lack of
 access to finance, and the sources of financing for HI
 start-ups. Lastly, financing catalyst recommendations
 address non-financing impediments, which if overcome will
 have a positive impact on access to finance.
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SME Exchanges in Emerging Market Economies : A Stocktaking of Development PracticesIn recent years, many emerging market countries have developed or are in the process of developing SME Exchanges to provide financing to SMEs, but few have succeeded. This paper aims to help stock exchanges and policy makers think through the key questions to be addressed to determine if, when, how and for whom to develop an SME Exchange in emerging market countries. It takes stock of some of the actions that exchanges can take to reduce issuance costs, in time and money for SMEs, without compromising the prudential needs of investors. The paper draws on the experience of seven SME Exchanges and the World Federation of Exchanges that participated in a workshop organized and led by the WBG to discuss these and other questions. It does not recommend a specific model to follow and does not address specific context issues, however the analysis suggests approaches that are widespread and/or could be beneficial to consider such as (1) focus on SMEs with a sizeable growth rate, (2) have the SME exchange legally related to the main board, (3) do not reduce disclosure content to reduce costs, (4) allow private placements, (5) have well regulated advisors to vet issuers and provide comfort to investors about the quality of the issue, (6) have outreach, public awareness campaign and training for SMEs, (7) consider tax incentives for investors. The report is the first in a series on this topic, and subsequent reports will address and expand on related and broader issues.