Global economic crisis shows how important is venture capital as financing source for small and medium sized enterprises at its start-up stage in particular. The aim of the research is to analyze capacity of Latvia’s companies to attract venture capital and private equity Authors are analyzing economic and other factors which can influence business environment and the results are compared with other EU countries – mostly with Central and Eastern European countries. Comparing data from Latvia and published by European Venture Capital Association for year 2006 – 2008 it was possible find out main conclusions regarding venture capital transactions in CEE. The venture capital investors are looking for swift profit and it is proven by the fact regarding that most of the deals are buyouts and investments in enterprises with high growth potential – like telecommunications. The economic and legislative stability is very important for venture capital development, as well protection of ownership rights and how contractual rights are implemented. For local entrepreneurs it is important to foresee all major risks when having transactions with venture capital providers. Authors are concluding that the government is the most important player who could take it care to develop SME’s via involving venture capital. Research finds out main opportunities for Latvia’s economy if the venture capital will be used as a financing tool for seed and start-up enterprises.