Abstract

The aim of this study is to address the problem of financing by venture capital financing for the innovative small and medium enterprises in Algeria as an alternative to conventional financing offered by financial institutions, which is an obstacle to the development of the innovations of these SME’s due to the lack of guarantees. The study showed the theoretical concepts of innovation and its methods of financing, focusing on the method of venture capital and its advantages. The analysis and assessment of innovation in Algeria and the possibilities of financing with venture capital have been carried out using the data available during the period 2010-2018.The study concluded the existence of a number of legal, regulatory and cultural obstacles prevented the development of this financing method The study propose a revision of the relevant legal frameworks, activating the role of business incubators, stimulating financial institutions and the capital market.