Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Title: Editorial. Venture Capital: Rationale, aims and scope Abstract: This paper by the editors of Venture Capital has three objectives. First, it outlines the reasons why this is a particularly opportune time to launch a new journal on venture capital. Second, it sets out the aims of Venture Capital. Third, it provides an overview of venture capital research in order to 'map' the territory of the journal, describes its scope and highlights some aspects of venture capital where knowledge and understanding are limited. Journal: Venture Capital Pages: 1-46 Issue: 1 Volume: 1 Year: 1999 Month: 1 X-DOI: 10.1080/136910699295974 File-URL: http://hdl.handle.net/10.1080/136910699295974 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:1:p:1-46 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Title: European policy towards venture capital: Myth or reality? Abstract: <title/> In reaction to the enormous lack of venture capital in Europe compared to the US, the European Union, until now relatively absent from the venture capital market, has launched new programmes focusing on direct financing of the setting up and development of venture capital funds (by capital participation or contribution to overheads) as well as on stimulating the general conditions for better access to finance. This paper highlights the different interventions in financial engineering and argues that these can give better value for public money than classical subsidy schemes. Journal: Venture Capital Pages: 47-58 Issue: 1 Volume: 1 Year: 1999 Month: 1 X-DOI: 10.1080/136910699295983 File-URL: http://hdl.handle.net/10.1080/136910699295983 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:1:p:47-58 Template-Type: ReDIF-Article 1.0 Author-Name: Geoffrey H. Smart Author-X-Name-First: Geoffrey H. Author-X-Name-Last: Smart Title: Management assessment methods in venture capital: An empirical analysis of human capital valuation Abstract: <title/> Many venture capitalists experience frustration when their investments achieve disappointing results owing to weaknesses in the human capital that were not detected during due diligence. This study examines the methods that venture capitalists use to assess the senior managers of new ventures prior to making an investment decision. 'Human capital valuation' is introduced as a term to describe the process of appraising the human capital (people) in a venture. An a priori conceptual model was tested that accounted for over 70% of the variance in the accuracy of human capital valuations. In addition, inductive analysis yielded several distinct typologies of venture capital approaches to the process of human capital valuation. Implications for researchers and practitioners are discussed. Journal: Venture Capital Pages: 59-82 Issue: 1 Volume: 1 Year: 1999 Month: 1 X-DOI: 10.1080/136910699295992 File-URL: http://hdl.handle.net/10.1080/136910699295992 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:1:p:59-82 Template-Type: ReDIF-Article 1.0 Author-Name: Magnus Klofsten Author-X-Name-First: Magnus Author-X-Name-Last: Klofsten Title: Supporting the pre-commercialization stages of technology-based firms: The effects of small-scale venture capital Abstract: <title/> A large number of studies discuss the financing of small firms from the perspective of bank loans and different forms of venture capital. In this paper, a form of financing that is rarely touched upon in studies is discussed, namely, small-scale capital up to 500 KSEK (1 US$=7.9 SEK) that is provided in the form of soft loans or grants in the very early stages of a firm's development. Drawing upon a sample of 48 firms located in Swedish Science Parks, the authors mapped what the firms used their subsidies for (e.g. development of a business plan or a prototype and marketing). Particular emphasis was paid to the outcome of the financial support. Two main effects were found to be significant. First, the money was spent on activities that enable the companies to establish customer contacts as part of a process of successful market introduction. Second, the mere fact of selecting companies is widely regarded as an indicator of the selected companies' integrity and high potential by private investors and business partners. Thus, the reputation and network position of the young venture is leveraged. Journal: Venture Capital Pages: 83-93 Issue: 1 Volume: 1 Year: 1999 Month: 1 X-DOI: 10.1080/136910699296009 File-URL: http://hdl.handle.net/10.1080/136910699296009 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:1:p:83-93 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Title: The early-stage equity market in the USA Abstract: <title/> As recently as 20 years ago the USA began a transition from a declining industrial and manufacturing economy to an emerging entrepreneurial/innovation-driven economy. With this transition, the early-stage equity market has also evolved. As the institutional venture capital industry continues to focus on later stage and larger investments, the private investor market now provides the major source of seed and start-up capital. However, imperfections in the seed and start-up market have led to market inefficiencies for the high-growth firm. Two funding gaps appear to exist in the US equity market, both largely as a result of these market inefficiencies. This paper provides a broad overview of the early-stage equity market for high-growth ventures in the USA. In light of the critical role of business angels in the early-stage market, special attention will be given to this population. Also included is a discussion of angel markets and recent trends in the early-stage equity financing of entrepreneurial ventures. Journal: Venture Capital Pages: 101-120 Issue: 2 Volume: 1 Year: 1999 Month: 4 X-DOI: 10.1080/136910699295929 File-URL: http://hdl.handle.net/10.1080/136910699295929 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:2:p:101-120 Template-Type: ReDIF-Article 1.0 Author-Name: Lisa Feeney Author-X-Name-First: Lisa Author-X-Name-Last: Feeney Author-Name: George H. Haines Author-X-Name-First: George H. Author-X-Name-Last: Haines Author-Name: Allan L. Riding Author-X-Name-First: Allan L. Author-X-Name-Last: Riding Title: Private investors' investment criteria: Insights from qualitative data Abstract: <title/> This paper provides an analysis of the acceptance and rejection criteria of private investors using formal qualitative analysis. The findings indicate that private investors view the overall business opportunity and the principals of the company as key criteria in the decision-making process. Active and occasional investors differ somewhat in the emphases that they place on particular criteria. Perhaps the single most important finding, however, is that the reasons that prompt investors to reject opportunities are not simply the converse of reasons that prompt them to invest. Journal: Venture Capital Pages: 121-145 Issue: 2 Volume: 1 Year: 1999 Month: 4 X-DOI: 10.1080/136910699295938 File-URL: http://hdl.handle.net/10.1080/136910699295938 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:2:p:121-145 Template-Type: ReDIF-Article 1.0 Author-Name: Lloyd Steier Author-X-Name-First: Lloyd Author-X-Name-Last: Steier Author-Name: Royston Greenwood Author-X-Name-First: Royston Author-X-Name-Last: Greenwood Title: Newly created firms and informal angel investors: A four-stage model of network development Abstract: <title/> Informal angel investors represent a significant source of venture capital for newly-created firms; however, the process whereby entrepreneurs access this resource has often been described as 'invisible' and in need of further study. This paper subscribes to a 'networking' or 'relational' view of economic action and reports the findings of a longitudinal study of the development and evolution of a financial network within a newly created firm. It describes the network from the time the firm was founded in 1987 until 1996, by which time the firm had raised a significant amount of venture capital and was considering going public. The findings contribute to the entrepreneurship and financial literature by focusing on how entrepreneurs become connected to angel investors and subsequently manage the process of network development. The authors propose a four-stage model: initial navigation/'kissing frogs', consolidation, enrichment, and reconfiguration. Journal: Venture Capital Pages: 147-167 Issue: 2 Volume: 1 Year: 1999 Month: 4 X-DOI: 10.1080/136910699295947 File-URL: http://hdl.handle.net/10.1080/136910699295947 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:2:p:147-167 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin Hindle Author-X-Name-First: Kevin Author-X-Name-Last: Hindle Author-Name: Robert Wenban Author-X-Name-First: Robert Author-X-Name-Last: Wenban Title: Australia's informal venture capitalists: An exploratory profile Abstract: <title/> In Australia, as elsewhere, finding and acquiring equity capital is one of the major problems facing start-up or growing entrepreneurial ventures. The informal venture capital market, comprising high net worth non-institutional private equity investors (or 'business angels') provides risk capital directly to new and growing businesses and has been shown to be considerably more significant than institutional providers as a source of finance for entrepreneurial businesses. Building upon research undertaken internationally, this study generated and evaluated data resulting from an investigation of 36 carefully screened Australian business angels. It focused upon three primary research questions: (i) Who are Australia's informal venture capitalists (business angels)? (ii) How do they behave? (iii) What are their investment criteria? The study initiates Australian angel research into the developing international continuum of informal venture capital research and can serve as the generator of empirically testable hypotheses for future research and theory development. Journal: Venture Capital Pages: 169-186 Issue: 2 Volume: 1 Year: 1999 Month: 4 X-DOI: 10.1080/136910699295956 File-URL: http://hdl.handle.net/10.1080/136910699295956 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:2:p:169-186 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Title: Business Angels: Should they fly on their own wings? Abstract: <title/> This paper reviews the role of business angels in the financing of entrepreneurial businesses. Following a review of the characteristics of business angel investors, the paper examines the complementarities between business angels and the formal venture capital market, and concludes with a review of the scope for government intervention in this risk capital market. Journal: Venture Capital Pages: 187-195 Issue: 2 Volume: 1 Year: 1999 Month: 4 X-DOI: 10.1080/136910699295965 File-URL: http://hdl.handle.net/10.1080/136910699295965 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:2:p:187-195 Template-Type: ReDIF-Article 1.0 Author-Name: Dean A. Shepherd Author-X-Name-First: Dean A. Author-X-Name-Last: Shepherd Author-Name: Andrew Zacharakis Author-X-Name-First: Andrew Author-X-Name-Last: Zacharakis Title: Conjoint analysis: A new methodological approach for researching the decision policies of venture capitalists Abstract: <title/> Decision making is central to the ability of venture capitalists to predict those new ventures likely to succeed, yet most studies into their decision making use post-hoc methodologies that may generate biased results. People are poor at introspection and often suffer from recall and post-hoc rationalization biases among others. Therefore, researchers should consider using real-time methods that eliminate many of these biases. One such method is conjoint analysis. The purpose of this paper is to reveal the potential that conjoint analysis has to: (1) improve the validity of prior research into VCs' decision making; and (2) act as a catalyst for adopting conceptual tools from other disciplines that can be tested empirically. Both these functions have the purpose of increasing one's insight into the assessment policies of VCs. Journal: Venture Capital Pages: 197-217 Issue: 3 Volume: 1 Year: 1999 Month: 7 X-DOI: 10.1080/136910699295866 File-URL: http://hdl.handle.net/10.1080/136910699295866 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:3:p:197-217 Template-Type: ReDIF-Article 1.0 Author-Name: Ken Robbie Author-X-Name-First: Ken Author-X-Name-Last: Robbie Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Author-Name: Mark Albrighton Author-X-Name-First: Mark Author-X-Name-Last: Albrighton Title: High-tech management buy-outs Abstract: <title/> Management buy-outs have typically been viewed as occurring in mature sectors with wellestablished technology but the buy-out concept is also applicable to high-tech sectors. The paper examines this neglected form of buy-out drawing on the Centre for Management Buy-out Research (CMBOR) data base as well as a special mail questionnaire survey of high-tech and non-high-tech buy-outs. The study finds that over the past 6 years, high-tech transactions have accounted for about 10% of the UK buy-out and buy-in market. Hightech buy-outs are significantly more likely than non-high-tech buy-outs to be sourced from foreign parent companies, to be larger, to use R&D as a major source of new products, to develop new products internally, to have been non-core in their former parent companies, to be valued using liquidation values, to perceive technology to play a strong strategic role, and to require further finance to fund internal growth. Journal: Venture Capital Pages: 219-239 Issue: 3 Volume: 1 Year: 1999 Month: 7 X-DOI: 10.1080/136910699295875 File-URL: http://hdl.handle.net/10.1080/136910699295875 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:3:p:219-239 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Bliss Author-X-Name-First: Richard T. Author-X-Name-Last: Bliss Title: A venture capital model for transitioning economies: The case of Poland Abstract: <title/> The venture capital investment process is examined in a transitioning economy. The move from a planned economy to a free-market system confronts venture capitalists and entrepreneurs with an environment not typically encountered in developed countries. This may include high inflation, immature capital markets, a nascent legal system, and a dearth of managerial talent. Using interviews and follow-up questionnaires with a sample of Polish venture capital firms in 1995, the research yields two important results. The first is a VC decision-making model for transitioning economies that diverges from previous research in two areas. First, the privatization of state-owned enterprises is an important part of deal origination and many venture capitalists actively solicit deals from targeted industries. Second, firm-specific screens are rarely part of the process owing to the lack of depth in most industry and geographic segments. The second result is a modified set of investment criteria that reflect some of the unique difficulties venture capitalists face when evaluating deals in transitioning economies. Several differences between their criteria and those used by venture capitalists in developed countries are identified. The implications of these results for venture capital firms are discussed briefly. Journal: Venture Capital Pages: 241-257 Issue: 3 Volume: 1 Year: 1999 Month: 7 X-DOI: 10.1080/136910699295884 File-URL: http://hdl.handle.net/10.1080/136910699295884 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:3:p:241-257 Template-Type: ReDIF-Article 1.0 Author-Name: Yasuhisa Tashiro Author-X-Name-First: Yasuhisa Author-X-Name-Last: Tashiro Title: Business angels in Japan Abstract: <title/> The Japanese economy, which produced continued strong results through the 1980s on the basis of the competitiveness of Japanese big business, has stagnated since the early 1990s and has recently headed into recession. It is widely felt that Japan should encourage the development of new venture businesses as a new motor of economic growth and both government policy-makers and the Japanese private sector are making efforts to encourage the emergence of entrepreneurial businesses. In this context, the role of 'business angels'persons who provide initial start-up capital to entrepreneurial businesses- has attracted attention but, thus far, no research has been undertaken on this topic in Japan. This paper, which is the first detailed study of this subject, profiles potential and active Japanese business angels, examines their characteristics and evaluates their potential to spark the development of new venture businesses. The paper concludes by comparing Japanese business angels with their counterparts in North America and Western Europe. Journal: Venture Capital Pages: 259-273 Issue: 3 Volume: 1 Year: 1999 Month: 7 X-DOI: 10.1080/136910699295893 File-URL: http://hdl.handle.net/10.1080/136910699295893 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:3:p:259-273 Template-Type: ReDIF-Article 1.0 Author-Name: Akio Nishizawa Author-X-Name-First: Akio Author-X-Name-Last: Nishizawa Title: Executive forum: Japan's 'credit crunch' and its consequences for venture finance Abstract: <title/> This paper has three objectives. First, it describes the effects of the Japanese financial crisis ('credit crunch') on the small firm sector of the economy. Second, it explains why alternative sources of equity finance for new ventures have not emerged. Third, the paper outlines some policies that have been introduced recently to assist start-up ventures in Japan. One of the most important policies is that of facilitating risk capital through equity for start-up ventures to revive the Japanese economy from the current severe recession. The Ministry of International Trade and Industry (MITI) is trying to use every possible means, from nurturing business angels to restructuring the over-the-counter (OTC) market. Nevertheless there are strong concerns that the policies need a long time to take effect in Japan due to a lack of investors with enough experiences to invest in start-up ventures. Journal: Venture Capital Pages: 275-284 Issue: 3 Volume: 1 Year: 1999 Month: 7 X-DOI: 10.1080/136910699295901 File-URL: http://hdl.handle.net/10.1080/136910699295901 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:3:p:275-284 Template-Type: ReDIF-Article 1.0 Author-Name: Gavin C. Reid Author-X-Name-First: Gavin C. Author-X-Name-Last: Reid Title: The application of principal-agent methods to investor-investee relations in the UK venture capital industry Abstract: <title/> This paper appeals to UK evidence on venture capital. The investor is regarded as the principal, and the investee as the agent. Relations between the two are analysed in terms of risk management, information handling, and the trading of risk and information. In the data analysed, investors and investees are paired in 'dyads'. The evidence on their behaviour and interaction was obtained by face-to-face interviews. A principal-agent model is developed to deal with incentives for entrepreneurial effort. From this, issues of information and monitoring naturally arise. Then the seeking of contract optimality in real contexts is examined, applying this framework to qualitative data. It is argued that evidence viewed in this way supports the application of principal-agent modelling to the financing of mature small firms by venture capitalists. The feature of contract optimality that was perceived to be most important was capital structure. There were several reasons for this: establishing ownership entitlement; creating incentives for effort; and apportioning risk efficiently. Often the observed relations between investor and investee were perceived to be at or close to optimality. It was found that these optima were specific to time and place, and strongly reflected the house-styles of individual investors and their reputations. Journal: Venture Capital Pages: 285-302 Issue: 4 Volume: 1 Year: 1999 Month: 10 X-DOI: 10.1080/136910699295820 File-URL: http://hdl.handle.net/10.1080/136910699295820 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:4:p:285-302 Template-Type: ReDIF-Article 1.0 Author-Name: Andy Lockett Author-X-Name-First: Andy Author-X-Name-Last: Lockett Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Title: The syndication of private equity: Evidence from the UK Abstract: <title/> This paper uses UK survey data to investigate the different motives that venture capital firms have for syndicating equity investments, partner selection, and the link between competition and syndication in the market. The traditional finance perspective views syndication as a response to the need to diversify away risk, whereas the resource-based theory views syndication as a means of accessing a competitor's firm-specific resources. The results of the study indicate that syndication is more a response to the need to spread risk than share information and manage investments. Also, when the sample was subdivided according to minimum investment preference the resource-based perspective was found to be even less important for those firms who only invested sums of 5 million and greater. This result also held for the finance theory perspective for syndicating deals. The above findings were mirrored in the results relating to partner selection as the financial characteristics and resource-base of the firm were not found to be important factors in selecting a syndicate partner. Rather, partner selection was found to be far more influenced by a past interaction, reputation and investment style. Finally, evidence was found to suggest that competition in the venture capital market exerts a negative influence over a firm's decision to syndicate out a deal; however, this influence is significantly less for the decision to syndicate in to a deal. Journal: Venture Capital Pages: 303-324 Issue: 4 Volume: 1 Year: 1999 Month: 10 X-DOI: 10.1080/136910699295839 File-URL: http://hdl.handle.net/10.1080/136910699295839 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:4:p:303-324 Template-Type: ReDIF-Article 1.0 Author-Name: Susanne Espenlaub Author-X-Name-First: Susanne Author-X-Name-Last: Espenlaub Author-Name: Ian Garrett Author-X-Name-First: Ian Author-X-Name-Last: Garrett Author-Name: Wei Peng Mun Author-X-Name-First: Wei Peng Author-X-Name-Last: Mun Title: Conflicts of interest and the performance of venture-capital-backed IPOs: A preliminary look at the UK Abstract: <title/> We document the incidence of initial public offerings (IPOs) issued by UK companies with existing venture capital investors and sponsored (and underwritten) by issuing houses that are parents or affiliates of the venture capital backers. The effects on the performance of the stock offering of the resulting conflicts of interest between the venture capitalist-affiliated sponsors and the investors taking up the stock is examined. Contrary to the conflicts-of interest hypothesis, IPOs underwritten by VC affiliates perform better in the long-term than other IPOs. We also examine the role of the reputation of the financial firms involved in the IPO. The long-term performance of UK IPOs is found to be positively related to the reputation of the venture capital backers. In the short-term, IPO returns appear to be related to the prestige of the sponsor rather than the venture capitalist in that top fifteen underwriters are associated with lower short-returns. Although there is evidence of higher initial returns in IPOs where the sponsor and venture capitalist are affiliated, this is offset by an approximately equal reduction in initial returns if the venture capitalist is associated with an issuing house which may or may not act as the actual IPO sponsor. Thus, the net effect is that backing by venture capitalists with links to issuing houses reduces initial returns but only if those affiliates are in fact not employed as the actual sponsors to the offerings. Journal: Venture Capital Pages: 325-349 Issue: 4 Volume: 1 Year: 1999 Month: 10 X-DOI: 10.1080/136910699295848 File-URL: http://hdl.handle.net/10.1080/136910699295848 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:4:p:325-349 Template-Type: ReDIF-Article 1.0 Author-Name: Gordon Murray Author-X-Name-First: Gordon Author-X-Name-Last: Murray Title: Early-stage venture capital funds, scale economies and public support Abstract: <title/> This paper looks at the contemporary financing situation facing New Technology Based Firms in the UK. The specific role of venture capital as a source of third party equity to these frequently capital rationed start-ups is explored. Evidence is presented which indicates that, despite a significant increase in finance to venture funds, the share allocated to seed capital and to investment in the earliest stages of a new enterprise remain stubbornly small. A 'Catch 22' situation conundrum exists whereby it is the smallest specialist funds which are prepared to invest small tranches of equity at the earliest and most speculative stages of the investment cycle. Yet, using a spreadsheet model and industry sourced input and output parameters, it can also be demonstrated that small venture funds bear a major cost penalty which imperils their viability. The model is used to illustrate scale effects on an early-stage VC fund and the consequences of guarantee and leverage based, support mechanisms on the returns to the fund's managing and limited partners. Journal: Venture Capital Pages: 351-384 Issue: 4 Volume: 1 Year: 1999 Month: 10 X-DOI: 10.1080/136910699295857 File-URL: http://hdl.handle.net/10.1080/136910699295857 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:1:y:1999:i:4:p:351-384 Template-Type: ReDIF-Article 1.0 Author-Name: Kenji Kutsuna Author-X-Name-First: Kenji Author-X-Name-Last: Kutsuna Author-Name: Marc Cowling Author-X-Name-First: Marc Author-X-Name-Last: Cowling Author-Name: Paul Westhead Author-X-Name-First: Paul Author-X-Name-Last: Westhead Title: The short-run performance of JASDAQ companies and venture capital involvement before and after flotation Abstract: <title/> This study revealed that the level of venture capitalist involvement in the pre-flotation as well as the post-flotation period influenced the short-run performance of JASDAQ companies in Japan. We detected that JASDAQ companies differed in several ways from NASDAQ and EASDAQ companies. JASDAQ companies tended to be larger in size. Moreover, JASDAQ companies were older than NASDAQ or EASDAQ companies when they selected an initial public offering (IPO). In part, the IPO decision was influenced by the subsequent desire of owners to realize capital gains and exit via personal share sales. Further, we found that JASDAQ companies with high levels of venture capital investment reported inferior short-run performance with regard to share value. Journal: Venture Capital Pages: 1-25 Issue: 1 Volume: 2 Year: 2000 Month: 1 X-DOI: 10.1080/136910600295783 File-URL: http://hdl.handle.net/10.1080/136910600295783 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:1:p:1-25 Template-Type: ReDIF-Article 1.0 Author-Name: Nancy Upton Author-X-Name-First: Nancy Author-X-Name-Last: Upton Author-Name: William Petty Author-X-Name-First: William Author-X-Name-Last: Petty Title: Venture capital investment and US family business Abstract: <title/> Family-controlled businesses are the prevailing form of enterprise throughout the world, making significant contributions to their respective economies. World-wide, an unprecedented number of family businesses are facing ownership and management succession. A critical aspect of succession is finding capital to finance transition. This research addresses the issue of transition financing by reporting the combined results of two surveys, one to venture capitalists and the second to owners of family businesses. The findings clearly suggest that the financing of intergenerational transfers is a significant issue to owners of family-owned firms. Also, we observed that venture capitalists are interested in participating in transition financing, usually in the form of debt or preferred stock combined with sweeteners (warrants or conversion rights). In their evaluation of transition investments, they are particularly interested in the qualifications of the successor, along with the firm's strategic plans. Journal: Venture Capital Pages: 27-39 Issue: 1 Volume: 2 Year: 2000 Month: 1 X-DOI: 10.1080/136910600295792 File-URL: http://hdl.handle.net/10.1080/136910600295792 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:1:p:27-39 Template-Type: ReDIF-Article 1.0 Author-Name: Benoit F. Leleux Author-X-Name-First: Benoit F. Author-X-Name-Last: Leleux Author-Name: Daniel F. Muzyka Author-X-Name-First: Daniel F. Author-X-Name-Last: Muzyka Title: Courting the European growth firms: A survey of attitudes towards listing alternatives Abstract: <title/> The paper analyses the results of a survey of European issuers on the NASDAQ market to obtain a better understanding of their motivations in selecting a first public listing market and to outline the conditions necessary and sufficient to entice such firms, or similar firms, to list their shares in Europe. The motivations of these technology leaders provide valuable insights in designing more effective risk-equity markets in Europe and the policies needed to support them. The survey responses indicate a high degree of incredulity as far as the ability of the new European equity markets to deliver large amounts of capital, repeatedly and at good valuations. On the positive side, it is also clear that most firms are taking a wait-and see attitude, giving these exchanges the chance to demonstrate their strengths. Most firms recognized the utility of a European listing, if only for its public relation impact Journal: Venture Capital Pages: 41-59 Issue: 1 Volume: 2 Year: 2000 Month: 1 X-DOI: 10.1080/136910600295800 File-URL: http://hdl.handle.net/10.1080/136910600295800 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:1:p:41-59 Template-Type: ReDIF-Article 1.0 Author-Name: Dilek Cetindamar Karaomerlioglu Author-X-Name-First: Dilek Cetindamar Author-X-Name-Last: Karaomerlioglu Author-Name: Staffan Jacobsson Author-X-Name-First: Staffan Author-X-Name-Last: Jacobsson Title: The Swedish venture capital industry: An infant, adolescent or grown-up? Abstract: <title/> This paper analyses the evolution of the Swedish venture capital (VC) industry. The institutional infrastructure in the form of legal access to available savings, the incentive structure and the exit possibilities for the VC firm initially blocked the evolution of the VC industry but institutional changes initiated a catch-up process in Sweden in the 1990s. The size of the Swedish VC industry is now substantial, among the four largest in the OECD set in relation to population. A distinct structural change in the Swedish VC industry in favour of diversity is also taking place but the industry is not yet mature with respect to its competence. The key policy issues are related not only to expanding the size of the industry, but also to increasing its competence. Further institutional change is, therefore, warranted, not only in terms of tax reforms and improving the access to pension funds and other savings, but also in terms of distinct policies aiming at increasing the flow of competence to the VC industry. Journal: Venture Capital Pages: 61-88 Issue: 1 Volume: 2 Year: 2000 Month: 1 X-DOI: 10.1080/136910600295819 File-URL: http://hdl.handle.net/10.1080/136910600295819 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:1:p:61-88 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Van Osnabrugge Author-X-Name-First: Mark Author-X-Name-Last: Van Osnabrugge Title: A comparison of business angel and venture capitalist investment procedures: An agency theory-based analysis Abstract: <title/> This paper provides a detailed comparison of the investment criteria and procedures of business angels (BAs) and venture capitalists (VCs) across the full investment process. To make the study more robust, a theoretical base is adopted (based on agency theory) to form research hypotheses which propose that BAs and VCs in the UK may use different approaches to limit potential agency risks in their investments (i.e. the risks associated with an entrepreneur's potential misuse of the investor's money). Utilizing data from 40 personal interviews and 262 questionnaire responses, this study empirically supports the main hypothesized notion that, although both investors reduce agency risks at all stages of the investment process, BAs place more emphasis on doing so ex post investment (the incomplete contracts approach), while VCs stress doing so more ex ante investment (the principal-agent approach). Journal: Venture Capital Pages: 91-109 Issue: 2 Volume: 2 Year: 2000 Month: 4 X-DOI: 10.1080/136910600295729 File-URL: http://hdl.handle.net/10.1080/136910600295729 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:2:p:91-109 Template-Type: ReDIF-Article 1.0 Author-Name: David Deakins Author-X-Name-First: David Author-X-Name-Last: Deakins Author-Name: Eileen O'Neill Author-X-Name-First: Eileen Author-X-Name-Last: O'Neill Author-Name: Patrick Mileham Author-X-Name-First: Patrick Author-X-Name-Last: Mileham Title: The role and influence of external directors in small, entrepreneurial companies: Some evidence on VC and non-VC appointed external directors Abstract: <title/> The paper provides an analysis of the role of 'external' or non-executive directors and their relationship with entrepreneurs in small growth companies, focusing on their impact and style of intervention. We provide qualitative and quantitative analysis of research based on 46 face-to-face interviews with CEOs in small entrepreneurial companies, undertaken in Scotland. Further analysis has been conducted on a sub-sample of firms who have external directors appointed as a result of raising venture capital to compare the impact and role of VC appointed and non-VC appointed board members. Journal: Venture Capital Pages: 111-127 Issue: 2 Volume: 2 Year: 2000 Month: 4 X-DOI: 10.1080/136910600295738 File-URL: http://hdl.handle.net/10.1080/136910600295738 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:2:p:111-127 Template-Type: ReDIF-Article 1.0 Author-Name: Bjornar Reitan Author-X-Name-First: Bjornar Author-X-Name-Last: Reitan Author-Name: Roger Sorheim Author-X-Name-First: Roger Author-X-Name-Last: Sorheim Title: The informal venture capital market in Norway ? investor characteristics, behaviour and investment preferences Abstract: <title/> There is widespread recognition in Norway that the reliance of SMEs on debt financing must be reduced while equity finance sources need to be increased. One of the main sources of equity capital is the informal venture capital market. This paper is a response to the lack of knowledge of the informal venture capital market in Norway. The findings reported in this paper are based on a large survey comprising 6618 persons. Out of all the respondents, 425 are classified as informal investors and comprise the data material that this paper is based upon. This paper describes the Norwegian informal investors in terms of their demographics, investment activity, behaviour and investment preferences. A comparison is made between the results from the Norwegian survey and findings from the UK and Sweden. Journal: Venture Capital Pages: 129-141 Issue: 2 Volume: 2 Year: 2000 Month: 4 X-DOI: 10.1080/136910600295747 File-URL: http://hdl.handle.net/10.1080/136910600295747 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:2:p:129-141 Template-Type: ReDIF-Article 1.0 Author-Name: Adrian Piper Author-X-Name-First: Adrian Author-X-Name-Last: Piper Title: Finance in UK high technology small firms: An overview Abstract: <title/> This paper provides a broad overview of issues relating to the financing of technology-based small firms in the United Kingdom. After an explanation of the role of the Bank of England in relation to such issues, reference is made to the important contribution of such firms to competitiveness and entrepreneurship. During the past four years, a significant number of reports in the United Kingdom have focused on the needs, both financial and otherwise, of technology-based small firms. Barriers to the financing of technology-based firms at startup and early stages are considered, and comparisons are made with the United States. Recent public and private sector initiatives to encourage the provision of seed and venture capital, both formal and informal, are reviewed. Finally, the paper addresses institutional investor attitudes towards investment in classical venture capital and private equity. Journal: Venture Capital Pages: 143-153 Issue: 2 Volume: 2 Year: 2000 Month: 4 X-DOI: 10.1080/136910600295756 File-URL: http://hdl.handle.net/10.1080/136910600295756 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:2:p:143-153 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Denny Author-X-Name-First: Michael Author-X-Name-Last: Denny Title: The UK venture capital industry and investment in smaller companies and technology start ups Abstract: <title/> This paper, by a leading UK venture capitalist, provides a review of the state of the UK Venture Capital Industry at the end of the twentieth century. A key issue is how to increase the supply of capital at the smaller end of the market. A number of potential solutions are considered. Journal: Venture Capital Pages: 155-164 Issue: 2 Volume: 2 Year: 2000 Month: 4 X-DOI: 10.1080/136910600295765 File-URL: http://hdl.handle.net/10.1080/136910600295765 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:2:p:155-164 Template-Type: ReDIF-Article 1.0 Author-Name: Dev Prasad Author-X-Name-First: Dev Author-X-Name-Last: Prasad Author-Name: Garry D. Bruton Author-X-Name-First: Garry D. Author-X-Name-Last: Bruton Author-Name: George Vozikis Author-X-Name-First: George Author-X-Name-Last: Vozikis Title: Signaling value to businessangels: The proportion of the entrepreneur's net worth invested in a new venture as a decision signal Abstract: <title/> Prior investigations have demonstrated that, under the assumption of unlimited available personal funds, the proportion of equity retained by the entrepreneur in a new venture is an indicator of the proposed project's quality. Signaling theory argues that this signal of quality can be used by investors to help evaluate and decide which potential projects to fund. However, this paper will demonstrate that since many entrepreneurs have limited personal capital, a more appropriate signal is the proportion of the entrepreneur's initial wealth invested in the project (φ) since it indicates both the project's value and the entrepreneur's commitment to the project. Such information is beneficial to both investors and entrepreneurs as all parties seek to better understand the commitment of the entrepreneur, and the ultimate investment quality of a proposed venture. Journal: Venture Capital Pages: 167-182 Issue: 3 Volume: 2 Year: 2000 Month: 7 X-DOI: 10.1080/13691060050135064 File-URL: http://hdl.handle.net/10.1080/13691060050135064 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:3:p:167-182 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Kelly Author-X-Name-First: Peter Author-X-Name-Last: Kelly Author-Name: Michael Hay Author-X-Name-First: Michael Author-X-Name-Last: Hay Title: 'Deal-makers': Reputation attracts quality Abstract: <title/> This study is a preliminary step in examining whether reputation effects are operating in the UK informal venture capital market. We test the notion as to whether deal-makers rely on fundamentally different sources of leads and get shown better quality opportunities generally than is the case for less active investors. By deal-makers, we mean individuals who have: 1) a demonstrated track record of completing deals, 2) significant personal resources to invest in new opportunities presented to them, and 3) have substantial previous experience in the building of new ventures. Our findings reveal differences in terms of the relative reliance on different sources of investment leads and the perceived quality of specific sources. Over time, it appears that the most active segment of the market rely less on 'public' as opposed to 'private' sources for leads and benefit from an extensive base of contacts developed as a result of building their own portfolios, particularly among individual investors, venture capital funds and entrepreneurs. Journal: Venture Capital Pages: 183-202 Issue: 3 Volume: 2 Year: 2000 Month: 7 X-DOI: 10.1080/13691060050135073 File-URL: http://hdl.handle.net/10.1080/13691060050135073 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:3:p:183-202 Template-Type: ReDIF-Article 1.0 Author-Name: Åsa Lindholm Dahlstrand Author-X-Name-First: Åsa Lindholm Author-X-Name-Last: Dahlstrand Author-Name: Dilek Cetindamar Author-X-Name-First: Dilek Author-X-Name-Last: Cetindamar Title: The dynamics of innovation financing in Sweden Abstract: <title/> A well functioning and dynamic system of innovation financing is an important tool for the development of future growth sectors. This analysis of the dynamics of innovation financing by using the case of Sweden shows the importance of government and venture capital in financing innovation. It highlights two further important features. First, the role of acquisitions in innovation financing identifies 'competent acquirers' as active actors in the financing system; this is in addition to the public sector and the venture capital industry. Second, innovation financing differs by firms' technology specialization and industrial sectors. In particular, technology-based service firms have different financing patterns to that of manufacturing firms. The paper concludes with a discussion on the functions of three important actors in financing systems, namely government, venture capital, and competent acquirers. Journal: Venture Capital Pages: 203-221 Issue: 3 Volume: 2 Year: 2000 Month: 7 X-DOI: 10.1080/13691060050135082 File-URL: http://hdl.handle.net/10.1080/13691060050135082 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:3:p:203-221 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Author-Name: Colin M. Mason Author-X-Name-First: Colin M. Author-X-Name-Last: Mason Title: Venture capital market complementarities: The links between business angels and venture capital funds in the United Kingdom Abstract: <title/> The nature and extent of complementarities between the informal and formal venture capital markets has been the subject of limited research. This paper explores systematically the nature and extent of complementarities between the formal and informal venture capital markets in the UK, and identifies the opportunities for additional collaboration. Evidence is presented from surveys of business angels and venture capital fund managers for four types of complementarities: co-investing in deals; sequential investing in ventures; business angels as investors in venture capital funds; and deal referring. Journal: Venture Capital Pages: 223-242 Issue: 3 Volume: 2 Year: 2000 Month: 7 X-DOI: 10.1080/13691060050135091 File-URL: http://hdl.handle.net/10.1080/13691060050135091 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:3:p:223-242 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Author-Name: Colin M. Mason Author-X-Name-First: Colin M. Author-X-Name-Last: Mason Title: Editorial: The role of the public sector in the development of a regional venture capital industry Abstract: The existence of an equity gap in the provision of venture capital has prompted a range of initiatives by public sector bodies to stimulate the venture capital market. This paper reviews the rationale for public sponsorship of venture capital and summarizes the four papers which comprise this special issue on regional venture capital. Journal: Venture Capital Pages: 243-253 Issue: 4 Volume: 2 Year: 2000 Month: 10 X-DOI: 10.1080/13691060050176988 File-URL: http://hdl.handle.net/10.1080/13691060050176988 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:4:p:243-253 Template-Type: ReDIF-Article 1.0 Author-Name: Alan Doran Author-X-Name-First: Alan Author-X-Name-Last: Doran Author-Name: Graham Bannock Author-X-Name-First: Graham Author-X-Name-Last: Bannock Title: Publicly sponsored regional venture capital: what can the UK learn from the US experience? Abstract: National venture capital activity in both the US and UK is concentrated in just a handful of regions. As a consequence, there are perceived to be local gaps in the availability of venture capital. Governments in both countries have sought to fill these gaps using taxpayer funds, although in recent years the policy emphasis has shifted in favour of measures to stimulate local activity by private sector venture capitalists. This paper addresses three questions. First, can locally targeted funds be an additional profitable investment opportunity for institutional investors including public sector pension funds? Second, to what extent is there a conflict for those sponsoring, or providing funding to, locally targeted funds between financial investment returns and economic development objectives? Third, what are the best mechanisms to balance the interests of the three parties-those with responsibility for regional development, investment managers within funding institutions and venture capitalists-while attempting to build a sustainable local venture capital industry? The paper concludes that given a clear-sighted approach to the goals of both parties, locally targeted private equity funds can indeed be an additional profitable investment opportunity for public sector funds. Good practice in sponsorship principles, as distilled from the American experience, should be largely applicable in Britain. However, the mechanisms will not easily translate from the US to the UK. Journal: Venture Capital Pages: 255-285 Issue: 4 Volume: 2 Year: 2000 Month: 10 X-DOI: 10.1080/13691066.2000.10446335 File-URL: http://hdl.handle.net/10.1080/13691066.2000.10446335 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:4:p:255-285 Template-Type: ReDIF-Article 1.0 Author-Name: Rebecca Harding Author-X-Name-First: Rebecca Author-X-Name-Last: Harding Title: Venture capital and regional development: Towards a venture capital 'system' Abstract: This paper provides a critical review of UK government proposals to develop venture capital funds in the English regions to address the 'equity gap'. It argues that there is currently an adequate supply of equity-type funding under 250,000. The real equity gap is between the more informal, packaged finance structures and the formal venture capital market which is dominated by MBOs and MBIs. It is argued that the creation of strong venture capital markets in the regions requires the close co-ordination between all the various actors in the system at regional and national levels. Regional Development Agencies have the tools to enable them to perform this co-ordinating task. Journal: Venture Capital Pages: 287-311 Issue: 4 Volume: 2 Year: 2000 Month: 10 X-DOI: 10.1080/13691060050177004 File-URL: http://hdl.handle.net/10.1080/13691060050177004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:4:p:287-311 Template-Type: ReDIF-Article 1.0 Author-Name: Neil Hood Author-X-Name-First: Neil Author-X-Name-Last: Hood Title: Public venture capital and economic development: The Scottish experience Abstract: This paper attempts to both chronicle and evaluate the development of public venture capital in Scotland over the past 20 years or so. This terminology refers to the role which public bodies have sought to play in venture capital to achieve economic development ends, initially using public money, but in recent years by launching and managing funds involving both private and public capital. The paper concentrates on the activities of Scottish Development Finance (SDF), the investment arm of the major Government funded economic development agency in Scotland called Scottish Enterprise (SE) and its predecessor body, the Scottish Development Agency (SDA). SDF has been by far the most substantial public venture capital investor in Scotland throughout this period and a study of its evolution and development is an illuminating one for any student of industrial policy. This study is longitudinal, charting the various different policy environments and political climates in which SDF has existed, as well as seeking to evaluate its achievements, and in particular its impact on economic development. Journal: Venture Capital Pages: 313-341 Issue: 4 Volume: 2 Year: 2000 Month: 10 X-DOI: 10.1080/13691060050177013 File-URL: http://hdl.handle.net/10.1080/13691060050177013 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:4:p:313-341 Template-Type: ReDIF-Article 1.0 Author-Name: Helena R. Snee Author-X-Name-First: Helena R. Author-X-Name-Last: Snee Title: The case for an enterprise development fund for Wales Abstract: This paper sets out the case for an enterprise development fund for Wales against a background of the financing problems faced by small and medium sized enterprises. Supply and demand side problems in the market for finance for small businesses are analysed and the finance gaps in Wales are explored. The advantages and disadvantages of creating such an institution are highlighted; crowding out is noted as a potential problem that needs to be monitored. It is concluded that in the absence of private sector provision there is considerable scope for a development fund to improve the allocation of resources in the Welsh economy by offering a range of loans and equity based finance. An overall strategy which supports the growth and development of a diverse range of small and medium sized enterprises should result in a fairer competitive environment and provide opportunities for new key industries to contribute to sustained economic growth in Wales. The concentration of effort into one institution in Wales should enhance the viability of the fund in the medium to long term and reduce information costs. Journal: Venture Capital Pages: 343-355 Issue: 4 Volume: 2 Year: 2000 Month: 10 X-DOI: 10.1080/13691060050177022 File-URL: http://hdl.handle.net/10.1080/13691060050177022 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:2:y:2000:i:4:p:343-355 Template-Type: ReDIF-Article 1.0 Author-Name: Rolf Visser Author-X-Name-First: Rolf Author-X-Name-Last: Visser Author-Name: Roger Williams Author-X-Name-First: Roger Author-X-Name-Last: Williams Title: Prospecting for Gold: How Dutch informal investors appraise small businesses in trouble Abstract: <title/> One of the most potentially interesting groups of informal investors is the group of the individuals who use their own money to take over and turn around businesses in major financial trouble (T&T artists). This study examines how such individuals appraise these businesses. Using a sample of nine successful T&T artists in the Netherlands and a combination of interviewing and a simulation exercise, it was found that the sample largely agreed on the most important items they looked at when considering a potential take-over target. These all concerned the business's right to exist and the factors influencing the costs, in time and money, of turning the business around. In contrast there was more disagreement about some items seen to be relatively unimportant, especially the human resource variables. It was suggested that this disagreement could be caused by differences in the personality and experience of the T&T artists concerned. Journal: Venture Capital Pages: 1-24 Issue: 1 Volume: 3 Year: 2001 Month: 1 X-DOI: 10.1080/713867620 File-URL: http://hdl.handle.net/10.1080/713867620 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:1:p:1-24 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Van Osnabrugge Author-X-Name-First: Mark Author-X-Name-Last: Van Osnabrugge Author-Name: Robert J. Robinson Author-X-Name-First: Robert J. Author-X-Name-Last: Robinson Title: The influence of a venture capitalist's source of funds Abstract: <title/> In observing the growing presence of venture capital firms in our financial landscape, most commentators concentrate on the structural questions of size of deals, sector investing focus, and the issues of risk and reward. Little, if any, consideration is given to the source of the venture capitalist's own funding, and how this may affect the structure, investing behaviour, and informational strategies of the venture capital firm itself. This study examines the management styles and investment preferences of the two primary types of venture capital firms, 'captives' and 'independents', in an effort to gain insight into the sorts of structural and behavioural considerations that help determine a firm's investment strategy, and which may help a firm to capitalize on the structure of its relationship with fund providers. Such considerations may critically determine a firm's performance, if not its ultimate fate. Journal: Venture Capital Pages: 25-39 Issue: 1 Volume: 3 Year: 2001 Month: 1 X-DOI: 10.1080/13691060117288 File-URL: http://hdl.handle.net/10.1080/13691060117288 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:1:p:25-39 Template-Type: ReDIF-Article 1.0 Author-Name: Dirk De Clercq Author-X-Name-First: Dirk Author-X-Name-Last: De Clercq Author-Name: Philip K. Goulet Author-X-Name-First: Philip K. Author-X-Name-Last: Goulet Author-Name: Mikko Kumpulainen Author-X-Name-First: Mikko Author-X-Name-Last: Kumpulainen Author-Name: Manu Mäkelä Author-X-Name-First: Manu Author-X-Name-Last: Mäkelä Title: Portfolio investment strategies in the Finnish venture capital industry: A longitudinal study Abstract: <title/> The objective of this study is to identify realized strategies of venture capital firms when undertaking portfolio investments. We analysed data for the period 1994 through 1997 on a sample of Finnish venture capital firms representing virtually the entire population of the Finnish venture capital industry. The results indicate that, over time, the venture capital firms specialized the industry scope of their portfolio. Further, the venture capital firms consistently diversified geographically throughout the 4 year period of the study, and they diversified their portfolio in terms of stage-of-growth by investing in increasingly later stage companies through the first years of the study, before entering a period of equilibrium in which this degree of stage-of-growth diversification held relatively constant. Finally, the importance of accumulated experience was illustrated by the finding that less experienced venture capital firms showed a time lag in these investment patterns compared to more experienced firms. Journal: Venture Capital Pages: 41-62 Issue: 1 Volume: 3 Year: 2001 Month: 1 X-DOI: 10.1080/13691060116688 File-URL: http://hdl.handle.net/10.1080/13691060116688 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:1:p:41-62 Template-Type: ReDIF-Article 1.0 Author-Name: Patricia G. Greene Author-X-Name-First: Patricia G. Author-X-Name-Last: Greene Author-Name: Candida G. Brush Author-X-Name-First: Candida G. Author-X-Name-Last: Brush Author-Name: Myra M. Hart Author-X-Name-First: Myra M. Author-X-Name-Last: Hart Author-Name: Patrick Saparito Author-X-Name-First: Patrick Author-X-Name-Last: Saparito Title: Patterns of venture capital funding: Is gender a factor? Abstract: <title/> Since the early 1980s, new ventures with high growth potential and large capital needs have found an ever-increasing pool of venture capital available to support their growth. However, the flow of venture capital investment to women-led businesses remains meager in spite of the fact that in the US and Europe an increasing number of businesses are owned by women. The apparent disparity between potential investment opportunity and actual deals made between venture capital firms and women-led businesses raises the question of whether gender is an issue. The majority of venture capital studies investigate equity funds flows, investor criteria and the nature of the investor-investee relationship. Research on women entrepreneurs focuses on psychological dimensions, business characteristics and performance. Questions about the intersection of gender and venture capital financing are largely unexamined. This exploratory study utilizes longitudinal data to track US venture capital investments by proportion, stage, industry and gender. The descriptive statistics and our analysis of the findings suggest several hypotheses to explain the apparent gender gap. Journal: Venture Capital Pages: 63-83 Issue: 1 Volume: 3 Year: 2001 Month: 1 X-DOI: 10.1080/13691060118175 File-URL: http://hdl.handle.net/10.1080/13691060118175 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:1:p:63-83 Template-Type: ReDIF-Article 1.0 Author-Name: Einar Hackner Author-X-Name-First: Einar Author-X-Name-Last: Hackner Author-Name: Robert D. Hisrich Author-X-Name-First: Robert D. Author-X-Name-Last: Hisrich Title: Editorial: A golden era for entrepreneurship and entrepreneurial finance research Journal: Venture Capital Pages: 85-89 Issue: 2 Volume: 3 Year: 2001 Month: 4 X-DOI: 10.1080/13691060110048433 File-URL: http://hdl.handle.net/10.1080/13691060110048433 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:2:p:85-89 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas D. Moesel Author-X-Name-First: Douglas D. Author-X-Name-Last: Moesel Author-Name: James O. Fiet Author-X-Name-First: James O. Author-X-Name-Last: Fiet Author-Name: Lowell W. Busenitz Author-X-Name-First: Lowell W. Author-X-Name-Last: Busenitz Title: Embedded fitness landscapes-part 1: How a venture capitalist maps highly subjective risk Abstract: <title/> Sensemaking frameworks are used to develop the metaphor of shifting, multidimensional fitness landscapes mentally embedded in increasing higher levels of abstraction. Cognitive maps illustrate the simplified visualization used by early stage venture capitalists (VCs) to understand venture risk. Risk assessments of new, high-growth potential ventures are often highly subjective. In this first article of a three-part series, we define the nature of the uncertainty and equivocality that VCs face and relate these to traditional approaches to categorizing risk. Next, we introduce fitness landscapes and review two approaches relating these to business strategy. The metaphor is extended to focus on multiple embedded landscapes rather than a single map. Map instability is linked to ongoing sensemaking activities of the VC. Finally, the remaining two papers in the series on cognitive representation and experiential learning of VCs are previewed. The papers in the series all focus on developing a new research approach to understanding the conceptualization and management of highly subjective risk by VCs. Journal: Venture Capital Pages: 91-106 Issue: 2 Volume: 3 Year: 2001 Month: 4 X-DOI: 10.1080/13691060110045652 File-URL: http://hdl.handle.net/10.1080/13691060110045652 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:2:p:91-106 Template-Type: ReDIF-Article 1.0 Author-Name: Dirk De Clercq Author-X-Name-First: Dirk Author-X-Name-Last: De Clercq Author-Name: Harry J. Sapienza Author-X-Name-First: Harry J. Author-X-Name-Last: Sapienza Title: The creation of relational rents in venture capitalist-entrepreneur dyads Abstract: <title/> This paper focuses on the question of how relational rents can be created in the venture capitalist-entrepreneur dyad. It identifies how theoretical frameworks, such as agency theory and procedural justice theory, have been used to describe the relationship between venture capitalists and entrepreneurs. Further, it shows how other research streams, such as organizational learning theory and social exchange theory, may be integrated with research on venture capital financing. The central thesis of the paper is that relational rents can be created in venture capitalist-entrepreneur dyads through relation-specific investments and knowledgesharing routines, based on an effective governance of the relationship between both parties. Journal: Venture Capital Pages: 107-127 Issue: 2 Volume: 3 Year: 2001 Month: 4 X-DOI: 10.1080/13691060110045661 File-URL: http://hdl.handle.net/10.1080/13691060110045661 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:2:p:107-127 Template-Type: ReDIF-Article 1.0 Author-Name: Dean A. Shepherd Author-X-Name-First: Dean A. Author-X-Name-Last: Shepherd Author-Name: Andrew Zacharakis Author-X-Name-First: Andrew Author-X-Name-Last: Zacharakis Title: The venture capitalist-entrepreneur relationship: Control, trust and confidence in co-operative behaviour Abstract: <title/> This article acknowledges the importance of achieving confidence in partner co-operation within the venture capitalist (VC)-entrepreneur relationship. The entrepreneur and the VC need to balance the level of control and trust building mechanisms so that the optimal level of confidence in partner co-operation can be achieved. The study proposes that the entrepreneur can build trust with the VC (and vice versa) by signaling commitment and consistency, being fair and just, obtaining a good fit with one's partner, and with frequent and open communication. Open and frequent communication acts as a catalyst for the other trust building mechanisms. This theoretical framework acts as a counter weight to most previous studies on the VC-entrepreneur relationship that have emphasized control mechanisms in order to build partner co-operation without sufficient consideration of how this might effect trust and how trust and control jointly effect confidence in partner cooperation. Journal: Venture Capital Pages: 129-149 Issue: 2 Volume: 3 Year: 2001 Month: 4 X-DOI: 10.1080/13691060110042763 File-URL: http://hdl.handle.net/10.1080/13691060110042763 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:2:p:129-149 Template-Type: ReDIF-Article 1.0 Author-Name: Goran Lindstrom Author-X-Name-First: Goran Author-X-Name-Last: Lindstrom Author-Name: Christer Olofsson Author-X-Name-First: Christer Author-X-Name-Last: Olofsson Title: Early stage financing of NTBFs: An analysis of contributions from support actors Abstract: <title/> This paper is based on a survey of 150 firms about the main problems faced in the early stages by NTBFs with different roots, and the contributions of different actors in the early development of technology-based firms. In the analysis the different generic problems of the young firms are put in relation to contributions not only in terms of finance but also in terms of their support in finding the market niche and developing an early product concept into market-viable applications. Our analysis shows that firms in the technology forefront experience greater problems in fundraising as compared to firms of lesser technological sophistication. The same holds for high-growth firms as opposed to low-growth firms. The typical high growth firm operates in an environment characterized by new technology and an emerging market. This implies extreme levels of uncertainty and may explain the greater difficulties these firms experience in financing, especially in the early stages of development. Moreover, firms with the highest levels of technology more often originate from university or research related environments than firms with less novel technology. The analysis also shows that in all (problem) dimensions, business angels are considered to be the most important actor group by the firms in the study. It also turns out that the most growth-oriented firms are the ones most favoured by business angels and venture capital. Journal: Venture Capital Pages: 151-168 Issue: 2 Volume: 3 Year: 2001 Month: 4 X-DOI: 10.1080/13691060110042754 File-URL: http://hdl.handle.net/10.1080/13691060110042754 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:2:p:151-168 Template-Type: ReDIF-Article 1.0 Author-Name: Priscilla Chu Author-X-Name-First: Priscilla Author-X-Name-Last: Chu Author-Name: Robert D. Hisrich Author-X-Name-First: Robert D. Author-X-Name-Last: Hisrich Title: Venture capital in an economy in transition Abstract: <title/> For one aspect of economic development to occur-new venture creation-people, capital, ideas, and know how are needed. In terms of the capital need, venture capital frequently plays a significant role by providing the much needed capital for starting and particularly growing enterprises. Hong Kong is no exception, as venture capitalists have played a significant role in funding ventures not only in Hong Kong but also in the surrounding region. Since Hong Kong very early excelled in its entrepreneurial activities, venture capital firms were funding ventures in the 1970s before such firms even existed in other parts of Asia. Funding expanded to technology ventures and to a lesser extent other firms in PRC, Taiwan, Singapore, and Malaysia, being particularly focused on high technology firms in Beijing and Shanghai when conditions were not favourable for high-tech firm development in Hong Kong, interest particularly shifted to other areas of the region. Since the government is now interested in making Hong Kong an innovation and technology centre over the next decade, venture capital will play a very important role in this activity. This new role in Hong Kong will require a shift in the focus of some venture capital firms from short-term investments in established companies to longer-term investments in high technology start-ups. Journal: Venture Capital Pages: 169-182 Issue: 2 Volume: 3 Year: 2001 Month: 4 X-DOI: 10.1080/13691060110042772 File-URL: http://hdl.handle.net/10.1080/13691060110042772 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:2:p:169-182 Template-Type: ReDIF-Article 1.0 Author-Name: Einar Häckner Author-X-Name-First: Einar Author-X-Name-Last: Häckner Author-Name: Robert D. Hisrich Author-X-Name-First: Robert D. Author-X-Name-Last: Hisrich Title: Editorial: Contemporary entrepreneurial finance research Journal: Venture Capital Pages: 183-185 Issue: 3 Volume: 3 Year: 2001 Month: 7 X-DOI: 10.1080/13691060110060628 File-URL: http://hdl.handle.net/10.1080/13691060110060628 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:3:p:183-185 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas D. Moesel Author-X-Name-First: Douglas D. Author-X-Name-Last: Moesel Author-Name: James O. Fiet Author-X-Name-First: James O. Author-X-Name-Last: Fiet Title: Embedded fitness landscapes?part 2: Cognitive representation by venture capitalists Abstract: <title/> Sensemaking frameworks explain changes in multidimensional fitness landscapes. Such cognitive maps represent the simplified visualization process used by early stage venture capitalists (VCs) to understand venture risk. VC risk assessments of high-growth potential ventures are highly subjective because of their ambiguous investment environments. For VCs, management of highly subjective risk entails both cognitive representation and experiential learning. The second article of this three-part series analyses how VCs use cognitive representation. A VC's cognitive representation process is modelled using Weick's belief-driven sensemaking processes of arguing and expecting. The authors suggest the use of self-fulfilling prophecy as a way to understand how a VC focuses on a few dimensions of a fitness landscape (selective noticing) and selects network contacts for updates based on those dimensions (selective shaping). Discrepant cues cause confusion concerning the accuracy of the dimensions relied on in a fitness map, especially when provided by well-established network contacts. The interruption of prophecy fulfillment by one or more discrepant clues initiates one or both forms of belief-driven sensemaking process. These processes cycle until a VC reaches a stable interpretation with some intra-firm coherence. Promising research questions on the VC's cognitive representation process are identified. Journal: Venture Capital Pages: 187-213 Issue: 3 Volume: 3 Year: 2001 Month: 7 X-DOI: 10.1080/13691060110060637 File-URL: http://hdl.handle.net/10.1080/13691060110060637 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:3:p:187-213 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Cressy Author-X-Name-First: Robert Author-X-Name-Last: Cressy Author-Name: Otto Toivanen Author-X-Name-First: Otto Author-X-Name-Last: Toivanen Title: Is there adverse selection in the credit market? Abstract: <title/> Despite a huge theoretical literature on credit markets charaterized by asymmetric information little is known about the structure of real world credit contracts or the nature of the underlying informational regime on which they are predicated. A model is constructed and tested that enables delineation of credit contract features and establishment of the nature of the underlying informational <italic>regime</italic>. Large sample estimates based on individual loans from a major UK bank are shown to support both the symmetric and asymmetric information variants of the model: better borrowers get larger loans and lower interest rates; collateral provision and loan size reduce the interest rate paid. However, consistent with a regime of <italic>symmetric</italic> information collateral levels are found to be <italic>independent</italic> of borrower type. Finally, in line with the insurance literature, the bank is shown to use qualitative as well as quantitative information in the structuring of loan contracts to small businesses. Journal: Venture Capital Pages: 215-238 Issue: 3 Volume: 3 Year: 2001 Month: 7 X-DOI: 10.1080/13691060110052104 File-URL: http://hdl.handle.net/10.1080/13691060110052104 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:3:p:215-238 Template-Type: ReDIF-Article 1.0 Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Author-Name: Robert E. Hoskisson Author-X-Name-First: Robert E. Author-X-Name-Last: Hoskisson Author-Name: Lowell W. Busenitz Author-X-Name-First: Lowell W. Author-X-Name-Last: Busenitz Author-Name: Jay Dial Author-X-Name-First: Jay Author-X-Name-Last: Dial Title: Finance and management buyouts: Agency versus entrepreneurship perspectives Abstract: <title/> Agency theory, the predominant theoretical lens employed to examine leveraged buyouts, focuses on buyouts principally as a governance and control device. This view is especially useful in evaluating mature firms where discipline, incentives and limits to managerial discretion serve to mitigate the destruction or the downside of firm value. In contrast, an entrepreneurial view of buyouts is introduced, which incorporates upside incentives for growth and improvements not associated with pure efficiency gains or more effective monitoring to curtail opportunism. Investors such as venture capitalists in the UK and LBO associations in the US are increasingly investing in buyouts to realize entrepreneurial opportunities. Understanding how entrepreneurs make decisions with greater reliance on cognitive biases and heuristics provides an insightful lens for understanding why different types of buyouts occur. These perspectives provide a view of buyouts as a vehicle for strategic innovation and renewal that fosters upside growth opportunities in a variety of buyout types which heretofore have not been incorporated into buyout theory. Finally, research issues are discussed to facilitate future conceptual development and empirical testing of the upside as well as the downside of buyouts. Journal: Venture Capital Pages: 239-261 Issue: 3 Volume: 3 Year: 2001 Month: 7 X-DOI: 10.1080/13691060110060646 File-URL: http://hdl.handle.net/10.1080/13691060110060646 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:3:p:239-261 Template-Type: ReDIF-Article 1.0 Author-Name: Mikhail V. Gratchev Author-X-Name-First: Mikhail V. Author-X-Name-Last: Gratchev Author-Name: Maria A. Bobina Author-X-Name-First: Maria A. Author-X-Name-Last: Bobina Title: Financial resources for new business in Russia: Desirable vs available Abstract: <title/> The article is focused on the trends in accessing the financial resources for new business formation in the Russian transitional economy. Two hundred and forty-nine managers and entrepreneurs from 18 industries (response rate 26%) surveyed differentiate available vs desirable financial resources. The authors compare entrepreneurs' assessments to those of company managers. Current low-to-medium attractiveness of main sources of financing reflects extremely high interest rates, underdeveloped banking mechanism for crediting new business formation, heavy taxation and differences in new business strategies (entrepreneurial vs privatization). The findings correlate with the current cultural and managerial characteristics of the Russian transitional economy (low uncertainty avoidance, low future orientation). At the same time, among the positive shifts in the Russian economy in the year 2000 is the commercial banks and government funds increased interest in financing not only large businesses, but new start-ups and SMEs as well. The authors discuss the desirable sources of financing and analyse the differences between the views of managers and of entrepreneurs. The survey results display growing interest to accessing medium and longterm sources of financing (bank and commercial credit, foreign credit and others), tax breaks expectations, and lower interest in personal financial contribution. Journal: Venture Capital Pages: 263-274 Issue: 3 Volume: 3 Year: 2001 Month: 7 X-DOI: 10.1080/13691060110060655 File-URL: http://hdl.handle.net/10.1080/13691060110060655 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:3:p:263-274 Template-Type: ReDIF-Article 1.0 Author-Name: Truls Erikson Author-X-Name-First: Truls Author-X-Name-Last: Erikson Author-Name: Lars Nerdrum Author-X-Name-First: Lars Author-X-Name-Last: Nerdrum Title: New venture management valuation: Assessing complementary capacities by human capital theory Abstract: <title/> A theory of new venture management valuation should answer the two questions: (1) What should be assessed? (2) How can it be assessed? In response to the work of Smart (1999), we address the first question and suggest a conceptual framework for the valuation of founder managers' entrepreneurial potential. Entrepreneurial capital, as we term this potential, is conceptualized as founder managers' complementary capacity to identify new opportunities, to combine or co-ordinate scarce resources; and to see new initiatives through to fruition. This approach is an extension of human capital theory to include the more heterogeneous entrepreneurial capacities of founder managers and entrepreneurs. Implications for new venture management valuation are discussed. Journal: Venture Capital Pages: 277-290 Issue: 4 Volume: 3 Year: 2001 Month: 10 X-DOI: 10.1080/13691060010024728 File-URL: http://hdl.handle.net/10.1080/13691060010024728 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:277-290 Template-Type: ReDIF-Article 1.0 Author-Name: Luis E. Pereiro Author-X-Name-First: Luis E. Author-X-Name-Last: Pereiro Title: Tango and cash: Entrepreneurial finance and venture capital in Argentina Abstract: <title/> This paper is the first to empirically map entrepreneurial finance in Argentina, by studying in-depth three different types of actors: entrepreneurs, formal private equity and venture capital (PE/VC) funds and angel investors. Through separate surveys, the operational characteristics of these actors are profiled and, whenever possible, systematically compared to US, European and Canadian data. Empirical evidence suggests that: (1) it takes on average more money for the Argentinian entrepreneur to start a de novo venture than for his/ her counterparts in the US; (2) operational parameters of formal PE/VC funds are in line with international standards; and (3) Argentinian angels invest on average substantially higher amounts per venture than their counterparts in other countries, being also younger than the international average. Journal: Venture Capital Pages: 291-308 Issue: 4 Volume: 3 Year: 2001 Month: 10 X-DOI: 10.1080/13691060110036256 File-URL: http://hdl.handle.net/10.1080/13691060110036256 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:291-308 Template-Type: ReDIF-Article 1.0 Author-Name: Julian E. Lange Author-X-Name-First: Julian E. Author-X-Name-Last: Lange Author-Name: William Bygrave Author-X-Name-First: William Author-X-Name-Last: Bygrave Author-Name: Sakura Nishimoto Author-X-Name-First: Sakura Author-X-Name-Last: Nishimoto Author-Name: James Roedel Author-X-Name-First: James Author-X-Name-Last: Roedel Author-Name: Walter Stock Author-X-Name-First: Walter Author-X-Name-Last: Stock Title: Smart money? The impact of having top venture capital investors and underwriters backing a venture Abstract: <title/> One hundred and sixty two venture-capital-backed internet and software companies were examined that floated IPOs in 1998 and 1999 to see how the quality of the venture capital firm and the quality of the underwriter affected market capitalization. It was found that companies backed by top venture capital firms and taken public by top underwriters had higher market capitalizations and produced higher returns for their venture capitalists than other companies. In the post-IPO market, only the quality of the underwriter made a difference to the market capitalization. It was also found that there was a noticeable deterioration in the overall pre-IPO financial performance in the 1998-1999 era compared with the 1980s. Journal: Venture Capital Pages: 309-326 Issue: 4 Volume: 3 Year: 2001 Month: 10 X-DOI: 10.1080/13691060110037129 File-URL: http://hdl.handle.net/10.1080/13691060110037129 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:309-326 Template-Type: ReDIF-Article 1.0 Author-Name: Susan Belden Author-X-Name-First: Susan Author-X-Name-Last: Belden Author-Name: Robert Keeley Author-X-Name-First: Robert Author-X-Name-Last: Keeley Author-Name: Robert Knapp Author-X-Name-First: Robert Author-X-Name-Last: Knapp Title: Can venture capital-backed IPOs compete with seasoned public companies? Abstract: <title/> This paper investigates whether a small group of venture capital-backed initial public offerings (IPOs) were able to compete effectively with seasoned competitors. Previous studies have shown that IPOs have generally under performed seasoned companies. Using data from the Venture Capital Journal and Compustat , this paper tests for statistically significant differences in the long run market and operating performances of a carefully matched set of IPOs and seasoned companies. Using Wilcoxon paired sample tests as well as standard t-tests, it was found that over the nine years following the IPO, there were no statistically significant differences in market returns, except in the first year when the VCbacked IPOs under performed. On the operating side, it is found that there are no statistically significant differences, except that VC-backed firms have faster sales and asset growth. Our evidence suggests that this set of VC-funded IPOs was able to compete effectively with seasoned competitors. This is interesting and important because the previous research has found that newly public companies, on average, do not compete well against seasoned firms. Journal: Venture Capital Pages: 327-336 Issue: 4 Volume: 3 Year: 2001 Month: 10 X-DOI: 10.1080/13691060110045995 File-URL: http://hdl.handle.net/10.1080/13691060110045995 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:327-336 Template-Type: ReDIF-Article 1.0 Author-Name: Clement K. Wang Author-X-Name-First: Clement K. Author-X-Name-Last: Wang Author-Name: Valerie Y.L. Sim Author-X-Name-First: Valerie Y.L. Author-X-Name-Last: Sim Title: Exit strategies of venture capital-backed companies in Singapore Abstract: <title/> As the exit of venture capital (VC) is essential for the growth of the VC industry, an empirical study is conducted on the VC exit mechanism in Singapore using survey and interview data. Relying on empirical evidence of VC firms in Singapore with exits from 1990-1998, the aim is to explore the rationale of VCs in choosing a particular mode of exit for their investments. This study presents empirical evidence of the various determinants which affect Singapore venture capitalists exit choices, and explores the local VC investment/exit process. Consistent with other studies, it was found that companies in the family-owned, high-technology industries tend to exit via initial public offering (IPO). In addition, the IPO exit route is positively related to the total amount of venture financing and company total sales. However, the level of equity valuation is shown to be independent of the likelihood that the VC-backed companies will exit via IPO. In contrast to the grandstanding hypothesis, younger VCs do not perform more IPO-exits than their older counterparts. Another noteworthy finding is that the frequency of financing rounds is independent of the IPO exit. All these results reveal the immaturity of Asia's capital markets compared with the West. Journal: Venture Capital Pages: 337-358 Issue: 4 Volume: 3 Year: 2001 Month: 10 X-DOI: 10.1080/13691060110060664 File-URL: http://hdl.handle.net/10.1080/13691060110060664 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:337-358 Template-Type: ReDIF-Article 1.0 Author-Name: Alex F. De Noble Author-X-Name-First: Alex F. Author-X-Name-Last: De Noble Title: Raising finance from business angels Journal: Venture Capital Pages: 359-367 Issue: 4 Volume: 3 Year: 2001 Month: 10 X-DOI: 10.1080/13691060010024719 File-URL: http://hdl.handle.net/10.1080/13691060010024719 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:3:y:2001:i:4:p:359-367 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Queen Author-X-Name-First: Michael Author-X-Name-Last: Queen Title: Government policy to stimulate equity finance and investor readiness Journal: Venture Capital Pages: 1-5 Issue: 1 Volume: 4 Year: 2002 Month: 1 X-DOI: 10.1080/13691060110104331 File-URL: http://hdl.handle.net/10.1080/13691060110104331 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:1:p:1-5 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas C. Lawton Author-X-Name-First: Thomas C. Author-X-Name-Last: Lawton Title: Missing the target: Assessing the role of government in bridging the European equity gap and enhancing economic growth Abstract: <title/> International evidence suggests that the European venture capital market would grow by itself for management buy-out and buy-in type investments but would not function to promote small and medium sized enterprise growth and employment without a stimulus from policy, as the bridge between risk and return is simply too great. In this paper it is argued that the challenge for policy is to use venture capital as a tool for creating that growth--rather than growing the venture capital industry in and of itself. Whilst acknowledging that the limited public provision of seed capital can prove an effective stimulus for many small enterprises, it is hypothesized that a further target for government in Europe should be the removal of structural barriers--both tangible and intangible--that hinder the development and diffusion of private venture capital. This involves tackling not only regulatory impediments but also providing the information to dispel the embedded fear of risk--and of venture capitalists--that abides across Europe. Journal: Venture Capital Pages: 7-23 Issue: 1 Volume: 4 Year: 2002 Month: 1 X-DOI: 10.1080/13691060110064246 File-URL: http://hdl.handle.net/10.1080/13691060110064246 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:1:p:7-23 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuelle Dubocage Author-X-Name-First: Emmanuelle Author-X-Name-Last: Dubocage Author-Name: Dorothée Rivaud-Danset Author-X-Name-First: Dorothée Author-X-Name-Last: Rivaud-Danset Title: Government policy on venture capital support in France Abstract: <title/> After a difficult beginning, a series of fiscal and legislative measures is helping to encourage venture capital investment and the appearance of new and innovative enterprises. A feature of the French venture capital world is the key role played by public bodies. These are multi-role organizations seeking to connect up the core players. The key factors for success can be described as a concern that all the stages in financing innovative new companies should join up smoothly, and action by public bodies generating the leverage effects. This present paper aims to show that leverage is not only a financial mechanism just as gap between venture capital and entrepreneur is not simply a financial phenomenon. The public policy can be qualified as an effective one. However, it does have negative side-effects such as escalating demands from investors and a complicated system in France. Analysis of public practices highlights problems which are not specific to France. The lack of skills favours long-established investment teams and a trend towards 'megafunds' and 'megaprojects'. Journal: Venture Capital Pages: 25-43 Issue: 1 Volume: 4 Year: 2002 Month: 1 X-DOI: 10.1080/13691060110091237 File-URL: http://hdl.handle.net/10.1080/13691060110091237 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:1:p:25-43 Template-Type: ReDIF-Article 1.0 Author-Name: David Mcglue Author-X-Name-First: David Author-X-Name-Last: Mcglue Title: The funding of venture capital in Europe: Issues for public policy Abstract: <title/> This paper considers the key questions facing public policy-makers in the European Union in developing policies to stimulate venture capital. The first is how to define when and where public intervention is necessary and justifiable. The second is to identify precise policy objectives. Thirdly, should the public sector take the same or more of the risk and less of the return than the private sector? Then, what instruments should the public sector deploy (equity, grants, guarantees or loans, or a combination)? Finally, when should public intervention cease? The paper considers the experience of instruments at both European and national levels and some of the policy debates. It concludes with reminders that venture capital is not the most appropriate form of finance for all small businesses; that venture capital will not in any case succeed in promoting growth unless an appropriate framework exists also on the demand side to support the emergence of growth companies; and that venture capital in Europe must be complemented by the growth of entrepreneurial finance from other sources, notably business angels, who have played a key role in the US experience. Journal: Venture Capital Pages: 45-58 Issue: 1 Volume: 4 Year: 2002 Month: 1 X-DOI: 10.1080/13691060110091246 File-URL: http://hdl.handle.net/10.1080/13691060110091246 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:1:p:45-58 Template-Type: ReDIF-Article 1.0 Author-Name: Rebecca Harding Author-X-Name-First: Rebecca Author-X-Name-Last: Harding Title: Plugging the knowledge gap: An international comparison of the role for policy in the venture capital market Abstract: <title/> This paper examines the role of policy in creating venture capital structures that support innovative, high growth companies. It compares the policy challenges and the emerging structures and measures in the US, Germany, Singapore, France, Ireland, the Netherlands and the UK. It argues that policies to stimulate the demand for venture capital are more effective in overcoming inherent information asymmetries in venture capital market. These information asymmetries take the form of risk aversion on the supply side and uncertainty and resistance to venture capital on the demand side. The result is a gap in funding for high growth businesses. Narrowing this gap--often called the equity gap--has been a target of policy makers in the countries studied. The paper provides evidence to demonstrate that the equity gap is actually the measurable outcome of this information asymmetry, or 'knowledge gap' and that policy has been most effective in countries which have approached the development of a venture capital market through demand rather than supply side measures. Journal: Venture Capital Pages: 59-76 Issue: 1 Volume: 4 Year: 2002 Month: 1 X-DOI: 10.1080/13691060110093019 File-URL: http://hdl.handle.net/10.1080/13691060110093019 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:1:p:59-76 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Author-X-Name-First: Author-X-Name-Last: The Editors Title: The Taylor and Francis Group plc: Award for excellence in research on the topic of venture capital Journal: Venture Capital Pages: 77-77 Issue: 2 Volume: 4 Year: 2002 Month: 4 X-DOI: 10.1080/13691060110107879 File-URL: http://hdl.handle.net/10.1080/13691060110107879 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:2:p:77-77 Template-Type: ReDIF-Article 1.0 Author-Name: Diamanto Politis Author-X-Name-First: Diamanto Author-X-Name-Last: Politis Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Title: Informal investors as entrepreneurs--the development of an entrepreneurial career Abstract: <title/> Informal investors have proved to be highly valuable for the growth of the firms in which they have invested. Therefore, it is important to understand what motivates potential informal investors to make their initial investment as well as how already active investors develop their entrepreneurial careers. Such an understanding may prove helpful in directing efforts to locate and attract potential and existing informal investors. This paper investigates the entrepreneurial career of four informal investors. Based on the personal stories of these individuals, we explore their career patterns and present the central concepts of the different career phases they have progressed through. The results indicate that informal investors have experienced three overall career phases: (1) the corporate career phase; (2) the entrepreneurial learning phase; and (3) the integrated investment career phase. Each career phase provides informal investors with possibilities for learning and developing valuable competencies in order to advance in their entrepreneurial career. During the corporate career phase, the investors learn a 'managerial logic' and create a platform on which they can build up their managerial competence, establish a network, and legitimize their reputation. In the following entrepreneurial learning phase, the investors make use of this platform in varying entrepreneurial projects, mainly as consultants, which in turn provides them with the possibilities for learning the 'logic' behind entrepreneurial processes. During the integrated investment career phase, informal investors extend the platform by making use of their managerial and entrepreneurial competence in the firms in which they invest, and thus act as both entrepreneurs and informal investors in the firms in which they are involved. Journal: Venture Capital Pages: 78-101 Issue: 2 Volume: 4 Year: 2002 Month: 4 X-DOI: 10.1080/13691060210816 File-URL: http://hdl.handle.net/10.1080/13691060210816 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:2:p:78-101 Template-Type: ReDIF-Article 1.0 Author-Name: Sophie Manigart Author-X-Name-First: Sophie Author-X-Name-Last: Manigart Author-Name: Katleen Baeyens Author-X-Name-First: Katleen Author-X-Name-Last: Baeyens Author-Name: Wim Van Hyfte Author-X-Name-First: Wim Author-X-Name-Last: Van Hyfte Title: The survival of venture capital backed companies Abstract: <title/> This study addresses the survival of Belgian venture capital (VC) backed companies, compared to companies that did not receive VC. Survival analysis techniques are used to analyse the survival of a sample of 565 Belgian VC backed companies and 565 comparable non-VC backed companies. A distinction between different types of venture capitalists is made. Contrary to commom wisdom, VC backed companies do not have a higher probability of surviving than comparable non-VC backed companies. Companies, backed by the two oldest government venture capitalists, however, have a higher survival rate and companies, backed by other government venture capitalists have a lower survival rate and a higher probability of going bankrupt. Our results confirm previous studies in that it is shown that receiving VC from the right backer is perhaps more important than receiving VC per se. Journal: Venture Capital Pages: 103-124 Issue: 2 Volume: 4 Year: 2002 Month: 4 X-DOI: 10.1080/13691060110103233 File-URL: http://hdl.handle.net/10.1080/13691060110103233 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:2:p:103-124 Template-Type: ReDIF-Article 1.0 Author-Name: Jonas Gabrielsson Author-X-Name-First: Jonas Author-X-Name-Last: Gabrielsson Author-Name: Morten Huse Author-X-Name-First: Morten Author-X-Name-Last: Huse Title: The venture capitalist and the board of directors in SMEs: Roles and processes Abstract: <title/> The paper provides an attempt to direct the research in the area of venture capitalists and the board of directors in SMEs. Issues about boards in venture capital-backed technology based industrials are explored, and various research designs are used to meet different research questions. Empirical results indicate that venture capital firms purposefully use boards in the portfolio firm, and boards in venture capital-backed firms are more active than boards in other firms. The venture capitalist and the entrepreneur/owner-manager of the portfolio firm may have diverging expectations to board roles. In this setting the board becomes an interesting meeting place for studying the processes and the dynamics between external and internal stakeholders. Future research in this area should integrate board role theories and board process theories. Journal: Venture Capital Pages: 125-146 Issue: 2 Volume: 4 Year: 2002 Month: 4 X-DOI: 10.1080/13691060110094397 File-URL: http://hdl.handle.net/10.1080/13691060110094397 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:2:p:125-146 Template-Type: ReDIF-Article 1.0 Author-Name: Hans Bruining Author-X-Name-First: Hans Author-X-Name-Last: Bruining Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Title: Entrepreneurial orientation in management buy-outs and the contribution of venture capital Abstract: <title/> This paper focuses on the development of entrepreneurial orientation (EO) after a management buy-out (MBO) and on the role played by venture capital firms in enhancing EO. It presents results of two exploratory case studies of divisional buy-outs with regard to their EO and the areas where the venture capital (VC) firm has been of greatest help. Their contribution to elements of the EO of the buy-out firm are discussed. The key output is expected to be a better understanding of the functioning and operations of the VC with regard to their contribution to the EO of the firm after an MBO. This will also benefit the management team that seeks venture capital support to improve the firm's economic performance by using its upside potential. Journal: Venture Capital Pages: 147-168 Issue: 2 Volume: 4 Year: 2002 Month: 4 X-DOI: 10.1080/13691060110117427 File-URL: http://hdl.handle.net/10.1080/13691060110117427 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:2:p:147-168 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin Hindle Author-X-Name-First: Kevin Author-X-Name-Last: Hindle Author-Name: Leo Lee Author-X-Name-First: Leo Author-X-Name-Last: Lee Title: An exploratory investigation of informal venture capitalists in Singapore Abstract: <title/> This paper presents an exploratory profile of Singapore's informal venture capitalists (business angels). It examines three issues: (1) investor characteristics--comparing descriptive data on Singapore angels; (2) the 'investee attractiveness' issue--classifying the characteristics of an opportunity most likely to result in an actual investment; and (3) relationship issues--describing key behaviours essential to the investor/investee relationship. The research questions were informed by previous international studies. However, in deference to the cultural mores of Singapore society, the research design and methodology were extensively modified. The results of this study have two implications. First, they can underpin structured hypotheses for future research. Second, they offer a challenge to traditional ways of thinking about capital provision to new ventures in the Singapore environment. Journal: Venture Capital Pages: 169-177 Issue: 2 Volume: 4 Year: 2002 Month: 4 X-DOI: 10.1080/13691060110091255 File-URL: http://hdl.handle.net/10.1080/13691060110091255 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:2:p:169-177 Template-Type: ReDIF-Article 1.0 Author-Name: Andy Lockett Author-X-Name-First: Andy Author-X-Name-Last: Lockett Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Title: Venture capital in Asia and the Pacific Rim Abstract: <title/> Venture capital in Asia and the Pacific Rim is of increasing importance because of the heterogeneity of the countries in the region in terms of their stage of economic development, their institutional systems and cultures and the state of development of their venture capital markets. This introductory paper provides a brief overview of the issues relating to venture capital in Asia and the Pacific Rim, summarizes the papers in the special issue and suggests areas for further research. The discussion is structured under five headings: (1) the context of the venture capital investment; (2) deal generation and screening; (3) due diligence and valuation; (4) monitoring and adding value; and (5) exiting. Journal: Venture Capital Pages: 183-195 Issue: 3 Volume: 4 Year: 2002 Month: 7 X-DOI: 10.1080/13691060213714 File-URL: http://hdl.handle.net/10.1080/13691060213714 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:3:p:183-195 Template-Type: ReDIF-Article 1.0 Author-Name: Garry D. Bruton Author-X-Name-First: Garry D. Author-X-Name-Last: Bruton Author-Name: David Ahlstrom Author-X-Name-First: David Author-X-Name-Last: Ahlstrom Author-Name: Kulwant Singh Author-X-Name-First: Kulwant Author-X-Name-Last: Singh Title: The impact of the institutional environment on the venture capital industry in Singapore Abstract: <title/> Venture capital in most of Asia may be more accurately termed a private equity industry which focuses on funding mature firms in slow growth sectors of the economy rather than on funding start-ups. However, the venture capital industry in Singapore is becoming substantially different from that of much of Asia in that it funds high technology startups. The industry in Singapore has grown substantially in recent years, with funds under management growing from about US$20 million in 1983 to more than US$7 billion in 1999. These developments together with the government's efforts to make Singapore a venture capital hub for Asia motivate our examination of the venture capital industry there. Institutional theory frames this analysis of the emergence of the venture capital industry in Singapore and the distinctiveness of its evolution. Employing a replication logic methodology during 16 in-depth interviews with venture capitalists and senior government officials, it is found that the institutional environment, particularly the regulatory environment created by the government and its agencies, helps to explain key differences in the Singapore venture capital industry compared with that of the rest of Asia. Cognitive (cultural) institutions also impact how venture capital firms operate in Singapore, particularly causing foreign venture capitalists to adapt their methods to the local cultural setting. Our results highlight the importance of the institutional environment, particularly of the government, in guiding the emergence and evolution of the venture capital industry. Journal: Venture Capital Pages: 197-218 Issue: 3 Volume: 4 Year: 2002 Month: 7 X-DOI: 10.1080/13691060213712 File-URL: http://hdl.handle.net/10.1080/13691060213712 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:3:p:197-218 Template-Type: ReDIF-Article 1.0 Author-Name: Evan J. Douglas Author-X-Name-First: Evan J. Author-X-Name-Last: Douglas Author-Name: Dean Shepherd Author-X-Name-First: Dean Author-X-Name-Last: Shepherd Title: Exploring investor readiness: Assessments by entrepreneurs and investors in Australia Abstract: <title/> Entrepreneurs often submit crude business plans to potential investors and are frequently disappointed when the investor decides that the new venture is not yet 'investment ready'. This paper examines the nature of investor readiness and the differing perceptions of investor readiness by entrepreneurs relative to venture capitalists in Australia. It is found that when the assessments of each investor readiness dimension are combined they are related to the venture capitalists' intuitive (gut) assessments; that new ventures are perceived to be more marketing and management ready than technology ready; and investors and entrepreneurs differ in their perception of readiness (technology, market, management and overall). Journal: Venture Capital Pages: 219-236 Issue: 3 Volume: 4 Year: 2002 Month: 7 X-DOI: 10.1080/13691060213713 File-URL: http://hdl.handle.net/10.1080/13691060213713 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:3:p:219-236 Template-Type: ReDIF-Article 1.0 Author-Name: Andy Lockett Author-X-Name-First: Andy Author-X-Name-Last: Lockett Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Author-Name: Harry Sapienza Author-X-Name-First: Harry Author-X-Name-Last: Sapienza Author-Name: Sarika Pruthi Author-X-Name-First: Sarika Author-X-Name-Last: Pruthi Title: Venture capital investors, valuation and information: A comparative study of the US, Hong Kong, India and Singapore Abstract: <title/> This paper compares the approaches to investee valuation and sources of information used by venture capital investors in the US, Hong Kong, India and Singapore. The results identify significant differences in respect of the use of asset valuation, earnings before interest, depreciation and amortisation (EBITDA) and options based valuation methods. Significant differences are also identified in respect of the use of various sources of information for valuation, notably the use of business plan data, own due diligence, sales and product information and information relating to entrepreneurs. Journal: Venture Capital Pages: 237-252 Issue: 3 Volume: 4 Year: 2002 Month: 7 X-DOI: 10.1080/13691060213715 File-URL: http://hdl.handle.net/10.1080/13691060213715 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:3:p:237-252 Template-Type: ReDIF-Article 1.0 Author-Name: Barbara Cornelius Author-X-Name-First: Barbara Author-X-Name-Last: Cornelius Author-Name: Sayed Ahmed Naqi Author-X-Name-First: Sayed Ahmed Author-X-Name-Last: Naqi Title: Resource exchange and the Asian venture capital fund/portfolio company dyad Abstract: <title/> This paper is the result of an examination of the basic dynamics governing the relationship between venture capitalists and their portfolio companies using the resource exchange paradigm. An alignment between the needs of the portfolio company for particular resources and the ability of the venture capitalist to add these resources to the total resource pool drawn on by the entrepreneur is seen as a necessary precursor to venture capital involvement in portfolio companies. Through an examination of the thriving venture capital market in Hong Kong and Singapore it is concluded that resource exchange, and hence value addition, depend upon the venture capitalist's perception of the resource needs of the portfolio company rather than on the resources available from the venture capital firm. Journal: Venture Capital Pages: 253-265 Issue: 3 Volume: 4 Year: 2002 Month: 7 X-DOI: 10.1080/13691060213716 File-URL: http://hdl.handle.net/10.1080/13691060213716 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:3:p:253-265 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Title: The private equity market gyrations: What has been learned? Journal: Venture Capital Pages: 267-274 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024932 File-URL: http://hdl.handle.net/10.1080/1369106022000024932 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:267-274 Template-Type: ReDIF-Article 1.0 Author-Name: John Freear Author-X-Name-First: John Author-X-Name-Last: Freear Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Author-Name: William Wetzel Author-X-Name-First: William Author-X-Name-Last: Wetzel Title: Angles on angels: Financing technology-based ventures - a historical perspective Abstract: <title/> This paper reviews 20 years of research on the angel segment of the venture capital market. A lot has been learnt from one-shot studies of the attitudes, behaviour and characteristics of business angels. Taxonomies have been developed. However, we now need systematic insights into the dynamics of the angel market. The paper calls for longitudinal studies of angel and entrepreneurial behaviour, information flows, links to other market segments, information quality, formal and informal networks and the latent angel problem. The research base needs to be put on a solid theoretical and conceptual foundation. This research will provide the guidance required by public policy to unlock the capital and know-how of the millions of latent angels. Journal: Venture Capital Pages: 275-287 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024923 File-URL: http://hdl.handle.net/10.1080/1369106022000024923 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:275-287 Template-Type: ReDIF-Article 1.0 Author-Name: Gordon Baty Author-X-Name-First: Gordon Author-X-Name-Last: Baty Author-Name: Bruce Sommer Author-X-Name-First: Bruce Author-X-Name-Last: Sommer Title: True then, true now: A 40-year perspective on the early stage investment market Abstract: <title/> One of the constants in the angel marketplace is that they invest mostly for non-economic reasons. The operations of two Boston-based seed capital funds - Zero Stage Capital and Navigation Technology Ventures - which raise their funds from both institutional and angel investors are described. Some lessons about commercializing technology are reported. Journal: Venture Capital Pages: 289-293 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024914 File-URL: http://hdl.handle.net/10.1080/1369106022000024914 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:289-293 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Jensen Author-X-Name-First: Mark Author-X-Name-Last: Jensen Title: Angel investors: Opportunity amidst chaos Abstract: <title/> The seemingly relentless flow of negative news from the markets, the boardrooms and the political capitals has created a paradoxical opportunity for the astute angel investor. Traditional venture capitalists have virtually abandoned the early stage investment space. By observing certain parameters, by learning from the mistakes of the recent speculative frenzy, and by following conservative investing principles, early stage investors may prosper in the midst of widespread stagnation. Journal: Venture Capital Pages: 295-304 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024905 File-URL: http://hdl.handle.net/10.1080/1369106022000024905 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:295-304 Template-Type: ReDIF-Article 1.0 Author-Name: Candida G. Brush Author-X-Name-First: Candida G. Author-X-Name-Last: Brush Author-Name: Nancy M. Carter Author-X-Name-First: Nancy M. Author-X-Name-Last: Carter Author-Name: Patricia G. Greene Author-X-Name-First: Patricia G. Author-X-Name-Last: Greene Author-Name: Myra M. Hart Author-X-Name-First: Myra M. Author-X-Name-Last: Hart Author-Name: Elizabeth Gatewood Author-X-Name-First: Elizabeth Author-X-Name-Last: Gatewood Title: The role of social capital and gender in linking financial suppliers and entrepreneurial firms: A framework for future research Abstract: <title/> Equity capital fuels growth companies and yields high returns for investors. The process of equity investment and ultimate harvesting of innovative companies has created significant wealth among fund investors, venture capitalists, angels and new entrepreneurs. Extensive research investigates all phases of the venture capital investment process, industry characteristics and returns to investors. Surprisingly absent from current research are studies including women, on both the supply (equity provider) and demand (equity seeker) sides. Women make significant contributions to the US economy in the workforce and as business owners, yet research about women as recipients of equity capital and providers of equity is extremely scarce. This raises a question--are women being left out of the wealth creation process? Our paper addresses this question by exploring women's role in supply and demand of equity capital. We utilize a social capital perspective to develop a conceptual framework and focus our analysis on early stage and angel investment. The paper concludes with directions for future research. Journal: Venture Capital Pages: 305-323 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024897 File-URL: http://hdl.handle.net/10.1080/1369106022000024897 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:305-323 Template-Type: ReDIF-Article 1.0 Author-Name: Bruce Cerullo Author-X-Name-First: Bruce Author-X-Name-Last: Cerullo Author-Name: Bruce Sommer Author-X-Name-First: Bruce Author-X-Name-Last: Sommer Title: Helping healthcare entrepreneurs: A case study of Angel Healthcare Investors, LLC Abstract: <title/> There is a significant financing gap for businesses seeking between $US250 000 and $US2 million. Filling this gap are the approximately 400 000 business angels scattered across the country who invest approximately $US30-40 billion a year in 50 000 early stage businesses. Increasingly angels are investing together in groups. Angel Healthcare Investors (AHI), LLC is one such angel group comprising investors with backgrounds in the healthcare sector who invest in innovative business start-ups in various healthcare markets. The paper describes AHI's operations, yield rates and portfolio firms. It concludes with a view of current trends in angel investing. Journal: Venture Capital Pages: 325-330 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024941 File-URL: http://hdl.handle.net/10.1080/1369106022000024941 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:325-330 Template-Type: ReDIF-Article 1.0 Author-Name: William H. Payne Author-X-Name-First: William H. Author-X-Name-Last: Payne Author-Name: Matthew J. Macarty Author-X-Name-First: Matthew J. Author-X-Name-Last: Macarty Title: The anatomy of an angel investing network: Tech Coast Angels Abstract: <title/> This paper describes the Tech Coast Angels, an alliance of three angel networks in California. The investment process is described. Companies complete an online application. These are pre-screened by small groups of members with appropriate experience. The best applications go forward to an 'all hands' screening meeting. Any company which attracts an investor champion is then subject to detailed due diligence. Due diligence reports are made available to all members on the website. Once a term-sheet has been negotiated by the due diligence team and one member has agreed to invest, the company may present to a monthly investment meeting. Investment meetings in the three networks are scheduled on consecutive nights monthly, allowing qualified companies to present over 200 TCA members in one week. Journal: Venture Capital Pages: 331-336 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024950 File-URL: http://hdl.handle.net/10.1080/1369106022000024950 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:331-336 Template-Type: ReDIF-Article 1.0 Author-Name: John May Author-X-Name-First: John Author-X-Name-Last: May Title: Structured angel groups in the USA: The Dinner Club experience Abstract: <title/> The angel marketplace has evolved over the past 20-30 years from an informal, word-of-mouth network dominated by 'lone wolf' chequebook angels making deals occurring on an ad hoc basis after cursory due diligence to a much more professional and sophisticated approach. The emergence since the mid-1990s of organized groups of angels has been responsible for this change. Structured angel groups and clubs are providing a more efficient market place for entrepreneurs and enable angels to find deals more effectively and invest in deals that they would never otherwise have been able to do. The activities and operation of the Dinner Club, one of the leading angel groups in the USA, based in the Washington DC area, is described. Journal: Venture Capital Pages: 337-342 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024969 File-URL: http://hdl.handle.net/10.1080/1369106022000024969 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:337-342 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey Pollock Author-X-Name-First: Jeffrey Author-X-Name-Last: Pollock Author-Name: William Scheer Author-X-Name-First: William Author-X-Name-Last: Scheer Title: Regional seed investing: MerchantBanc Abstract: <title/> The contraction in venture capital has created new opportunities for angel investors in traditional venture capital markets where, previously, angels have struggled to get a foothold. Angels and the growing number of angel networks are increasingly filling the $US500 000 to $US2 million funding gap left by venture capitalists who have fled the early stage space for more secure later stage investments. Angels' increasing visibility in venture capital markets creates additional opportunity for angels to become co-investors in venture capital-led deals. However, the emerging partnership between angels and venture capitalists does not take place easily in spite of the market forces driving the two together. There are gaps in information that create inefficiencies in the angel-VC market. A critical need has arisen for intermediaries to facilitate interaction between angels and venture capitalists, particularly in under-served markets. Without these intermediaries, the role angel investors have to play in rejuvenating venture fund markets will go largely unfulfilled. Journal: Venture Capital Pages: 343-347 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024978 File-URL: http://hdl.handle.net/10.1080/1369106022000024978 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:343-347 Template-Type: ReDIF-Article 1.0 Author-Name: Charles W. Wessner Author-X-Name-First: Charles W. Author-X-Name-Last: Wessner Title: Entrepreneurial finance and the New Economy Abstract: <title/> It is widely believed that a substantial change has occurred in the structure of the US economy as a result of investments in IT which have resulted in a secular increase in productivity. Public policy has a key role in sustaining this 'new economy'. Both the venture capital and angel markets have limitations in financing the innovation system. Public programmes can play a role in the development of potential platform technologies that private investors do not fund because of their high risk. Journal: Venture Capital Pages: 349-355 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024987 File-URL: http://hdl.handle.net/10.1080/1369106022000024987 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:349-355 Template-Type: ReDIF-Article 1.0 Author-Name: George Lipper Author-X-Name-First: George Author-X-Name-Last: Lipper Author-Name: Bruce Sommer Author-X-Name-First: Bruce Author-X-Name-Last: Sommer Title: Encouraging angel capital: What the US states are doing Abstract: <title/> The importance of business angels has increased in recent years as venture capital funds are investing less and less in the smaller initial funding stages. Individual states are now recognizing the significant impact of angel investors in economic development. The paper reports on a survey to discover how individual states across the US are encouraging angel activity. One-third of states responded. The Oklahoma Technology Commercialisation Corporation has a well-thought out and designed programme of tax credits, forums and other incentives. Six other states have angel incentive programmes and four states have tax credit programmes. Economic development through innovation is stimulated by the presence of angel investing which acts as a catalyst. Economic development in 'have not' states with low levels of venture capital investments is being threatened by the transfer of local entrepreneurs and angel investors to nearby 'have' states with high levels of venture capital investment activity. Journal: Venture Capital Pages: 357-362 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000024996 File-URL: http://hdl.handle.net/10.1080/1369106022000024996 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:357-362 Template-Type: ReDIF-Article 1.0 Author-Name: Connie K. N. Chang Author-X-Name-First: Connie K. N. Author-X-Name-Last: Chang Author-Name: Stephanie S. Shipp Author-X-Name-First: Stephanie S. Author-X-Name-Last: Shipp Author-Name: Andrew J. Wang Author-X-Name-First: Andrew J. Author-X-Name-Last: Wang Title: The Advanced Technology Program: A public-private partnership for early stage technology development Abstract: <title/> The Advanced Technology Program (ATP) supports early stage technology development efforts by US companies. The ATP provides funding support to high-risk R&D projects that have potential for broad-based economic benefits for the nation. The rationale for government support of R&D rests on theory and evidence that the social benefits of R&D are greater than the private returns. The ATP has been active in supporting entrepreneurial start-up firms. The role of ATP as a public-private partnering programme extends from providing critical funding to early stage technology projects, and also includes aspects of encouraging collaboration among firms and other organizations, fostering information exchange, and facilitating technology entrepreneurship activities. Journal: Venture Capital Pages: 363-370 Issue: 4 Volume: 4 Year: 2002 Month: 10 X-DOI: 10.1080/1369106022000028262 File-URL: http://hdl.handle.net/10.1080/1369106022000028262 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:4:y:2002:i:4:p:363-370 Template-Type: ReDIF-Article 1.0 Author-Name: Nancy Carter Author-X-Name-First: Nancy Author-X-Name-Last: Carter Author-Name: Candida Brush Author-X-Name-First: Candida Author-X-Name-Last: Brush Author-Name: Patricia Greene Author-X-Name-First: Patricia Author-X-Name-Last: Greene Author-Name: Elizabeth Gatewood Author-X-Name-First: Elizabeth Author-X-Name-Last: Gatewood Author-Name: Myra Hart Author-X-Name-First: Myra Author-X-Name-Last: Hart Title: Women entrepreneurs who break through to equity financing: The influence of human, social and financial capital Abstract: <title/> This is one of the first efforts to systematically study attributes of women business owners and their equity financing strategies. The study explored the factors associated with the use of equity capital in women led firms. Hypotheses examined the influence of human and social capital on the likelihood of seeking equity funding, access to funding sources, bootstrapping techniques and development of financial strategies. Data for this study came from a survey of 235 US women business owners conducted by the National Foundation for Women Business Owners from a sample identified by Dun and Bradstreet. Results showed only graduate education significantly influenced the odds of using outside equity financing. Social capital had no direct effect on increasing likelihood of using equity but influenced the use of bootstrapping techniques. Network diversity was positively related to the use of personal sources of funding, while professional advisor relationships were negatively related to personal sources of financing. Our research suggests women obtaining higher levels of education may increase their likelihood of obtaining funding. Further, during the bootstrap phase, utilizing social capital is an asset. Journal: Venture Capital Pages: 1-28 Issue: 1 Volume: 5 Year: 2003 Month: 1 X-DOI: 10.1080/1369106032000082586 File-URL: http://hdl.handle.net/10.1080/1369106032000082586 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:1:p:1-28 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey Sohl Author-X-Name-First: Jeffrey Author-X-Name-Last: Sohl Title: The private equity market in the USA: Lessons from volatility Abstract: <title/> Since the nadir of the early 1990s, the angel and venture capital markets began a rapid recovery followed by a marked decline. These recent market gyrations offer insights into the private equity industry. During the rise, angel and venture capital investments soared, accompanied by rising deal valuations. For the first time since the study of angels was initiated, venture capital investments exceed, in total dollars, the amount of angel investments, although the number of deals remained larger in the angel market. However, unsustainable trends inevitably return to normalcy and these changes have resulted in a restructuring of the market. Angels are reasserting their fundamental role as the major source of seed capital for high growth entrepreneurial ventures. This paper examines the rise and the downturn in the private equity market, and identifies some of the causes for each. Current and future market trends are also identified. Journal: Venture Capital Pages: 29-46 Issue: 1 Volume: 5 Year: 2003 Month: 1 X-DOI: 10.1080/1369106032000062713 File-URL: http://hdl.handle.net/10.1080/1369106032000062713 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:1:p:29-46 Template-Type: ReDIF-Article 1.0 Author-Name: Ervin Black Author-X-Name-First: Ervin Author-X-Name-Last: Black Title: Usefulness of financial statement components in valuation: An examination of start-up and growth firms Abstract: <title/> According to US financial accounting standards and prior research, accrual-based earnings provide the best measure of firm performance. Results from prior capital markets research imply that earnings are more value-relevant than operating cash. There are, however, potential problems in pooling cross-sectionally across all firms and assuming a homogeneous sample of companies. For many start-up and early growth companies, their earnings are non-positive. Other components of the financial statements may be more value-relevant than the bottom-line earnings. In early firm life cycle stages, growth opportunities are a relatively larger component of firm value than assets in place; in these stages, the proxy that provides more value-relevant information about firm-value is the one that provides more information about the future growth opportunities of the firm. This study examines both the incremental and relative usefulness of earnings, cash flow and book value financial statement components using various valuation models. Results indicate that earnings do not provide significant information for valuation of start-ups, but become incrementally informative as firms move into a growth stage. Other financial statement components, particularly cash flow measures, are relatively more value-relevant than earnings in these early stages of a firm's existence. These results have implications for researchers, analysts, investors and management. Journal: Venture Capital Pages: 47-69 Issue: 1 Volume: 5 Year: 2003 Month: 1 X-DOI: 10.1080/136910603200006722 File-URL: http://hdl.handle.net/10.1080/136910603200006722 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:1:p:47-69 Template-Type: ReDIF-Article 1.0 Author-Name: Alf SæTRE Author-X-Name-First: Alf Author-X-Name-Last: SæTRE Title: Entrepreneurial perspectives on informal venture capital Abstract: <title/> Entrepreneurial firms, a major source of new employment in Europe, require risk capital from informal venture capitalists in order to create substantial economic growth. This study surveys the capital-acquisition process from the demand side--that is, from the entrepreneurs' perspective. Twenty semi-structured, qualitative, in-depth interviews, conducted over 2½ years and focusing on the entrepreneur-informal investor relationship, yielded four case studies that are analysed here. The analysis reveals two very different approaches to acquiring informal venture capital. One approach views capital as a scarce resource, the other views it as a commodity. Entrepreneurs who view it as a commodity contend that what makes the capital-acquisition process so difficult is not securing the capital itself, but rather finding investors with the requisite expertise and contacts. This paper proposes the term relevant capital to describe the 'added value' capital that these investors provide, and offers qualitative insights into the content of the informal investor/entrepreneur relationship. Journal: Venture Capital Pages: 71-94 Issue: 1 Volume: 5 Year: 2003 Month: 1 X-DOI: 10.1080/1369106032000062731 File-URL: http://hdl.handle.net/10.1080/1369106032000062731 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:1:p:71-94 Template-Type: ReDIF-Article 1.0 Author-Name: William Bygrave Author-X-Name-First: William Author-X-Name-Last: Bygrave Author-Name: Michael Hay Author-X-Name-First: Michael Author-X-Name-Last: Hay Author-Name: Emily Ng Author-X-Name-First: Emily Author-X-Name-Last: Ng Author-Name: Paul Reynolds Author-X-Name-First: Paul Author-X-Name-Last: Reynolds Title: Executive forum: A study of informal investing in 29 nations composing the Global Entrepreneurship Monitor Abstract: <title/> This study examined informal investment in the 29 nations that participated in the Global Entrepreneurship Monitor (GEM) study in 2001. Investment was tabulated by gender, age of investor and amount invested for the 29 nations combined. Prevalence of opportunity-pull entrepreneurship was correlated with informal investment, entrepreneurial capacity, and perception of start-up opportunities in a subset of 18 GEM nations. In contrast, necessity-push entrepreneurship had no significant correlation with those same variables. Journal: Venture Capital Pages: 101-116 Issue: 2 Volume: 5 Year: 2003 Month: 4 X-DOI: 10.1080/1369106032000097021 File-URL: http://hdl.handle.net/10.1080/1369106032000097021 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:2:p:101-116 Template-Type: ReDIF-Article 1.0 Author-Name: Markku Maula Author-X-Name-First: Markku Author-X-Name-Last: Maula Author-Name: Erkko Autio Author-X-Name-First: Erkko Author-X-Name-Last: Autio Author-Name: Gordon Murray Author-X-Name-First: Gordon Author-X-Name-Last: Murray Title: Prerequisites for the creation of social capital and subsequent knowledge acquisition in corporate venture capital Abstract: <title/> Past research has largely treated inter-organizational social capital as an exogenously determined asset. In this paper, the authors build and test a model on the effects of the initial conditions for the creation and leveraging of social capital in corporate venture capital v - v portfolio firm dyads. Using contemporary survey data from US portfolio firms, it is shown that complementarities and financial incentives constitute important initial conditions for the creation of social interaction and subsequent knowledge acquisition. While extending the understanding of social capital formation, the findings also have important practical implications for technology-based new firms planning their growth and financing strategies. Journal: Venture Capital Pages: 117-134 Issue: 2 Volume: 5 Year: 2003 Month: 4 X-DOI: 10.1080/1369106032000087275 File-URL: http://hdl.handle.net/10.1080/1369106032000087275 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:2:p:117-134 Template-Type: ReDIF-Article 1.0 Author-Name: Enrique Díaz De Leó Author-X-Name-First: Enrique Díaz Author-X-Name-Last: De Leó Author-Name: Paul Guild Author-X-Name-First: Paul Author-X-Name-Last: Guild Title: Using repertory grid to identify intangibles in business plans Abstract: <title/> The assessment of intangibles in business plans by investors is an important factor of recent interest, particularly in the evaluation of early-stage technology-based ventures. On one hand, investors are challenged to properly assess new opportunities. At the same time, entrepreneurs or innovators face the formidable task of communicating what is, sometimes, nothing more than just an 'extraordinary' idea. In such situations, the decision to continue with the due diligence process, and finally to invest, is based frequently on those aspects that are intangible. In an attempt to reveal some of the intangibles assessed by investors and communicated by entrepreneurs, an investigation was conducted using repertory grid, a technique based on personal construct psychology. Five venture capitalists and five entrepreneurs were interviewed. Evidence was found for the importance of intangibles during the investment-decision process of early stage technology-based ventures. For these ventures, the consideration of only tangible criteria is not a guaranteed predictor of success. The repertory grid technique makes a significant contribution to the identification of intangibles assessed by investors and communicated by entrepreneurs. Journal: Venture Capital Pages: 135-160 Issue: 2 Volume: 5 Year: 2003 Month: 4 X-DOI: 10.1080/1369106032000097030 File-URL: http://hdl.handle.net/10.1080/1369106032000097030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:2:p:135-160 Template-Type: ReDIF-Article 1.0 Author-Name: R. P. Oakey Author-X-Name-First: R. P. Author-X-Name-Last: Oakey Title: Funding innovation and growth in UK new technology-based firms: Some observations on contributions from the public and private sectors Abstract: <title/> This paper explores the recent evolution of funding for New Technology-Based Firms (NTBFs) in the UK, with particular concern for the post-1980 period. Special attention is placed upon the relationship between public and private sector funding, and the ways in which these different funding cultures impact upon NTBF development. By citing a number of practical examples, the paper argues that a better integration of public and private sector funding would be to the advantage of all funders, the recipients and the wider economies in which all those involved co-exist. Improved collaboration would create a funding whole, achieved through sympathetic interaction between the public and private sectors, of greater value than the sum of its constituent parts. Journal: Venture Capital Pages: 161-179 Issue: 2 Volume: 5 Year: 2003 Month: 4 X-DOI: 10.1080/1369106032000097049 File-URL: http://hdl.handle.net/10.1080/1369106032000097049 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:2:p:161-179 Template-Type: ReDIF-Article 1.0 Author-Name: Graham Hall Author-X-Name-First: Graham Author-X-Name-Last: Hall Author-Name: Ciwen Tu Author-X-Name-First: Ciwen Author-X-Name-Last: Tu Title: Venture capitalists and the decision to invest overseas Abstract: <title/> An important strategic decision facing venture capitalists is whether to invest overseas. This paper identifies some of the reasons why some choose this route whilst others do not. The paper is based on data generated from a sample drawn from UK venture capitalists operating in 2000. A qualitative response model is employed to analyse the data. The results suggest that the willingness to invest overseas is directly related to the size of venture capital firms (measured by the funds they have available for investment), the number of offices they operate from, the stage of development of their investee ventures, and is inversely related to the length of time in which the venture capitalist had been in operation. The type of ownership of the venture capitalist does not appear to be an influence on the degree of internationalization. Journal: Venture Capital Pages: 181-190 Issue: 2 Volume: 5 Year: 2003 Month: 4 X-DOI: 10.1080/1369106032000097058 File-URL: http://hdl.handle.net/10.1080/1369106032000097058 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:2:p:181-190 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Author-Name: Amparo San José Author-X-Name-First: Amparo Author-X-Name-Last: San José Title: Executive forum: early stage finance and corporate venture—two worlds apart? Abstract: Start-ups and early stage ventures are facing more and more financial constraints. The lack of second round financing substantially reduces the potential of patent applications from spin-offs and other early stage ventures. On the other hand, investing in new companies provides large companies with access to new technologies and future strategic advantages. So why are large companies not prominent in making seed stage investments? Is there any possible action to increase these investments? In order to address these issues, the paper takes a closer look at corporate venture capital, how large companies invest, the size of their investments and importance in the supply chain and what could be done in order to increase their role in seed investments. Journal: Venture Capital Pages: 277-286 Issue: 4 Volume: 5 Year: 2003 Month: 8 X-DOI: 10.1080/1369106032000128440 File-URL: http://hdl.handle.net/10.1080/1369106032000128440 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:4:p:277-286 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Kelly Author-X-Name-First: Peter Author-X-Name-Last: Kelly Author-Name: Michael Hay Author-X-Name-First: Michael Author-X-Name-Last: Hay Title: Business angel contracts: the influence of context Abstract: Relying on agency theory for guidance, a model is developed and empirically tested to examine the influence that various attributes of the contracting parties and of the deal itself can have on the form of the contract adopted between business angels and entrepreneurs. Findings are based on survey responses obtained from 106 UK-based business angels that had completed at least one investment to date. Journal: Venture Capital Pages: 287-312 Issue: 4 Volume: 5 Year: 2003 Month: 8 X-DOI: 10.1080/1369106032000141940 File-URL: http://hdl.handle.net/10.1080/1369106032000141940 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:4:p:287-312 Template-Type: ReDIF-Article 1.0 Author-Name: Stuart Paul Author-X-Name-First: Stuart Author-X-Name-Last: Paul Author-Name: Geoff Whittam Author-X-Name-First: Geoff Author-X-Name-Last: Whittam Author-Name: Jim B Johnston Author-X-Name-First: Jim B Author-X-Name-Last: Johnston Title: The operation of the informal venture capital market in Scotland Abstract: This paper addresses the lack of knowledge about business angels based in Scotland. An understanding of the informal investment market is important given that Scotland has recently achieved devolved powers and business start-ups are a priority of the Scottish Executive. Based upon 140 replies to a survey questionnaire, investment-active angels are profiled in terms of business background and experience, motivation and investing criteria, behaviour and outcomes. Of particular note is the finding that the majority of angels based in Scotland lack experience of small businesses and it is argued that this cannot be helpful in securing deals with entrepreneurs. The paper addresses how entrepreneurs can target angels, the lack of ‘investable’ entrepreneurs, the role of experienced angels, how nascent angels can be encouraged to make their first investment, tax breaks and the search behaviour of angels. Finally, a typology of angels, based on the number of investments made by an individual, is set out. Journal: Venture Capital Pages: 313-335 Issue: 4 Volume: 5 Year: 2003 Month: 8 X-DOI: 10.1080/1369106032000141931 File-URL: http://hdl.handle.net/10.1080/1369106032000141931 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:4:p:313-335 Template-Type: ReDIF-Article 1.0 Author-Name: Roger Sørheim Author-X-Name-First: Roger Author-X-Name-Last: Sørheim Title: The pre-investment behaviour of business angels: a social capital approach Abstract: Using insights from social capital theory, this paper examines the pre-investment behaviour of experienced business angels in Norway. Previous research indicates there are considerable inefficiencies in the informal venture capital market, notably information inefficiencies related to the identification of investment opportunities, and problems associated with the screening or evaluation of new investment proposals. The empirical findings show that an investor's previous track record, to a great extent, determines how they can operate in the informal venture capital market. It is quite rational for individuals who have acquired most of their experience in one specific region to make the overwhelming majority of their investments in the same region. It is this regional track record that gives them a competitive advantage in the informal venture capital market. This reasoning also seems to be valid with regard to individuals with industry specific experience, where the regional track record is ‘replaced’ by an industry specific record. Moreover, these industry specific investors take care of the initial screening themselves, whereas regional investors are predominately generalists who rely more on information provided by their regional networks. The business angels in this study are very concerned with establishing common ground with entrepreneurs and potential co-investors. This establishment of common ground can be viewed as a necessary antecedent for long-term trustworthy relationships. Journal: Venture Capital Pages: 337-364 Issue: 4 Volume: 5 Year: 2003 Month: 8 X-DOI: 10.1080/1369106032000152443 File-URL: http://hdl.handle.net/10.1080/1369106032000152443 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:4:p:337-364 Template-Type: ReDIF-Article 1.0 Author-Name: Dave Valliere Author-X-Name-First: Dave Author-X-Name-Last: Valliere Author-Name: Rein Peterson Author-X-Name-First: Rein Author-X-Name-Last: Peterson Title: Inflating the bubble: examining dot-com investor behaviour Abstract: Findings are presented from a study of the cognitive behaviours of 57 venture capital investors in the early-stage technology sector during the 1998 -- 2001 Internet bubble period. The inductive research methodology was based on open-ended qualitative interviews with investment practitioners, conducted by the lead author who was an investment practitioner during the bubble. The data obtained were used to develop a grounded model of how generally accepted venture capital industry decision-making practices were bypassed and modified by investors competing intensively in an unfamiliar sector with unknown success criteria, which contributed to the creation of the bubble. Insights from prospect theory, attribution theory and cognitive dissonance theory were used to identify the cognitive processes that led through groupthink to the development of a conceptual framework in the industry, similar to what organizational theorist Gareth Morgan has called a Psychic Prison. The study identified four positive feedback loops in the environment surrounding the activities of Internet investors that contributed to the bypassing of generally accepted practices by investors who believed they were behaving rationally. Journal: Venture Capital Pages: 1-22 Issue: 1 Volume: 6 Year: 2003 Month: 9 X-DOI: 10.1080/1369106032000152452 File-URL: http://hdl.handle.net/10.1080/1369106032000152452 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:1-22 Template-Type: ReDIF-Article 1.0 Author-Name: Grant Fleming Author-X-Name-First: Grant Author-X-Name-Last: Fleming Title: Venture capital returns in Australia Abstract: This paper examines the returns to venture capital in Australia. It is hypothesized that returns to venture capital will be associated with the type of venture capital firm (captive or non-captive; specialist or non-specialist), venture capital experience, syndication, duration and exit strategy. Using a sample of 129 venture capital exits between 1992 and 2002, it was found that Australian venture capitalists take only the best firms public, generating higher returns than from other exit strategies. Syndicated investments generate lower returns (after controlling for firm-specific risks), while no difference was found in return profiles on the basis of firm type (captive, specialist or experience) or duration of investment. The results are robust to model specifications that control for stage of investment, industry and year of exit. Journal: Venture Capital Pages: 23-45 Issue: 1 Volume: 6 Year: 2003 Month: 9 X-DOI: 10.1080/1369106042000175573 File-URL: http://hdl.handle.net/10.1080/1369106042000175573 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:23-45 Template-Type: ReDIF-Article 1.0 Author-Name: Anders Isaksson Author-X-Name-First: Anders Author-X-Name-Last: Isaksson Author-Name: Barbara Cornelius Author-X-Name-First: Barbara Author-X-Name-Last: Cornelius Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Author-Name: Sven Junghagen Author-X-Name-First: Sven Author-X-Name-Last: Junghagen Title: Institutional theory and contracting in venture capital: the Swedish experience Abstract: This paper tests the tenets of institutional theory by means of an empirical study of the contractual strategies applied in the Swedish venture capital industry. Venture capitalists differ in, for example, their preferences for early or later stage investments. Some have more experience than others and some are employed by public funds while others work in non-public funds. The sector, however, was expected to be relatively homogeneous due to the small size of the industry and the cultural milieu in which it is located. This homogeneity was tested regarding the use of contractual strategies among venture capitalists in Sweden. Seventy-nine separate contractual covenants were examined in relation to distinctive sector variables, structure, experience and investment preferences. The results indicate that the greatest differences in contractual strategies occur among those with differing investment preferences. There appear to be two distinct venture capital cultures controlling contractual choices in these groups. The public and the non-public sector have limited variations in their contractual choices, although public funds employ slightly more standardized strategies. Little difference was found between the contractual choices made by experienced and inexperienced venture capitalists. The findings generally conform to the outcomes predicted by institutional theory. Journal: Venture Capital Pages: 47-71 Issue: 1 Volume: 6 Year: 2003 Month: 10 X-DOI: 10.1080/1369106042000175582 File-URL: http://hdl.handle.net/10.1080/1369106042000175582 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:47-71 Template-Type: ReDIF-Article 1.0 Author-Name: Stewart Thornhill Author-X-Name-First: Stewart Author-X-Name-Last: Thornhill Author-Name: Guy Gellatly Author-X-Name-First: Guy Author-X-Name-Last: Gellatly Author-Name: Allan Riding Author-X-Name-First: Allan Author-X-Name-Last: Riding Title: Growth history, knowledge intensity and capital structure in small firms Abstract: This paper explores the financial characteristics of successful Canadian small- and medium-sized enterprises (SME). It asks whether industry membership and early growth history play a role in shaping these financial characteristics. Our study reveals a strong correlation between capital structure and knowledge intensity. In contrast, growth histories are not obvious determinants of financial structure. Results also suggest that leverage strategies are more apparent in low-knowledge industries, in firms with higher expectations of future performance, and in businesses with more balanced financial structures. Industry comparisons are based on production activity and knowledge intensity. Growth distinctions are based on the firm's employment and sales history. We evaluate our hypotheses with survey data from a stratified random sample of 2775 Canadian firms. Proportional weighting techniques are utilized in all analyses. Journal: Venture Capital Pages: 73-89 Issue: 1 Volume: 6 Year: 2003 Month: 10 X-DOI: 10.1080/1369106042000175591 File-URL: http://hdl.handle.net/10.1080/1369106042000175591 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:73-89 Template-Type: ReDIF-Article 1.0 Author-Name: Colin M Mason Author-X-Name-First: Colin M Author-X-Name-Last: Mason Author-Name: Richard T Harrison Author-X-Name-First: Richard T Author-X-Name-Last: Harrison Title: Editorial. New issues in venture capital: an introduction to the special issue Abstract: This paper introduces a special issue of <italic>Venture Capital</italic> which comprises a selection of the papers that were presented in the venture capital track at the 48th World Conference of the International Council For Small Business (ICSB) held in Belfast, Northern Ireland in June 2003. The intention of the mini-conference was to provide a forum for papers which explored new issues in venture capital. In our judgement the six papers that we have selected for publication in this special issue are particularly innovative in either their topic, methodology or treatment of the subject matter. This review covers the main themes in the track: (i) the new investment environment; (ii) approaches by venture capitalists to the evaluation of investment opportunities; (iii) the management of investments and investment performance; (iv) the global spread of venture capital; (v) business angels; (vi) the demand for venture capital; (vii) bootstrapping -- making do without venture capital; (viii) women and (no) venture capital Journal: Venture Capital Pages: 95-103 Issue: 2-3 Volume: 6 Year: 2004 Month: 4 X-DOI: 10.1080/1369106042000248653 File-URL: http://hdl.handle.net/10.1080/1369106042000248653 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:95-103 Template-Type: ReDIF-Article 1.0 Author-Name: Carola Jungwirth Author-X-Name-First: Carola Author-X-Name-Last: Jungwirth Author-Name: Petra Moog Author-X-Name-First: Petra Author-X-Name-Last: Moog Title: Selection and support strategies in venture capital financing: high-tech or low-tech, hands-off or hands-on? Abstract: The advantage of specialization in venture capital financing makes the presence of generalist investors perplexing. In order to understand their function, the authors investigate the knowledge resource bases of both generalist and specialist venture capital funds, the types of enterprises they select and their corresponding support strategies. Arguing that differences in strategy can be attributed to differences in knowledge, the authors hypothesize that specialists select high-tech projects; generalists, on the other hand, select low-tech projects. Specialists support ‘hands-off’; generalist support ‘hands-on’. These hypotheses are tested with a dataset of 103 venture capitalists in Austria, Germany and Switzerland. The empirical results from OLS-regressions show a close relationship between knowledge and selection as well as support strategies. These results invite further research on differences in venture capitalists' strategies as they relate to differences in knowledge. Journal: Venture Capital Pages: 105-123 Issue: 2-3 Volume: 6 Year: 2004 Month: 3 X-DOI: 10.1080/1369106042000224703 File-URL: http://hdl.handle.net/10.1080/1369106042000224703 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:105-123 Template-Type: ReDIF-Article 1.0 Author-Name: Jorge Silva Author-X-Name-First: Jorge Author-X-Name-Last: Silva Title: Venture capitalists' decision-making in small equity markets: a case study using participant observation Abstract: Despite significant academic research undertaken in the field of venture capital decision-making process, the dimension and maturity of equity market has not yet been considered as an important contextual factor. Aiming at developing an understanding on how venture capitalists (VCs) select early-stage projects in small equity markets, a pilot study using participant observation technique has been conducted in a Portuguese venture capital firm. The findings indicate that the decision-making process and the criteria used by VCs in this market context differ significantly from those used in the developed equity markets. Regarding the decision-making process as a whole, it appears to be more interactive than usually portrayed in previous models. Moreover, some of the activities take place simultaneously, rather than sequentially. In particular, relevant differences were found in deal origination, deal evaluation and closing phase. Regarding the decision-making criteria applied, the findings of this case study are in accordance to previous studies and suggest that the attention of VCs is very focused on entrepreneur(s). The business idea, its sustainable advantages and growth potential are also considered important but, contrarily to previous literature, financial projections do not seem to play a major role in the selection of early-stage projects. Journal: Venture Capital Pages: 125-145 Issue: 2-3 Volume: 6 Year: 2004 Month: 2 X-DOI: 10.1080/13691060410001675974 File-URL: http://hdl.handle.net/10.1080/13691060410001675974 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:125-145 Template-Type: ReDIF-Article 1.0 Author-Name: Jason Cope Author-X-Name-First: Jason Author-X-Name-Last: Cope Author-Name: Frank Cave Author-X-Name-First: Frank Author-X-Name-Last: Cave Author-Name: Sue Eccles Author-X-Name-First: Sue Author-X-Name-Last: Eccles Title: Attitudes of venture capital investors towards entrepreneurs with previous business failure Abstract: Business failure represents a significant outcome of entrepreneurial activity and yet remains an underdeveloped area of research. This article focuses on the attitudes of venture capitalist (VC) investors towards entrepreneurs with a previous failure experience. It illustrates that VCs recognize the complex, contextual nature of failure and do not necessarily perceive the entrepreneur to be the primary cause of the venture's demise. Consequently, the article differentiates between ‘business’, ‘entrepreneurial’ and ‘venture capitalist’ failure. The article demonstrates that VCs often adopt a tolerant, flexible and open-minded attitude to failure and are keen to understand the circumstances in which it occurred. The majority of the VCs in the study emphasize that their decision to invest in an entrepreneur is not negatively affected to any significant degree by a previous experience of failure. A number of influential factors are presented, such as a high quality concept, which can offset this aspect of the entrepreneur's track record. The article concludes that business failure is not automatically considered a ‘black mark’ by VCs. It is important for entrepreneurs involved in business failure to be aware of these positive and sympathetic attitudes when considering putting forward new proposals to the VC community. Journal: Venture Capital Pages: 147-172 Issue: 2-3 Volume: 6 Year: 2004 Month: 2 X-DOI: 10.1080/13691060410001675965 File-URL: http://hdl.handle.net/10.1080/13691060410001675965 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:147-172 Template-Type: ReDIF-Article 1.0 Author-Name: Tom McKaskill Author-X-Name-First: Tom Author-X-Name-Last: McKaskill Author-Name: K Mark Weaver Author-X-Name-First: K Mark Author-X-Name-Last: Weaver Author-Name: Pat Dickson Author-X-Name-First: Pat Author-X-Name-Last: Dickson Title: Developing an exit readiness index: a research note Abstract: A proactive and viable exit strategy is a key influence on the ability of firms to raise equity capital. Investors in firms with such an exit strategy will improve their prospects of achieving a successful exit. However, the issue of ‘exit readiness’—especially in the context of trade sales, which account for the majority of exits of venture capital-backed firms—has attracted limited attention. Based on interviews with business angels, venture capitalists and others, this paper develops an ‘exit readiness index’ for trade sales that can be used by investors to identify firms that are exit ready and demonstrate to entrepreneurs what is required to build a viable exit strategy. The paper proposes that the ‘exit readiness index’ should be tested on longitudinal panels of start-up and nascent firms in various countries in order to determine its predictive ability. Journal: Venture Capital Pages: 173-179 Issue: 2-3 Volume: 6 Year: 2004 Month: 4 X-DOI: 10.1080/1369106042000227782 File-URL: http://hdl.handle.net/10.1080/1369106042000227782 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:173-179 Template-Type: ReDIF-Article 1.0 Author-Name: Frances M Amatucci Author-X-Name-First: Frances M Author-X-Name-Last: Amatucci Author-Name: Jeffrey E Sohl Author-X-Name-First: Jeffrey E Author-X-Name-Last: Sohl Title: Women entrepreneurs securing business angel financing: tales from the field Abstract: While women-led businesses are the fastest growing segment of venture creation in the US economy, the amount of private equity capital investment they receive is disproportionately small. Informal venture capital, or business angel, investment is as large as venture capital activity, and business angels provide the majority of the critical seed and start-up stage capital. This research explores the investment decision process involving women entrepreneurs and business angels from the perspective of demand. Successful strategies of women entrepreneurs are investigated using in-depth interviews. In particular, pre-investment processes, trust, comprehensiveness, the post-investment relationship and gender are examined. Journal: Venture Capital Pages: 181-196 Issue: 2-3 Volume: 6 Year: 2004 Month: 4 X-DOI: 10.1080/1369106042000223579 File-URL: http://hdl.handle.net/10.1080/1369106042000223579 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:181-196 Template-Type: ReDIF-Article 1.0 Author-Name: Noel J Lindsay Author-X-Name-First: Noel J Author-X-Name-Last: Lindsay Title: Do business angels have an entrepreneurial orientation? Abstract: This research extends existing theory on the entrepreneurial orientation (EO) and the EO-performance relationship of entrepreneurial firms to business angels. Business angels are high net worth individuals who invest their own money in early stage, new entrant, high risk, unlisted entrepreneurial firms. Because of their investment focus, the environments they operate in tend to be dynamic and changing where there is a need for them to be structured organically to respond to uncertainty and change. Underpinning the research is the notion that business angels need to be consummate entrepreneurs to be successful in undertaking their investment activities. The research identified the EO construct as relevant for describing the decision making activities and processes of business angels. Business angels do demonstrate an EO. In addition, all three of the underlying EO dimensions (proactiveness, innovativeness and risk taking) were identified as being related to the profitability-growth performance scale used in this research. Journal: Venture Capital Pages: 197-210 Issue: 2-3 Volume: 6 Year: 2004 Month: 2 X-DOI: 10.1080/13691060420001675983 File-URL: http://hdl.handle.net/10.1080/13691060420001675983 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:197-210 Template-Type: ReDIF-Article 1.0 Author-Name: Annaleena Parhankangas Author-X-Name-First: Annaleena Author-X-Name-Last: Parhankangas Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Title: Responses to psychological contract violations in the venture capitalist-entrepreneur relationship: An exploratory study Abstract: <title/> The purpose of this paper is to describe venture capitalists' responses to psychological contract violations in their relationship to entrepreneurs. In particular, the authors seek to establish a link between the characteristics of a psychological contract violation and the venture capitalist's attitudes and behaviour. They are concerned with four situations conducive to psychological contract violations in a venture capitalist-entrepreneur relationship: (1) a disagreement over the goals or strategies of a portfolio company; (2) incompetence; (3) shirking; and (4) opportunistic behaviour of the entrepreneur. The results show that these four examples of psychological contract violations are an integral part of the venture capitalist-entrepreneur interaction. Faced with these challenges, venture capitalists prefer active behaviours to passive approaches. It was also found that venture capitalists' reactions to unmet expectations are influenced by the degree to which a psychological contract violation is perceived to be voluntary and harmful for the portfolio company. In a similar vein, venture capitalists' attitudes and behaviour are shaped by the extent to which it is possible to improve the impaired relationship. Journal: Venture Capital Pages: 217-242 Issue: 4 Volume: 6 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000258526 File-URL: http://hdl.handle.net/10.1080/1369106042000258526 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:4:p:217-242 Template-Type: ReDIF-Article 1.0 Author-Name: Dirk De Clercq Author-X-Name-First: Dirk Author-X-Name-Last: De Clercq Author-Name: Dimo Dimov Author-X-Name-First: Dimo Author-X-Name-Last: Dimov Title: Explaining venture capital firms' syndication behaviour: A longitudinal study Abstract: <title/> Using a unique methodological approach, this paper examines the factors related to venture capital firms' (VCFs') involvement in syndication. It is argued that VCFs' investment strategies matters in terms of the extent to which VCFs engage in syndication. Several hypotheses pertaining to VCFs' syndication behaviour are tested based on a longitudinal data set of the realized strategies of 200 US-based VCFs over a 12-year period. Overall, support is found for both knowledge-based and financial arguments for why VCFs engage in syndication. Results are discussed and avenues are provided for future research. Journal: Venture Capital Pages: 243-256 Issue: 4 Volume: 6 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000277688 File-URL: http://hdl.handle.net/10.1080/1369106042000277688 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:4:p:243-256 Template-Type: ReDIF-Article 1.0 Author-Name: Hady Farag Author-X-Name-First: Hady Author-X-Name-Last: Farag Author-Name: Ulrich Hommel Author-X-Name-First: Ulrich Author-X-Name-Last: Hommel Author-Name: Peter Witt Author-X-Name-First: Peter Author-X-Name-Last: Witt Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Title: Contracting, monitoring, and exiting venture investments in transitioning economies: A comparative analysis of Eastern European and German markets Abstract: <title/> This paper analyses investment practices in the private equity markets of transitioning economies in Central and Eastern Europe (CEE). Using a proprietary set of survey data and non-parametric tests, the study compares findings for the Czech Republic, Hungary and Poland to those for the more established German private equity market. The analysis also highlights the specificities of early-stage and later-stage investors in truly emerging venture-capital markets. The CEE firms surveyed display investment practices on a par with firms in established private equity markets. The more extensive investment risks faced by CEE private equity firms are largely reflected in their financial contracting and monitoring practices. Several factors hinder the further development of private equity markets in CEE, notably the supply of attractive investment and the lack of viable exit channels other than trade sales. Transformation-related issues impact the private equity markets surveyed only in restricting the level of debt financing used. Journal: Venture Capital Pages: 257-282 Issue: 4 Volume: 6 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000258490 File-URL: http://hdl.handle.net/10.1080/1369106042000258490 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:4:p:257-282 Template-Type: ReDIF-Article 1.0 Author-Name: William Scheela Author-X-Name-First: William Author-X-Name-Last: Scheela Author-Name: Nguyen Van Dinh Author-X-Name-First: Nguyen Author-X-Name-Last: Van Dinh Title: Venture capital in a transition economy: The case of Vietnam Abstract: <title/> This paper presents exploratory case studies of five venture capital firms operating in the emerging and transition economy of Vietnam. Institutional theory is used as the theoretical framework to analyse the development of the venture capital industry in Vietnam. The authors explore the relationship between the lack of fully-developed institutions in Vietnam and the challenges facing venture capitalists in a transition economy. Similarities and differences between US and Vietnamese-based venture capitalist are also identified. Unlike US venture capitalists, it was found that venture capitalists operating in Vietnam must closely monitor their portfolio companies because of undeveloped institutions. The importance of networking with government officials was found to be a significant and unique value-added activity for venture capitalists operating in Vietnam. Differences between venture capitalists operating in transition and developed economies are clearly identified. Journal: Venture Capital Pages: 333-350 Issue: 4 Volume: 6 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000258508 File-URL: http://hdl.handle.net/10.1080/1369106042000258508 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:4:p:333-350 Template-Type: ReDIF-Article 1.0 Author-Name: Sameer Kumar Author-X-Name-First: Sameer Author-X-Name-Last: Kumar Author-Name: Jacky Jamieson Author-X-Name-First: Jacky Author-X-Name-Last: Jamieson Author-Name: Mathew Sweetman Author-X-Name-First: Mathew Author-X-Name-Last: Sweetman Title: Executive forum: Corporate finance in China - challenges and opportunities Abstract: <title/> Financing a business enterprise in China today is still challenging for entrepreneurs. Growing government debt, rising unemployment, substantial urbanization, crumbling state-owned enterprises, a broken banking system and a miniscule number of private enterprises are all hurdles that must be overcome in order for the country to achieve sustainable growth and continue to modernize. This research study focuses on the status of traditional and alternative sources of corporate funding for private business enterprises located in China. The former sources of funding include banks and equity markets and the latter includes venture capital opportunities. Journal: Venture Capital Pages: 351-366 Issue: 4 Volume: 6 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000258517 File-URL: http://hdl.handle.net/10.1080/1369106042000258517 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:4:p:351-366 Template-Type: ReDIF-Article 1.0 Author-Name: Claire Leitch Author-X-Name-First: Claire Author-X-Name-Last: Leitch Author-Name: Frances Hill Author-X-Name-First: Frances Author-X-Name-Last: Hill Title: Special issue: Women and the financing of entrepreneurial ventures Journal: Venture Capital Pages: 367-368 Issue: 4 Volume: 6 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000277697 File-URL: http://hdl.handle.net/10.1080/1369106042000277697 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:6:y:2004:i:4:p:367-368 Template-Type: ReDIF-Article 1.0 Author-Name: Markku Maula Author-X-Name-First: Markku Author-X-Name-Last: Maula Author-Name: Erkko Autio Author-X-Name-First: Erkko Author-X-Name-Last: Autio Author-Name: Gordon Murray Author-X-Name-First: Gordon Author-X-Name-Last: Murray Title: Corporate Venture Capitalists and Independent Venture Capitalists: What do they know, Who do They Know and Should Entrepreneurs Care? Abstract: <title/> There is an established body of research that has examined the value-added provided by venture capitalists for their portfolio companies. More recent work has started to look at the comparable activities of corporate venture capitalists. However, to date, the value-added provided by these two types of investors for their portfolio companies has not been compared systematically. This study undertakes such an evaluation by comparing the social capital-based and knowledge-based forms of value-added provided by independent and corporate venture capitalists to their portfolio firms. Primary data from US technology-based new firms that had received both corporate venture capital and independent venture capital funding is analysed. This study demonstrates that the value-adding contributions of corporate venture capital and independent venture capital investors are different both in their origins and in their consequences. Independent VCs add value in helping raise additional finance, recruiting key employees and professionalizing the organization--early-stage establishment activities we term 'enterprise nurturing'. Corporate venture capitalists are superior in helping the young firm build commercial credibility and capacity, and in providing technological support--growth-focused activities termed 'commerce building'. Importantly, the two forms of value-added appear complementary. It is concluded that it is in the interests of both portfolio companies and their investors that both sources of advice and support are available. Journal: Venture Capital Pages: 3-21 Issue: 1 Volume: 7 Year: 2005 Month: 1 X-DOI: 10.1080/1369106042000316332 File-URL: http://hdl.handle.net/10.1080/1369106042000316332 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:1:p:3-21 Template-Type: ReDIF-Article 1.0 Author-Name: Dodo Zu Knyphausen-Aufseß Author-X-Name-First: Dodo Author-X-Name-Last: Zu Knyphausen-Aufseß Title: Corporate Venture Capital: Who Adds Value? Abstract: <title/> <italic>Corporate venture capital (CVC) is a phenomenon that has received changing levels of attention in the last two decades. To understand the varying performance of CVC activities, it is important to analyse the value added CVC firms provide to investee start-up companies. This analysis in itself is an important contribution to existing literature. This paper argues that different CVC firms rely on different resource bases. Thus, different 'types' of CVC providers can be distinguished. Empirical case studies serve to illustrate these different types. A number of propositions are derived in order to answer the question which of these CVC investors may be best suited to add different kinds of value to the start-up firms. The derived propositions may lead empirical research in the future.</italic> Journal: Venture Capital Pages: 23-49 Issue: 1 Volume: 7 Year: 2005 Month: 1 X-DOI: 10.1080/1369106042000335610 File-URL: http://hdl.handle.net/10.1080/1369106042000335610 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:1:p:23-49 Template-Type: ReDIF-Article 1.0 Author-Name: Christiana Weber Author-X-Name-First: Christiana Author-X-Name-Last: Weber Author-Name: Barbara Weber Author-X-Name-First: Barbara Author-X-Name-Last: Weber Title: Corporate Venture Capital Organizations in Germany Abstract: <title/> This paper analyses the goals, the organizational structures and processes, and the investment criteria that underlie venture strategies in Germany today, using a sample of 20 corporate venture capital organizations (CVCs). The performance of these CVCs is examined and the data are compared with those generated by studies on German independent venture capital organizations (VCs) as well as with European and US CVCs. The study concludes that German CVCs that focus either on financial or on strategic objectives are more successful than those with a mixed approach. Further, CVCs with a strong financial focus seem to be financially--and sometimes also strategically--more successful than CVCs with a strong strategic focus. Journal: Venture Capital Pages: 51-73 Issue: 1 Volume: 7 Year: 2005 Month: 1 X-DOI: 10.1080/1369106042000316350 File-URL: http://hdl.handle.net/10.1080/1369106042000316350 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:1:p:51-73 Template-Type: ReDIF-Article 1.0 Author-Name: Hans Sjögren Author-X-Name-First: Hans Author-X-Name-Last: Sjögren Author-Name: Marcus Zackrisson Author-X-Name-First: Marcus Author-X-Name-Last: Zackrisson Title: The Search for Competent Capital: Financing of High Technology Small Firms in Sweden and USA Abstract: <title/> The pecking order theory states that firms choose financing in the following order: internal finance-debt-equity. However, most of the research has been conducted on larger (publicly-listed) firms. This article presents a unique empirical material on the financing of high technology small firms (HTSFs) in Linköping, Sweden and Santa Clara County, USA. The data reveals how firms are financed and their preferences for different financial sources. Whilst traditional financial theory and pecking order studies assume only three different financial sources (internal financing-debt-equity), this study also considers who the money comes from: venture capitalists, business angels, banks, corporate venture capital, governments, employees or the firms' founders. The paper shows that the pecking order is different for HTSFs than for larger firms. The HTSFs in the study have a preference for equity financing. The paper also shows that there are differences in financing between HTSFs in Linköping and Silicon Valley and that these differences are not explained by differences in pecking order but rather by differences in availability of finance--in other words, the functioning of the financial systems and the competence provided by the various financiers. HTSFs are primarily searching for appropriate financing. Journal: Venture Capital Pages: 75-97 Issue: 1 Volume: 7 Year: 2005 Month: 1 X-DOI: 10.1080/1369106042000335629 File-URL: http://hdl.handle.net/10.1080/1369106042000335629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:1:p:75-97 Template-Type: ReDIF-Article 1.0 Author-Name: Judith J Madill Author-X-Name-First: Judith J Author-X-Name-Last: Madill Author-Name: George H Haines, Jr Author-X-Name-First: George H Author-X-Name-Last: Haines, Jr Author-Name: Allan L RIding Author-X-Name-First: Allan L Author-X-Name-Last: RIding Title: The Role of Angels in Technology SMEs: A Link to Venture Capital Abstract: The presence of angels among early-stage financiers of new technology-based firms should improve chances of eventual venture capital financing. Reasons to expect that firms with private investment would have easier access to venture capital are discussed. This study presents findings that support this expectation. A total of 57% of the firms that had received private investor financing had also received financing from institutional venture capitalists; only 10% of firms that had not received angel financing obtained venture capital. Angel investor financing was a significant explanatory variable (among others) of differences between venture capital recipients and firms that had not received venture capital. It would appear that angels help firms to become more ready for future stages of investment by, among other contributions, being closely involved with the firms in which they invest. They usually provide advice and networking opportunities. They also serve on Boards of Directors and Advisors, and provide hands-on assistance and business intelligence. Angels also fulfill an important accreditation role. Overall, this study provides empirical support for the expectation that involvement of angels can substantially increase the attractiveness of firms to institutional venture capitalists. Journal: Venture Capital Pages: 107-129 Issue: 2 Volume: 7 Year: 2004 Month: 10 X-DOI: 10.1080/1369106042000316341 File-URL: http://hdl.handle.net/10.1080/1369106042000316341 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2004:i:2:p:107-129 Template-Type: ReDIF-Article 1.0 Author-Name: Steven Dolvin Author-X-Name-First: Steven Author-X-Name-Last: Dolvin Title: Venture Capitalist Certification of IPOs Abstract: This article analyses a set of 4606 IPOs from the 1986 to 2000 period, specifically focusing on the certification effect associated with venture capital backing. It concludes that venture capitalists, particularly those of higher quality, are associated with lower issuance costs (both direct and indirect), increased upward price adjustments, and shorter lockup periods, all of which are consistent with a valuable certification role. In addition, it is found that even lower quality venture capitalists perform a certification role; however, it is specific to a set of penny stock (i.e. high information asymmetry) IPOs. Journal: Venture Capital Pages: 131-148 Issue: 2 Volume: 7 Year: 2005 Month: 4 X-DOI: 10.1080/1369106042000335601 File-URL: http://hdl.handle.net/10.1080/1369106042000335601 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:2:p:131-148 Template-Type: ReDIF-Article 1.0 Author-Name: Amparo San José Author-X-Name-First: Amparo Author-X-Name-Last: San José Author-Name: Juan Roure Author-X-Name-First: Juan Author-X-Name-Last: Roure Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Title: Business Angel Academies: Unleashing the Potential for Business Angel Investment Abstract: <italic>Previous research has highlighted the existence of an information problem (information gap) among business angels, mainly due to their desire to keep a low public profile and to the informal character of the market. The creation of business angels' networks was promoted in order to deal with this gap. This approach, however, only partly succeeded in converting the stock of virgin angels into active informal investors. On the basis of the study of a sample of investors attending a business angels' academy, this paper argues that such a conversion can only be significant if the problem is approached from the perspective of their lack of understanding of the investment process. An important source of difficulty in the development and establishment of informal investment projects is the fact that many angels (especially potential angels) lack an adequate understanding of the investment process. They are therefore unable to take advantage of the investment opportunities that might arise. The implication is that there is a need for a new form of intervention: the creation of business angel schools or academies, conceived of as frameworks for the exchange of experiences and closer co-operation.</italic> Journal: Venture Capital Pages: 149-165 Issue: 2 Volume: 7 Year: 2004 Month: 12 X-DOI: 10.1080/13691060500063392 File-URL: http://hdl.handle.net/10.1080/13691060500063392 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2004:i:2:p:149-165 Template-Type: ReDIF-Article 1.0 Author-Name: Dave Valliere Author-X-Name-First: Dave Author-X-Name-Last: Valliere Author-Name: Rein Peterson Author-X-Name-First: Rein Author-X-Name-Last: Peterson Title: Venture Capitalist Behaviours: Frameworks for Future Research Abstract: Much of traditional investment theory is based on risk taking with known parameters. This article looks at a case where the parameters of the risk function are unknown and investors therefore face uncertainty in risk-taking. We provide a theoretical background to develop alternative cognitive and economic models of investor behaviour. Using a previously developed descriptive model of investor behaviour grounded in interviews with 57 venture capitalists during the internet bubble, we apply theoretical constructs from prospect theory, signalling theory, regret theory, and career concerns and reputation theory to provide deeper insights into different investor behaviours observed empirically. The different perspectives on investor utility offered by the theories developed in this paper serve to explain the unique model components that emerged during the bubble period. No single model or theory was sufficient by itself. Relationships are also suggested between the governance existing with specific investor classes, and the degree to which those investors exhibit the cognitions we model. We conclude that the bubble was a degenerate case that resulted from the failure of VCs with limited experience to follow accepted VC investment practices and governance, and from predictable human nature and weaknesses. This article concludes with theory-based directions for future research. Journal: Venture Capital Pages: 167-183 Issue: 2 Volume: 7 Year: 2005 Month: 2 X-DOI: 10.1080/13691060500088076 File-URL: http://hdl.handle.net/10.1080/13691060500088076 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:2:p:167-183 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Title: Review Essay: Global Venture Capital Transactions Abstract: This article reviews a timely legal book on Global Venture Capital Transactions in the context of academic entrepreneurial finance work on venture capital contracting. Legal scholarship in Global Venture Capital Transactions is provided for 12 countries (Austria, Belgium, Canada, Finland, Germany, Hong Kong, Hungary, India, Italy, the Netherlands, Taiwan and the US). This paper relates the legal scholarship in Global Venture Capital Transactions to empirical evidence from entrepreneurial finance scholarship on venture capital contracting. Contracting data from cross-border financings of US VCs financing Canadian entrepreneurs are also introduced in this article to illustrate the role of the law in venture capital transactions. Journal: Venture Capital Pages: 185-201 Issue: 2 Volume: 7 Year: 2005 Month: 1 X-DOI: 10.1080/13691060500061289 File-URL: http://hdl.handle.net/10.1080/13691060500061289 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:2:p:185-201 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Title: Editorial introduction: Managing growth -- the role of private equity Journal: Venture Capital Pages: 205-207 Issue: 3 Volume: 7 Year: 2005 Month: 9 X-DOI: 10.1080/13691060500337689 File-URL: http://hdl.handle.net/10.1080/13691060500337689 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:3:p:205-207 Template-Type: ReDIF-Article 1.0 Author-Name: Simon Barnes Author-X-Name-First: Simon Author-X-Name-Last: Barnes Author-Name: Vanessa Menzies Author-X-Name-First: Vanessa Author-X-Name-Last: Menzies Title: Investment into venture capital funds in Europe: An exploratory study Abstract: <title>Abstract Insight into the flow of capital into venture capital (VC) funds is fundamental to our understanding of the overall flow of capital into entrepreneurial ventures. To understand the processes and criteria utilized by limited partners (LPs) in the selection of the VC funds in which they invest we studied 21 European fund-of-fund investment management firms that actively invest in VC funds. We have demonstrated that such LPs utilize structured selection processes and criteria that are comparable to those used by VCs themselves, but with important differences. Notably, we found that LPs build early consensus within the investment team via a stage we have termed ratification. In selecting VCs, quantitative measures of reputation via historical performance are important, consistent with previous findings, but we found that reputation also captures opinions from entrepreneurs, other LPs and other VCs. We found that nurturing informal relationships outside the formal limited partnership agreement is an important component of LPs' decisions to invest and that LPs may pre-allocate capital to VCs with whom a relationship exists already. We conclude that early relationship building with potential LPs is an essential prerequisite for VCs aiming to raise a first fund. Journal: Venture Capital Pages: 209-226 Issue: 3 Volume: 7 Year: 2005 Month: 7 X-DOI: 10.1080/13691060500258919 File-URL: http://hdl.handle.net/10.1080/13691060500258919 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:3:p:209-226 Template-Type: ReDIF-Article 1.0 Author-Name: Markus M. Mäkelä Author-X-Name-First: Markus M. Author-X-Name-Last: Mäkelä Author-Name: Markku V. J. Maula Author-X-Name-First: Markku V. J. Author-X-Name-Last: Maula Title: Cross-border venture capital and new venture internationalization: An isomorphism perspective Abstract: Abstract Many of the fastest growing global ventures are backed by cross-border venture capitalists. However, the role of foreign investors in internationalization has not been examined in prior research. To address this gap, we carried out a multiple case study to produce a grounded theory of the effects of foreign investors in new venture internationalization. Our findings suggest that foreign venture capitalists located in a venture's target market of internationalization can be valuable for the venture by legitimizing the unknown new venture in that market. However, foreign investors tend to drive portfolio companies towards their home markets, and the benefits may turn into disadvantages if the target market differs from the home markets of the foreign investors. Journal: Venture Capital Pages: 227-257 Issue: 3 Volume: 7 Year: 2005 Month: 7 X-DOI: 10.1080/13691060500258877 File-URL: http://hdl.handle.net/10.1080/13691060500258877 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:3:p:227-257 Template-Type: ReDIF-Article 1.0 Author-Name: Teresa Hogan Author-X-Name-First: Teresa Author-X-Name-Last: Hogan Author-Name: Elaine Hutson Author-X-Name-First: Elaine Author-X-Name-Last: Hutson Title: What factors determine the use of venture capital? evidence from the Irish software sector Abstract: Abstract We address the venture capital financing issue from the firm's perspective. Using survey data for 110 new technology-based firms (NTBFs) in the Irish software sector, we assess the extent to which five human capital and three other variables determine the firm's use of venture capital. Education of the lead founder to degree level is the only significant human capital variable, and it is directly related to the likelihood of being venture capital-backed. Venture capital-backed firms have significantly higher start-up costs, and their founders are less averse to loss of control than non-venture capital-backed firms. We conclude that the use of venture capital is dictated largely by the willingness of founders to relinquish control. Journal: Venture Capital Pages: 259-283 Issue: 3 Volume: 7 Year: 2005 Month: 7 X-DOI: 10.1080/13691060500268249 File-URL: http://hdl.handle.net/10.1080/13691060500268249 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:3:p:259-283 Template-Type: ReDIF-Article 1.0 Author-Name: Dirk De Clercq Author-X-Name-First: Dirk Author-X-Name-Last: De Clercq Author-Name: Vance H. Fried Author-X-Name-First: Vance H. Author-X-Name-Last: Fried Title: Executive forum: How entrepreneurial company performance can be improved through venture capitalists' communication and commitment Abstract: Abstract We examine how venture capital firms (VCFs) can improve the performance of their portfolio companies (PFCs). We focus on the role of the communication between the VCF and PFC as well as within the VCF, and the role of the VCF's commitment to the PFC. We find that both communication and commitment have an important impact on VCFs' value-added contributions, and subsequently on entrepreneurial company performance. We show how the study's results can help practitioners to develop and assist successful entrepreneurial ventures. Journal: Venture Capital Pages: 285-294 Issue: 3 Volume: 7 Year: 2005 Month: 7 X-DOI: 10.1080/13691060500258943 File-URL: http://hdl.handle.net/10.1080/13691060500258943 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:3:p:285-294 Template-Type: ReDIF-Article 1.0 Author-Name: Annaleena Parhankangas Author-X-Name-First: Annaleena Author-X-Name-Last: Parhankangas Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Author-Name: D. Gordon Smith Author-X-Name-First: D. Gordon Author-X-Name-Last: Smith Title: Experience, contractual covenants and venture capitalists' responses to unmet expectations Abstract: The focus of this paper is on the role of experience in situations where venture capital contracts are drafted and applied. Based on a study of 78 Nordic venture capitalists, it was found that investors with venture capital and business experience include more protective clauses in venture capital contracts than their inexperienced colleagues. However, experienced investors were less likely to exercise these rights. The only deviation from this pattern was prior exposure to conflicts, prompting the use of contractual rights and discouraging compromise and patience in problematic situations with entrepreneurs. It also seems that the content of the contract shapes investors' reactions to unmet expectations: control rights tend to promote ‘relational’ approaches to solving problems emanating in the venture capitalist-entrepreneur relationship, whereas exit rights seem to decrease the venture capitalist's willingness to compromise in the face of unmet expectations caused by the entrepreneur. Journal: Venture Capital Pages: 297-318 Issue: 4 Volume: 7 Year: 2005 Month: 3 X-DOI: 10.1080/13691060500120929 File-URL: http://hdl.handle.net/10.1080/13691060500120929 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:4:p:297-318 Template-Type: ReDIF-Article 1.0 Author-Name: Florence Eid Author-X-Name-First: Florence Author-X-Name-Last: Eid Title: Institutional complementarities and entrepreneurial finance in emerging markets: Evidence from the Middle East and North Africa Abstract: Abstract The challenge today for the economies of the Middle East North Africa (MENA) region is to leverage the opportunity from increased liquidity, invest in new job creation and nurture key sectors for diversified, sustainable growth. This article shows how financing entrepreneurship is a promising path in this direction, and highlights the opportunities and challenges. This paper does not seek to propose a comprehensive job creation strategy, but to outline steps necessary to reinforce the potential role that entrepreneurial finance can play in job creation, show evidence of success along these lines, and point to policy steps that can be taken in this direction. This work draws on recent developments in organization economics to develop the notion of institutional complementarities and illustrate its importance. Journal: Venture Capital Pages: 319-341 Issue: 4 Volume: 7 Year: 2005 Month: 8 X-DOI: 10.1080/13691060500348843 File-URL: http://hdl.handle.net/10.1080/13691060500348843 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:4:p:319-341 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Wiltbank Author-X-Name-First: Robert Author-X-Name-Last: Wiltbank Title: Investment practices and outcomesof informal venture investors Abstract: Abstract This study explores a model of venture investing developed from the literature on formal venture capital research in the setting of angel investing in the USA. The model explores the role of venture stage, due diligence, deal flow, co-investing and post investment participation on the distribution of returns to angel investors. Doing so directly addresses an interesting question regarding the extent to which formal venture capital practices are appropriate and effective in the typical angel investment setting. In the process, results from the first relatively large-scale study of angel investor outcomes in the USA are reported and related to earlier findings for UK angel investors. Journal: Venture Capital Pages: 343-357 Issue: 4 Volume: 7 Year: 2005 Month: 8 X-DOI: 10.1080/13691060500348876 File-URL: http://hdl.handle.net/10.1080/13691060500348876 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:4:p:343-357 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Title: Executive forum: Seven ways to stimulate business angels' investments Abstract: Government policy to stimulate growth, innovation and especially the creation of new enterprises is rather focused on access to finance mainly through increasing the supply of capital. As formal venture capitalists are moving towards larger deals and shifting their investments to a later stage of development, creating a ‘second’ equity gap, business angels become more important in the financing of seed, early stage and second round phases. Government policy to stimulate financing should hence be considered as a priority. However, policies have to be focused both on the supply side and the demand side and combined with a cultural change. Government should look at innovative ways to stimulate business angel financing rather than coping with market failures by bureaucratic subsidy schemes. The paper identifies seven ways to stimulate business angel investment. Coping with the second equity gap can mainly happen by stimulating syndication and by setting up co-investment schemes. Investor readiness, corporate orientation, business angel networks, business angel academies and the integrated finance concept can be considered as key concepts in coping with the information asymmetry problem. Journal: Venture Capital Pages: 359-371 Issue: 4 Volume: 7 Year: 2005 Month: 3 X-DOI: 10.1080/13691060500120853 File-URL: http://hdl.handle.net/10.1080/13691060500120853 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:4:p:359-371 Template-Type: ReDIF-Article 1.0 Author-Name: Diana Heger Author-X-Name-First: Diana Author-X-Name-Last: Heger Author-Name: Andreas Fier Author-X-Name-First: Andreas Author-X-Name-Last: Fier Author-Name: Gordon Murray Author-X-Name-First: Gordon Author-X-Name-Last: Murray Title: Review Essay: Regional Venture Capital Policy: UK and Germany Compared1 Abstract: The government has become an important ‘player’ in the provision of early-stage, venture capital finance to nascent and growing businesses. Public funds have been invested by government agencies both directly to client firms and indirectly via investment in the funds of existing venture capital organisations. With the demise of technology stocks post 2000, governments have felt the need to become more involved in the provision of early-stage finance as private investors have increasingly withdrawn from equity markets that have produced unattractive longer-term returns to technology investments. Europe is in the forefront of designing programmes by which the state may intervene to address allegedly supply-side failures in the market for risk capital. Martin et al. (2003) analyse the regional Venture Capital policies of the UK and Germany reviewing the interactions between central governments and regional authorities. They conclude that there are significant regional venture capital gaps in both countries particularly at the earliest stages of investment. In this review, the major findings of their scientific study, key policy implications and future research implications are discussed. Journal: Venture Capital Pages: 373-383 Issue: 4 Volume: 7 Year: 2005 Month: 4 X-DOI: 10.1080/13691060500138756 File-URL: http://hdl.handle.net/10.1080/13691060500138756 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:7:y:2005:i:4:p:373-383 Template-Type: ReDIF-Article 1.0 Author-Name: Claire M. Leitch Author-X-Name-First: Claire M. Author-X-Name-Last: Leitch Author-Name: Frances M. Hill Author-X-Name-First: Frances M. Author-X-Name-Last: Hill Title: Guest editorial: Women and the financing of entrepreneurial ventures: More pieces for the Jigsaw Abstract: Abstract This paper provides an overview of current research into the financing of women-owned/led ventures and identifies specific issues requiring further investigation, as well as possible future research directions. Topics covered by current research are divided, for discussion, into five broad categories, namely the characteristics and behaviours of women business owners; the characteristics of their ventures; financial strategies adopted and business decision-making; the relationships between those seeking finance and potential suppliers; and the impact of gender on women's ability to raise finance. In relation to future research, the authors highlight, among other things, the need for: research designs that capture the heterogeneity of women business owners and their ventures; in addition to comparative studies, investigations that give ‘voice’ to women's experiences (of seeking and supplying finance) in their own right; sound theoretical and conceptual foundations and contributions to theory building; more longitudinal studies; holism, inclusivity and heterogeneity in research into the financing of women-owned/led businesses. Journal: Venture Capital Pages: 1-14 Issue: 1 Volume: 8 Year: 2005 Month: 12 X-DOI: 10.1080/13691060600555321 File-URL: http://hdl.handle.net/10.1080/13691060600555321 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:1:p:1-14 Template-Type: ReDIF-Article 1.0 Author-Name: Candida G. Brush Author-X-Name-First: Candida G. Author-X-Name-Last: Brush Author-Name: Nancy M. Carter Author-X-Name-First: Nancy M. Author-X-Name-Last: Carter Author-Name: Elizabeth J. Gatewood Author-X-Name-First: Elizabeth J. Author-X-Name-Last: Gatewood Author-Name: Patricia G. Greene Author-X-Name-First: Patricia G. Author-X-Name-Last: Greene Author-Name: Myra M. Hart Author-X-Name-First: Myra M. Author-X-Name-Last: Hart Title: The use of bootstrapping by women entrepreneurs in positioning for growth Abstract: Abstract The number of women entrepreneurs is rising rapidly and many are creating substantial businesses. For most women-led ventures, growth is funded by personal investment and debt, although a small percentage draw on private equity investment to fuel high growth. Of those that seek growth, not only do they face higher obstacles in obtaining capital, but little is known about ways they position ventures for growth. This paper addresses the question: ‘How do women develop financing strategies to prove the business concept, meet early stage milestones, and demonstrate to external investors the value and potential of their businesses?’ Data are drawn from phone interviews with 88 US female entrepreneurs seeking an equity investment to grow their businesses. The analysis examines the correspondence between bootstrapping and stage of business development. Results show significant differences in the use of bootstrap options utilized by women-led ventures depending on stage of business development. Companies that have not achieved sales were more likely to emphasize bootstrapping to reduce labour, while those companies with greater sales were more likely to minimize cost of operations. Implications for future research and education are suggested. Journal: Venture Capital Pages: 15-31 Issue: 1 Volume: 8 Year: 2006 Month: 10 X-DOI: 10.1080/13691060500433975 File-URL: http://hdl.handle.net/10.1080/13691060500433975 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:1:p:15-31 Template-Type: ReDIF-Article 1.0 Author-Name: John Watson Author-X-Name-First: John Author-X-Name-Last: Watson Title: External funding and firm growth: Comparing female- and male-controlled SMEs Abstract: Abstract Previous research suggests a lack of external funding opportunities might inhibit the growth of many small and medium enterprises (SMEs), particularly female-controlled SMEs. However, the existing empirical research on this issue is extremely limited. The aim of this study, therefore, is to gain a better understanding of the relationship between SME growth and external funding and, in particular, to determine if there are any significant differences between female- and male-controlled SMEs. The study is based on a large (2 367 SMEs) highly representative longitudinal (four-year) database provided by the Australian Bureau of Statistics. The results indicate that female-controlled SMEs have relatively lower levels of external funding than their male counterparts, with the difference being greater in older compared to younger firms. Further, the analysis suggests that pecking order theory, rather than bank discrimination, might be the primary cause of this difference. However, the results also indicate that the relatively lower levels of external funding in female-controlled SMEs does not appear to be inhibiting their growth (relative to male-controlled SMEs). The results suggest that profitability is the most significant determinant of firm growth. Journal: Venture Capital Pages: 33-49 Issue: 1 Volume: 8 Year: 2005 Month: 10 X-DOI: 10.1080/13691060500433512 File-URL: http://hdl.handle.net/10.1080/13691060500433512 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:1:p:33-49 Template-Type: ReDIF-Article 1.0 Author-Name: Monica Zimmerman Treichel Author-X-Name-First: Monica Zimmerman Author-X-Name-Last: Treichel Author-Name: Jonathan A. Scott Author-X-Name-First: Jonathan A. Author-X-Name-Last: Scott Title: Women-Owned businesses and access to bank credit: Evidence from three surveys since 1987 Abstract: Abstract Women-owned businesses are often thought to face difficulties in applying for and securing bank loans (Schwartz, 1979; Riding and Swift, 1990; Buttner and Rosen, 1992; Fabowale et al., 1995; Haines et al., 1999; Coleman, 2000). While there may always be individual instances of difficulties with credit availability that might receive the attention of the media, the more important issue—especially given the increasing contribution of women-owned business to growth in the US economy, is whether women-owned businesses face any systemic, non-economic discrimination in applying for credit. We test three questions related to the success of women-owned businesses in accessing commercial bank financing. First, are women-owned businesses less likely to apply for bank loans than businesses owned by men? Second are women-owned businesses more likely to be turned down in their most recent loan application? And finally, if approved on their most recent loan application, are they more likely to receive a smaller loan? We found gender to be related to the application for bank loans as well as the size of the loans but not to the frequency of turndowns. These findings may be due to an omitted variable that could capture women's concerns about maintaining control over their business. Journal: Venture Capital Pages: 51-67 Issue: 1 Volume: 8 Year: 2005 Month: 9 X-DOI: 10.1080/13691060500453726 File-URL: http://hdl.handle.net/10.1080/13691060500453726 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:1:p:51-67 Template-Type: ReDIF-Article 1.0 Author-Name: Colm O'Gorman Author-X-Name-First: Colm Author-X-Name-Last: O'Gorman Author-Name: Siri Terjesen Author-X-Name-First: Siri Author-X-Name-Last: Terjesen Title: Financing the Celtic Tigress: Venture financing and informal investment in Ireland Abstract: Abstract This study explores gender differences in entrepreneurship and informal investment in Ireland, a country with one of the lowest rates of female entrepreneurship in the developed world. Females in Ireland are less likely than males to be engaged in either the demand for (as entrepreneurs), or the supply of (as informal investors), entrepreneurial finance. Using Global Entrepreneurship Monitor data from a telephone survey of nearly 6 000 individuals, we present a comparative analysis of 73 female and 172 male nascent entrepreneurs, and 40 female and 91 male informal investors. We find no differences in the planned absolute financial capitalization of new ventures of female and male nascent entrepreneurs or in the investments made by female and male informal investors. We compare the full sample (from which we identified the nascent entrepreneurs) and find that females, when compared to males, are less likely to report perceiving opportunities, less likely to perceive they have the skills and knowledge required to start a business, and are less likely to know a recent entrepreneur. We argue that this might suggest that there may be less demand for start-up capital from females. We conclude by suggesting that policies that focus narrowly on the provision of finance to female entrepreneurs may have limited impact on the levels of female entrepreneurial activity. Journal: Venture Capital Pages: 69-88 Issue: 1 Volume: 8 Year: 2005 Month: 9 X-DOI: 10.1080/13691060500453742 File-URL: http://hdl.handle.net/10.1080/13691060500453742 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:1:p:69-88 Template-Type: ReDIF-Article 1.0 Author-Name: Claire M. Leitch Author-X-Name-First: Claire M. Author-X-Name-Last: Leitch Author-Name: Frances M. Hill Author-X-Name-First: Frances M. Author-X-Name-Last: Hill Title: Guest editorial: Women and the financing of entrepreneurial ventures: More pieces for the Jigsaw Abstract: Abstract This paper provides an overview of five articles which comprise the second part of the special issue on women and the financing of entrepreneurial ventures, and identifies specific issues requiring further investigation, as well as possible future research directions. Topics covered by these articles include: the characteristics and behaviours of women business owners; the characteristics of their ventures; financial strategies adopted and business decision-making; the relationships between those seeking finance and potential suppliers; and the impact of gender on women's ability to raise finance. In relation to future research, the authors highlight, among other things, the need for: research designs which capture the heterogeneity of women business owners and their ventures; in addition to comparative studies, investigations which give ‘voice’ to women's experiences (of seeking and supplying finance) in their own right; sound theoretical and conceptual foundations; holism, inclusivity and heterogeneity in research into the financing of women owned/led businesses. Journal: Venture Capital Pages: 89-92 Issue: 2 Volume: 8 Year: 2005 Month: 12 X-DOI: 10.1080/13691060600572375 File-URL: http://hdl.handle.net/10.1080/13691060600572375 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:2:p:89-92 Template-Type: ReDIF-Article 1.0 Author-Name: Pia Arenius Author-X-Name-First: Pia Author-X-Name-Last: Arenius Author-Name: Erkko Autio Author-X-Name-First: Erkko Author-X-Name-Last: Autio Title: Financing of small businesses: Are Mars and Venus more alike than different? Abstract: Abstract The purpose of our study is to contribute to an improved understanding of how women business owners finance their businesses and whether usage of financing and bank shopping patterns vary by gender. Our findings reveal more similarities than differences between women and men business owners in business financing. The only difference we find is that women-owned businesses had been more likely to have obtained financing from relatives than men-owned businesses. Among the women business owners we find that home-based businesses appear to use less financial services than businesses located outside the home. Journal: Venture Capital Pages: 93-107 Issue: 2 Volume: 8 Year: 2005 Month: 10 X-DOI: 10.1080/13691060500433793 File-URL: http://hdl.handle.net/10.1080/13691060500433793 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:2:p:93-107 Template-Type: ReDIF-Article 1.0 Author-Name: Tatiana S. Manolova Author-X-Name-First: Tatiana S. Author-X-Name-Last: Manolova Author-Name: Ivan M. Manev Author-X-Name-First: Ivan M. Author-X-Name-Last: Manev Author-Name: Nancy M. Carter Author-X-Name-First: Nancy M. Author-X-Name-Last: Carter Author-Name: Bojidar S. Gyoshev Author-X-Name-First: Bojidar S. Author-X-Name-Last: Gyoshev Title: Breaking the family and friends' circle: Predictors of external financing usage among men and women entrepreneurs in a transitional economy Abstract: Abstract This study looks at the differential effects of men and women entrepreneurs' human capital and network diversity on the likelihood of using external sources of financing (sources other than personal savings, family and friends) in the context of a transitional economy. Moderated logistical regression models using survey data from men and women new venture owners in Bulgaria (n = 555) suggest the likelihood of using external sources of financing is positively and significantly associated with the diversity of the entrepreneur's social network. Further, this effect is moderated by gender, suggesting that men make a better use of their social networks to secure sources of external financing. Implications for managerial practice and public policy are discussed. Journal: Venture Capital Pages: 109-132 Issue: 2 Volume: 8 Year: 2005 Month: 10 X-DOI: 10.1080/13691060500434072 File-URL: http://hdl.handle.net/10.1080/13691060500434072 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:2:p:109-132 Template-Type: ReDIF-Article 1.0 Author-Name: Christina Constantinidis Author-X-Name-First: Christina Author-X-Name-Last: Constantinidis Author-Name: Annie Cornet Author-X-Name-First: Annie Author-X-Name-Last: Cornet Author-Name: Simona Asandei Author-X-Name-First: Simona Author-X-Name-Last: Asandei Title: Financing of women-owned ventures: The impact of gender and other owner -and firm-related variables Abstract: Abstract While women-owned ventures represent an increasing proportion of new businesses in most western countries, most of them have particular financing patterns and encounter barriers in their access to financing. Recent research on the question argues that barriers to financing are mainly dependent on factors other than gender, such as owner- and firm-related characteristics. This quantitative and qualitative study, through descriptive statistics and interview analysis, examines the relationship between financing patterns and barriers and gender from the woman entrepreneur's viewpoint. It explores the behaviours and representations of women entrepreneurs towards financing, and considers to what extent the women see their own approaches as being different from those of men. Our study suggests that a gender effect still exists, and tries to identify its location and the corresponding implications for further research and action. Journal: Venture Capital Pages: 133-157 Issue: 2 Volume: 8 Year: 2006 Month: 1 X-DOI: 10.1080/13691060600572557 File-URL: http://hdl.handle.net/10.1080/13691060600572557 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:2:p:133-157 Template-Type: ReDIF-Article 1.0 Author-Name: Frances M. Hill Author-X-Name-First: Frances M. Author-X-Name-Last: Hill Author-Name: Claire M. Leitch Author-X-Name-First: Claire M. Author-X-Name-Last: Leitch Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Title: ‘Desperately seeking finance?’ The demand for finance by women-owned and -led businesses Abstract: Abstract The study reported here addresses some issues on gender, entrepreneurship and finance that have been identified as problematic in the literature. For example, much of the research to date is based on the assumption of entrepreneurship as male entrepreneurship; few studies have controlled for structural characteristics that may impact on the relationship between owner gender and a venture's ability to raise finance; and women are less likely than men to seek growth and external financing. Through the conduct of in-depth semi-structured interviews, an attempt has been made to give ‘voice’ to women's intrinsically interesting experiences as the enactment of a situated practice, and not just in comparison with the assumed norm of male entrepreneurial activity. The findings suggest that when variables such as individual and firm characteristics are controlled for, generalizations found in the literature may not be supported. Further, the paper highlights that neither women entrepreneurs nor their businesses are homogeneous in nature and that greater heterogeneity in the study of female entrepreneurship in general, and access to finance in particular, is required. Journal: Venture Capital Pages: 159-182 Issue: 2 Volume: 8 Year: 2005 Month: 12 X-DOI: 10.1080/13691060600555347 File-URL: http://hdl.handle.net/10.1080/13691060600555347 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:2:p:159-182 Template-Type: ReDIF-Article 1.0 Author-Name: Megan K. Blake Author-X-Name-First: Megan K. Author-X-Name-Last: Blake Title: Gendered lending: Gender, context and the rules of business lending Abstract: Abstract Three existing areas of research activity are addressed: (1) the local gendering of entrepreneurship; (2) gendered relationship between institutions and resource mobilization in place; and (3) gendered spaces of engagement. Looking through the lens of geography, a case study involving interview data from loan officers in Worcester, Massachusetts in the US are used to examine how financial institutions and the perceptions of loan officers create differential access to financial resources for women entrepreneurs. The paper finds that loan officers localize the interconnections between lending rules and institutional structure to collectively inform a landscape of resource availability for women starting businesses. The paper confirms the notion that lending is gendered but the effects of this are spatially variable, which has implications for industry standard advice regarding the best lenders for business owners. Journal: Venture Capital Pages: 183-201 Issue: 2 Volume: 8 Year: 2005 Month: 9 X-DOI: 10.1080/13691060500433835 File-URL: http://hdl.handle.net/10.1080/13691060500433835 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:2:p:183-201 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph H. Badino Author-X-Name-First: Joseph H. Author-X-Name-Last: Badino Author-Name: Chiu-Chiang Hu Author-X-Name-First: Chiu-Chiang Author-X-Name-Last: Hu Author-Name: Chih-Young Hung Author-X-Name-First: Chih-Young Author-X-Name-Last: Hung Title: Models of Taiwanese venture capital activity and paths for the future Abstract: Abstract The Taiwanese venture capital industry provides an intriguing study. The primary objective of this paper is to present a general overview of the industry that captures the realities of Taiwanese venture capitalists' everyday business activities while explaining issues and trends through historical analysis and discussions of future possibilities. Utilizing statistical information, previous research, and extensive interviews with the island's venture capitalists, we discuss the emergence of the four current models of venture capital activity in Taiwan—financial subsidiary, industrial subsidiary, independent and associatecompanies. This leads to an introduction of the four paths most commonly cited by Taiwanese VCs as roads to future growth: new industries, new markets, the bridge proposition and the real VC. Each of these paths provides a springboard for tackling deeper issues the industry has wrestled with and will continue to wrestle with, including: its relationship with the island's core industries, its ability to successfully operate in foreign markets, the value of potential cross-Pacific synergies, and the value proposition for the variety of business services Taiwanese VCs provide. We conclude with a discussion on the fate of the island's innovation system, specifically the potential for Taiwan to strengthen its new-product innovation capacity and the future of professionalism in the Taiwanese VC industry. Journal: Venture Capital Pages: 203-226 Issue: 3 Volume: 8 Year: 2005 Month: 10 X-DOI: 10.1080/13691060500433678 File-URL: http://hdl.handle.net/10.1080/13691060500433678 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:3:p:203-226 Template-Type: ReDIF-Article 1.0 Author-Name: Cécile Carpentier Author-X-Name-First: Cécile Author-X-Name-Last: Carpentier Author-Name: Jean-Marc Suret Author-X-Name-First: Jean-Marc Author-X-Name-Last: Suret Title: Some evidence of the external financing costs of new technology-based firms in Canada Abstract: Abstract This exploratory study attempts to estimate the external financing costs (EFCs) for a sample of new technology-based firms (NTBFs). A large body of literature describes the constraints these companies face when trying to obtain outside equity from venture capitalists or non-institutional investors. The theory explains some of these difficulties by the prevalence of information asymmetry, agency costs and moral hazard problems. For NTBFs, these phenomena cause the search for outside equity to be a time-consuming, costly process: the EFCs should thus be considerable, but are a largely unexplored aspect of the small business financing problem. We propose an estimation of these EFCs. Some of these costs are not reported in the financial statements and can be determined only through a field survey and case analyses. In this study, we identify the elements that generate the EFCs and estimate the time frames and costs associated with 18 financing rounds undertaken by 12 NTBFs in Canada. We show that these costs are indeed substantial and heavily penalize small companies, especially during the initial financing round and prior to the commercialization phase. Based on our initial propositions and observations, we conclude that the EFCs are higher for the first round of financing, for companies that have not reached the commercialization stage, and are lower as gross proceeds increase. Journal: Venture Capital Pages: 227-252 Issue: 3 Volume: 8 Year: 2005 Month: 12 X-DOI: 10.1080/13691060600748421 File-URL: http://hdl.handle.net/10.1080/13691060600748421 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:3:p:227-252 Template-Type: ReDIF-Article 1.0 Author-Name: Gabriele Morandin Author-X-Name-First: Gabriele Author-X-Name-Last: Morandin Author-Name: Massimo Bergami Author-X-Name-First: Massimo Author-X-Name-Last: Bergami Author-Name: Richard P. Bagozzi Author-X-Name-First: Richard P. Author-X-Name-Last: Bagozzi Title: The hierarchical cognitive structure of entrepreneur motivation toward private equity financing Abstract: Abstract This research investigates the motivation of 91 Italian entrepreneurs for engaging in private equity financing. The laddering methodology is used to uncover cognitive schemas of entrepreneurs consisting of a structure of interconnected motives organized in a hierarchy. Means -- end chain theory, the laddering technique, and principles from network analysis are used to interpret the schemas. The individual motives and connections among motives provide insights into why entrepreneurs make the decisions that they do and suggest practical implications for strategic decisions, everyday management and policy. The overall approach and results of this study differ fundamentally from traditional financial and business strategy points of view on decision making by entrepreneurs in that actual thinking processes, values and goals of managers are investigated to explain their choices and actions. Journal: Venture Capital Pages: 253-271 Issue: 3 Volume: 8 Year: 2006 Month: 1 X-DOI: 10.1080/13691060600748546 File-URL: http://hdl.handle.net/10.1080/13691060600748546 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:3:p:253-271 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Sunley Author-X-Name-First: Peter Author-X-Name-Last: Sunley Title: Review essay: Venture capital and the internet industry Journal: Venture Capital Pages: 273-280 Issue: 3 Volume: 8 Year: 2005 Month: 9 X-DOI: 10.1080/13691060500520227 File-URL: http://hdl.handle.net/10.1080/13691060500520227 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2005:i:3:p:273-280 Template-Type: ReDIF-Article 1.0 Author-Name: Nils Månsson Author-X-Name-First: Nils Author-X-Name-Last: Månsson Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Title: Business angels in a changing economy: The case of Sweden Abstract: Abstract The Swedish business angel market of 2004 is presented and compared to that of 1992 in order to determine the significance of the time factor. The presentation is carried out against the background of the macroeconomic changes that have taken place and how they have affected the informal venture capital market. The empirical findings reveal how the amounts invested have changed, which companies the business angels have invested in and the ways in which the business angels' deal flow has changed since 1992. The results show that business angels in Sweden have become more professional in their way of identifying new investment opportunities and that the informal venture capital market is becoming more mature with less information asymmetry. Furthermore, the results demonstrate that Internet hype and changes in the Swedish taxation system have probably influenced the business angel market, making investors invest at earlier stages and in high-tech companies. Journal: Venture Capital Pages: 281-301 Issue: 4 Volume: 8 Year: 2006 Month: 4 X-DOI: 10.1080/13691060600836275 File-URL: http://hdl.handle.net/10.1080/13691060600836275 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:4:p:281-301 Template-Type: ReDIF-Article 1.0 Author-Name: Christiana Weber Author-X-Name-First: Christiana Author-X-Name-Last: Weber Author-Name: Markus Göbel Author-X-Name-First: Markus Author-X-Name-Last: Göbel Title: Economic exchange reciprocity or social obligation reciprocity? exchange modalities of interorganizational relations in Germany Abstract: Abstract Exchange is regarded as the fundamental activity in every economic context. Seeking a theoretical conceptualization of exchange in an interorganizational sense, the authors use a qualitative study of venture capital organizations (VCs) in Germany and their portfolio companies (PCs) to develop an exchange-related perspective centred on reciprocity in interorganizational relations. Through grounded theory, two types of exchange are identified, economic exchange reciprocity and social obligation reciprocity, which differ considerably in their exchange cultures, modes, structures, and resources. In addition to specifying VC -- PC relations as the subject of study, the theoretical perspective focuses on making the rediscovered concept of reciprocity useful in the organization and management of organizational and interorganizational relations. Journal: Venture Capital Pages: 303-330 Issue: 4 Volume: 8 Year: 2006 Month: 4 X-DOI: 10.1080/13691060600759824 File-URL: http://hdl.handle.net/10.1080/13691060600759824 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:4:p:303-330 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Hart Author-X-Name-First: Mark Author-X-Name-Last: Hart Author-Name: Helena Lenihan Author-X-Name-First: Helena Author-X-Name-Last: Lenihan Title: Estimating additionality and leverage: The interplay between public and private sector equity finance in Ireland (2000 -- 2002) Abstract: Abstract This paper aims to contribute to the debate about the role of the public sector in stimulating greater use of private sector equity for business start-up and growth in two ways. First, to examine the extent to which the provision of public sector equity finance enables individual firms to raise additional funds in the private sector market place. Second, to consider the methodological implications for an economic impact assessment of industrial policy interventions (especially those which include an equity component) at the level of the individual firm. We assess the extent to which there may be indirect positive effects (externalities) associated with public sector financial assistance to individual firms and if so how they distort standard evaluation methodologies designed to estimate the level of additionality of that support. The paper draws upon the results of a recent study of the impact of Enterprise Ireland (EI) financial assistance to indigenous Irish industry in the period 2000 to 2002. The paper demonstrates that a process of re-calibration is necessary in estimates of economic impact in order to account for these positive externalities and the result in this study was a ‘boost’ to additionality. In operational and conceptual terms, the study underlines the importance of the relationship between private and public sector sources of equity finance as an important dynamic in the attempt by industrial and regional policy to stimulate the number of firms with viable investment proposals accessing external equity finance. Journal: Venture Capital Pages: 331-351 Issue: 4 Volume: 8 Year: 2006 Month: 5 X-DOI: 10.1080/13691060600836192 File-URL: http://hdl.handle.net/10.1080/13691060600836192 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:4:p:331-351 Template-Type: ReDIF-Article 1.0 Author-Name: Steven D. Dolvin Author-X-Name-First: Steven D. Author-X-Name-Last: Dolvin Author-Name: Mark K. Pyles Author-X-Name-First: Mark K. Author-X-Name-Last: Pyles Title: Venture capitalist quality and IPO certification Abstract: Abstract The opportunity cost of going public is directly related to the level of information asymmetry associated with the issuing firm. Independent third parties, such as underwriters and venture capitalists, are believed to mitigate this asymmetry through certification, thereby reducing this cost. Existing studies illustrate that higher quality underwriters provide increased certification value; however, current research is essentially mute with regard to the effect of venture capitalist quality. We fill this gap, finding that higher quality venture capitalists also provide incremental certification value relative to those of lower quality. Additionally, we suggest that the most appropriate measure of venture capitalist quality is a simple binary variable that captures prior experience as the lead of an IPO venture capital syndicate. Journal: Venture Capital Pages: 353-371 Issue: 4 Volume: 8 Year: 2006 Month: 4 X-DOI: 10.1080/13691060600759782 File-URL: http://hdl.handle.net/10.1080/13691060600759782 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:8:y:2006:i:4:p:353-371 Template-Type: ReDIF-Article 1.0 Author-Name: Cécile Carpentier Author-X-Name-First: Cécile Author-X-Name-Last: Carpentier Author-Name: Jean-Marc Suret Author-X-Name-First: Jean-Marc Author-X-Name-Last: Suret Title: On the usefulness of tax incentives for informal investors Abstract: Abstract This article analyses the QBIC programme introduced in Quebec to help capitalize SMEs. Taxpayers that invest in holding companies that finance one or more growth corporations receive substantial tax credits. Companies financed by this programme are apparently of mediocre quality. After the financing, the firms' growth is weak and their operational performance is significantly inferior to that of companies of comparable size and sector. The programme apparently does not fulfil its primary objective, to attract angels. On average, capitalization of companies via the programme has diminished. This result is foreseeable because the programme design does not take into account phenomena inherent in the financing of closed companies, namely agency costs, asymmetry and adverse selection. Journal: Venture Capital Pages: 1-22 Issue: 1 Volume: 9 Year: 2006 Month: 9 X-DOI: 10.1080/13691060600996673 File-URL: http://hdl.handle.net/10.1080/13691060600996673 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:1:p:1-22 Template-Type: ReDIF-Article 1.0 Author-Name: Terje Berg-Utby Author-X-Name-First: Terje Author-X-Name-Last: Berg-Utby Author-Name: Roger Sørheim Author-X-Name-First: Roger Author-X-Name-Last: Sørheim Author-Name: L. Øystein Widding Author-X-Name-First: L. Øystein Author-X-Name-Last: Widding Title: Venture capital funds: Do they meet the expectations of portfolio firms? Abstract: Abstract This paper examines the expectations and post-investment perceptions of value added activities from venture capital funds. Exploring the perspective of the company that is backed by venture capital, the deviation between expectations and post-investment perceptions are analysed. Insight from resource-dependence theory is employed as a theoretical point of departure. The empirical results show that significant gaps exist between the expectations of entrepreneurs and what they perceive to be the contributions from their venture capital backers. Indeed, the venture capitalists (VCs) do not even meet the entrepreneurs' modest expectations of their potential contribution. The difference between expectations and perceived outcome from the venture capitalist's involvement may be due, either to the overselling of their competence by venture capitalists, or to the limited amount of time that they allocate to each venture on account of their large investment portfolios. Journal: Venture Capital Pages: 23-41 Issue: 1 Volume: 9 Year: 2006 Month: 4 X-DOI: 10.1080/13691060600995998 File-URL: http://hdl.handle.net/10.1080/13691060600995998 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:1:p:23-41 Template-Type: ReDIF-Article 1.0 Author-Name: Poh Kam Wong Author-X-Name-First: Poh Kam Author-X-Name-Last: Wong Author-Name: Yuen Ping Ho Author-X-Name-First: Yuen Ping Author-X-Name-Last: Ho Title: Characteristics and determinants of informal investment in Singapore Abstract: Abstract Since Wetzel (1982, 1983) identified the business angel as a primary source of risk capital, there has been increased interest in the role of informal investors in the formation of new business ventures in the developed OECD countries. However, there remains little known about informal investors in developing or newly industrialized economies such as Singapore. Based on data collected using the Global Entrepreneurship Monitor (GEM) methodology (Reynolds et al., 2002), this paper examines the characteristics of informal investors in Singapore, and analyses the key determinant factors that differentiate individuals who become informal investors from those who do not make informal investments. In particular, we examine if these factors differ depending on the relationship between the investor and entrepreneur. We also investigate the differences between determinants of higher and lower value investment propensities. The findings reveal that knowing entrepreneurs personally was the factor with the strongest influence on informal investing propensity in Singapore. Other findings suggest that informal investing propensity in Singapore is less influenced by demographic factors and income, and more by prior entrepreneurial experience and self-perceived skills with new business formation. Journal: Venture Capital Pages: 43-70 Issue: 1 Volume: 9 Year: 2006 Month: 6 X-DOI: 10.1080/13691060600996772 File-URL: http://hdl.handle.net/10.1080/13691060600996772 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:1:p:43-70 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Author-Name: Amparo San José Author-X-Name-First: Amparo Author-X-Name-Last: San José Author-Name: Juan Roure Author-X-Name-First: Juan Author-X-Name-Last: Roure Title: Executive forum: Public support for the business angel market in Europe -- a critical review Abstract: Abstract Various levels of government have implemented instruments to promote business angel investment, often mirroring those used to support the institutional venture capital market. The paper reviews the existing practices at a point in time when intervention in the field of business angels is becoming increasingly popular in Europe. Governments are looking for innovative ways to enhance business angel investments and the evolution of the policy in the field is rather trial and error based. We see a shift from classical support to network creation and improvement of the fiscal environment, towards guarantee schemes for angel investments and co-investment schemes. This latest, most recent, approach is analysed by a detailed case study of the Belgian Business Angels Plus (BA+) scheme, which matches the financing provided by a business angel investor and the entrepreneur. In its initial two and a half years of operation the BA+ scheme has received close to 70 applications, of which just over 20 have been rejected. The characteristics of the deals financed by BA+ applicants are similar to those found in the average investment in Belgium. Following up the companies applying for the BA+ loan shows that the programme has so far avoided incurring significant losses. However, it is not possible to determine if lack of finance was one of the reasons for the bankruptcy of the companies that did not secure the additional loan. Journal: Venture Capital Pages: 71-84 Issue: 1 Volume: 9 Year: 2006 Month: 5 X-DOI: 10.1080/13691060600996723 File-URL: http://hdl.handle.net/10.1080/13691060600996723 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:1:p:71-84 Template-Type: ReDIF-Article 1.0 Author-Name: Terri L. Griffith Author-X-Name-First: Terri L. Author-X-Name-Last: Griffith Author-Name: Patrick J. Yam Author-X-Name-First: Patrick J. Author-X-Name-Last: Yam Author-Name: Suresh Subramaniam Author-X-Name-First: Suresh Author-X-Name-Last: Subramaniam Title: Silicon valley's ‘one-hour’ distance rule and managing return on location Abstract: Abstract We question the popular contention of a ‘one-hour’ rule of venture capital investing using data from two studies. A survey of 20 Silicon Valley (SV) venture capital general partners representing 122 portfolio firms finds 52% of their round one deals are done with exclusively SV firms (firms with no outside locations), 30% are done exclusively outside of the SV, and 18% are headquartered in the SV but also have locations elsewhere. A broader study of 3 826 SV venture capital deals finds 42% of round one deals are done with SV headquartered firms (this includes both exclusively SV deals and deals where only the headquarters is in the SV). There are significant effects for the industry of the portfolio company (high tech firms are more likely to be located in the SV) and the age of the venture capital firm, with younger firms roaming further a field in some cases. We describe ‘return on location’ (ROI) as a crucial component of due diligence, and consider the role that virtual management can play in mitigating distance issues. Six prominent Silicon Valley venture capitalists provide insights on the results. Journal: Venture Capital Pages: 85-106 Issue: 2 Volume: 9 Year: 2006 Month: 9 X-DOI: 10.1080/13691060601076202 File-URL: http://hdl.handle.net/10.1080/13691060601076202 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:2:p:85-106 Template-Type: ReDIF-Article 1.0 Author-Name: Stuart Paul Author-X-Name-First: Stuart Author-X-Name-Last: Paul Author-Name: Geoff Whittam Author-X-Name-First: Geoff Author-X-Name-Last: Whittam Author-Name: Janette Wyper Author-X-Name-First: Janette Author-X-Name-Last: Wyper Title: Towards a model of the business angel investment process Abstract: Abstract This paper examines the process that business angels undertake when they invest in new and small businesses. Existing research has generally taken a disaggregated approach and focused on individual stages of the investment process. Based on the empirical evidence gathered from 30 interviews with business angels this paper presents an overarching model of the angel investment process. Underlying factors that generate and sustain the investment process are also identified. A comparison is made between the investment processes in the informal and formal venture capital markets, finding that the emphasis on softer factors differentiates the former from the latter. The paper not only contributes to the existing literature but also provides policy makers, entrepreneurs and prospective angels with a greater understanding of the factors which underpin and sustain the angel investment process. Journal: Venture Capital Pages: 107-125 Issue: 2 Volume: 9 Year: 2006 Month: 12 X-DOI: 10.1080/13691060601185425 File-URL: http://hdl.handle.net/10.1080/13691060601185425 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:2:p:107-125 Template-Type: ReDIF-Article 1.0 Author-Name: Juan Florin Author-X-Name-First: Juan Author-X-Name-Last: Florin Author-Name: Zeki Simsek Author-X-Name-First: Zeki Author-X-Name-Last: Simsek Title: The effects of moral hazard and adverse selection on the pricing and underpricing of initial public offerings Abstract: Abstract Underpricing research to date relies on the assumption that there exist a negative relationship between the pricing of an initial public offering (IPO) and its first day returns. Consequently, little is known in the literature on IPOs as to which part of initial returns is due to ‘deliberate underpricing’ (that is, a discount on the ‘true’ value of the offer) and which part is due to market reaction on the first trading day. In this paper we theoretically untangle this assumed relationship between offer pricing and first day gains. Consistent with the proposed model, our results show that different antecedents affect the two outcomes and that their relationship is positive. Our model and findings provide interesting implications for research, public policy and practice. Journal: Venture Capital Pages: 127-143 Issue: 2 Volume: 9 Year: 2006 Month: 10 X-DOI: 10.1080/13691060601098115 File-URL: http://hdl.handle.net/10.1080/13691060601098115 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:2:p:127-143 Template-Type: ReDIF-Article 1.0 Author-Name: Steven D. Dolvin Author-X-Name-First: Steven D. Author-X-Name-Last: Dolvin Author-Name: Donald J. Mullineaux Author-X-Name-First: Donald J. Author-X-Name-Last: Mullineaux Author-Name: Mark K. Pyles Author-X-Name-First: Mark K. Author-X-Name-Last: Pyles Title: The impact of bank venture capital on initial public offerings Abstract: Abstract Studies of the role of venture capital in the IPO process generally assume that all venture capitalists are alike. We relax this assumption and focus on the role of venture capitalists affiliated with either commercial or investment banks. We find that firms backed by these bank venture capitalists experience a lower opportunity cost of going public. This result holds mainly for small issuers, suggesting that banks are superior to traditional venture capitalists in providing certification services to this segment of the market. We also find that bank venture capital-backed firms experience a less negative abnormal return at lockup expiration, which is consistent with the hypothesis that banks are motivated, at least in part, by ‘relationship building’ when providing venture capital funding. Journal: Venture Capital Pages: 145-164 Issue: 2 Volume: 9 Year: 2006 Month: 12 X-DOI: 10.1080/13691060601185417 File-URL: http://hdl.handle.net/10.1080/13691060601185417 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2006:i:2:p:145-164 Template-Type: ReDIF-Article 1.0 Author-Name: Henrik Berglund Author-X-Name-First: Henrik Author-X-Name-Last: Berglund Author-Name: Tomas Hellström Author-X-Name-First: Tomas Author-X-Name-Last: Hellström Author-Name: Sören Sjölander Author-X-Name-First: Sören Author-X-Name-Last: Sjölander Title: Entrepreneurial learning and the role of venture capitalists Abstract: Abstract This paper develops a model of entrepreneurial learning in order to explain how VCs support the process of entrepreneurial learning and thereby add value to their ventures. We draw on two generic approaches to learning, termed the hypothesis-testing mode and the hermeneutic mode, which turn out to be closely interrelated in such learning processes. The resulting model comprises four categories, which focus on what entrepreneurs learn and how it is learnt: experimentation, evaluation, unreflective action and unverified assumptions. We then use these analytical categories to illustrate how VCs apply their different forms of expertise to increase a venture's value once an investment has been made. Journal: Venture Capital Pages: 165-181 Issue: 3 Volume: 9 Year: 2007 Month: 3 X-DOI: 10.1080/13691060701324445 File-URL: http://hdl.handle.net/10.1080/13691060701324445 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:3:p:165-181 Template-Type: ReDIF-Article 1.0 Author-Name: Annaleena Parhankangas Author-X-Name-First: Annaleena Author-X-Name-Last: Parhankangas Author-Name: Tomas Hellström Author-X-Name-First: Tomas Author-X-Name-Last: Hellström Title: How experience and perceptions shape risky behaviour: Evidence from the venture capital industry Abstract: Abstract This study addresses a hitherto underexplored, but potentially very central issue in venture capital research by investigating whether differences in risk perceptions and professional experience of venture capitalists prompt differing investment and risk reduction strategies. The study is based on a survey sent to 142 Swedish and Finnish venture capitalists, with a response rate of 63% (90 responses). Our results show that experience drives the perception of risk and the riskiness of the preferred investment portfolio. To be more specific, we find that in the presence of more pronounced perceptions of market and agency risk, partly stemming from their experience, investors seem to be willing to take more risks. This result may be attributed to overconfidence, illusion of control, or the speculative dimension of risk present in entrepreneurial settings. The portfolio risk is dynamically attenuated by the execution of various risk reduction strategies, such as syndication, information seeking, monitoring and the use of preferred stock. These findings lead us to believe not only that venture capitalists are proactive and responsible risk takers, who shield themselves from potential losses through a careful application of risk reduction strategies, but also that their responses to risk may resemble more the behaviour of typical entrepreneurs than that of typical managers. Journal: Venture Capital Pages: 183-205 Issue: 3 Volume: 9 Year: 2007 Month: 2 X-DOI: 10.1080/13691060701324478 File-URL: http://hdl.handle.net/10.1080/13691060701324478 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:3:p:183-205 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Author-Name: Laura Hill Author-X-Name-First: Laura Author-X-Name-Last: Hill Title: Women business angels: Insights from angel groups Abstract: Abstract Women have become a significant and growing financial power over the past 20 years and are developing an increasing presence in the angel market. However, there is a paucity of research on the role of women as angel investors. Do women angels have a tendency to invest in women entrepreneurs? What are the underlying incentives and motivations for women to become involved as angel investors? This survey-based research addresses these questions, and identifies some of the underlying implications of the findings on the current and future role of women as angel investors. Journal: Venture Capital Pages: 207-222 Issue: 3 Volume: 9 Year: 2007 Month: 3 X-DOI: 10.1080/13691060701324536 File-URL: http://hdl.handle.net/10.1080/13691060701324536 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:3:p:207-222 Template-Type: ReDIF-Article 1.0 Author-Name: Ray Oakey Author-X-Name-First: Ray Author-X-Name-Last: Oakey Title: A commentary on gaps in funding for moderate ‘non-stellar’ growth small businesses in the United Kingdom Abstract: Abstract Over many years government interest has persisted in the general funding problems of small and medium-sized enterprises (SMEs). This concern has often concentrated on capital market failure in particular niche areas of the funding market. This paper has resulted from a specific interest of the Department of Trade and Industry (DTI) in possible funding gaps experienced by ‘non-stellar’ growth SMEs. Such ‘non-stellar’ firms would be typified by substantial growth potential that is, nonetheless, insufficient to attract the funding needed in order to ensure prosperity. This paper comments on the evidence that exists either to support or to refute the existence of such a problem. Journal: Venture Capital Pages: 223-235 Issue: 3 Volume: 9 Year: 2007 Month: 3 X-DOI: 10.1080/13691060701410160 File-URL: http://hdl.handle.net/10.1080/13691060701410160 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:3:p:223-235 Template-Type: ReDIF-Article 1.0 Author-Name: Julian E. Lange Author-X-Name-First: Julian E. Author-X-Name-Last: Lange Author-Name: Aleksandar Mollov Author-X-Name-First: Aleksandar Author-X-Name-Last: Mollov Author-Name: Michael Pearlmutter Author-X-Name-First: Michael Author-X-Name-Last: Pearlmutter Author-Name: Sunil Singh Author-X-Name-First: Sunil Author-X-Name-Last: Singh Author-Name: William D. Bygrave Author-X-Name-First: William D. Author-X-Name-Last: Bygrave Title: Pre-start-up formal business plans and post-start-up performance: A study of 116 new ventures Abstract: Abstract This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture. The dataset comprised new ventures started by Babson College alums who graduated between 1985 and 2003. The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial start-up capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business. Journal: Venture Capital Pages: 237-256 Issue: 4 Volume: 9 Year: 2007 Month: 4 X-DOI: 10.1080/13691060701414840 File-URL: http://hdl.handle.net/10.1080/13691060701414840 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:4:p:237-256 Template-Type: ReDIF-Article 1.0 Author-Name: László Szerb Author-X-Name-First: László Author-X-Name-Last: Szerb Author-Name: Siri Terjesen Author-X-Name-First: Siri Author-X-Name-Last: Terjesen Author-Name: Gábor Rappai Author-X-Name-First: Gábor Author-X-Name-Last: Rappai Title: Seeding new ventures -- green thumbs and fertile fields: Individual and environmental drivers of informal investment Abstract: Abstract This study explores individual and country level environmental drivers of informal ‘seed’ investment. We examine four types of informal investors based on business ownership experience (or no such experience) and close family relationship with investee (or no such relationship): ‘classic love money’, ‘outsider’, ‘kin owner’ and ‘classic business angel’ investors. At the environmental level, we are interested in the role of economic development, income tax policies, start-up costs, pro-enterprise government programmes, availability of debt financing, entrepreneurship education and culture. Using Global Entrepreneurship Monitor data from telephone interviews with 257 793 individuals in 31 countries, including 5 960 informal investors, we report drivers for the four types of seed investment. Descriptive statistics are consistent with prior research: informal investors are likely to be older males who work full-time, earn high incomes, perceive start-up opportunities in the environment, and believe that they have the skills to start their own businesses. At the environmental level, we find that countries with higher percentages of informal investors are significantly likely to have higher levels of economic development, higher business start-up costs, higher levels of entrepreneurship education, lower income taxes and lower power distance. Other environmental effects on the four populations of informal investors are reported and discussed, as well as implications for practice, policy and future research. Journal: Venture Capital Pages: 257-284 Issue: 4 Volume: 9 Year: 2007 Month: 4 X-DOI: 10.1080/13691060701414949 File-URL: http://hdl.handle.net/10.1080/13691060701414949 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:4:p:257-284 Template-Type: ReDIF-Article 1.0 Author-Name: Dave Valliere Author-X-Name-First: Dave Author-X-Name-Last: Valliere Author-Name: Rein Peterson Author-X-Name-First: Rein Author-X-Name-Last: Peterson Title: When entrepreneurs choose VCs: Experience, choice criteria and introspection accuracy Abstract: Abstract This study examines the criteria by which entrepreneurs choose their venture capital investors, using data from 59 entrepreneurs evaluating the relative importance of seven selection criteria. We divided our sample into three approximately equal subsamples, according to the degree of previous venture capital experience of the entrepreneur. These data suggests that novice entrepreneurs value the seven criteria differently from more experienced entrepreneurs, and in practice value these criteria differently from what they espouse. All groups of entrepreneurs consider valuation to be the primary criterion, and also view the terms and conditions of the investment deal as important. But as entrepreneurs gain experience they increasingly value the personal compatibility of the VC as important in their selection. Other differences between inexperienced and experienced entrepreneurs are reported for secondary selection criteria. These results recommend caution in the use of espoused data for future empirical research in this area, and suggest practical negotiating strategies for participants in this market. Journal: Venture Capital Pages: 285-309 Issue: 4 Volume: 9 Year: 2007 Month: 5 X-DOI: 10.1080/13691060701605413 File-URL: http://hdl.handle.net/10.1080/13691060701605413 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:4:p:285-309 Template-Type: ReDIF-Article 1.0 Author-Name: Kuntara Pukthuanthong Author-X-Name-First: Kuntara Author-X-Name-Last: Pukthuanthong Author-Name: Nikhil P. Varaiya Author-X-Name-First: Nikhil P. Author-X-Name-Last: Varaiya Author-Name: Thomas J. Walker Author-X-Name-First: Thomas J. Author-X-Name-Last: Walker Title: Bookbuilding versus auction selling methods: A study of US IPOs Abstract: Abstract This study documents differences between two widely known IPO selling methods: the auction method and bookbuilding method for a sample of US IPOs. We employ a matched firm technique to compare the two IPO selling methods and empirically test hypotheses relating to the two selling methods. Our sample comprises all auction IPOs in the US between January 1999 and December 2004. Our results indicate that in comparison to matched bookbuilding IPOs, auction IPOs are less underpriced and thus leave less money on the table for the issuers, and have lower underwriter spreads. Relative to auction IPOs, bookbuilding IPOs are more likely to be followed and positively recommended by analysts and they receive more coverage by lead analysts, i.e. analysts affiliated with lead underwriters. Moreover, bookbuilding IPOs tend to outperform auction IPOs up to 18 months post-IPO, exhibit lower aftermarket volatility, and insiders of auction IPOs agree to lock up a higher fraction of their shares and hold them for a longer period of time. Journal: Venture Capital Pages: 311-345 Issue: 4 Volume: 9 Year: 2007 Month: 5 X-DOI: 10.1080/13691060701605439 File-URL: http://hdl.handle.net/10.1080/13691060701605439 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:9:y:2007:i:4:p:311-345 Template-Type: ReDIF-Article 1.0 Author-Name: Josh Lerner Author-X-Name-First: Josh Author-X-Name-Last: Lerner Author-Name: Brian Watson Author-X-Name-First: Brian Author-X-Name-Last: Watson Title: The public venture capital challenge: the Australian case Abstract: The appropriate role of the public sector in stimulating venture capital activity remains highly controversial. Whereas dynamic new venture markets have been catalysed by public interventions in some countries (e.g. Israel and India), there are also many examples worldwide of failed public sector efforts to promote venture capital activity. This paper describes the experience of the Australian government between 2004 and 2006 as an example of one attempt to avoid the pitfalls of the past, and design a thoughtful set of policies to encourage venture capital activity. The paper begins with a review of the general case for a public role in promoting venture activity and the possible pitfalls that may result, and then looks specifically at Australia, describing the market as it existed in 2004, and then discussing the key policies that were discussed and adopted. Journal: Venture Capital Pages: 1-20 Issue: 1 Volume: 10 Year: 2007 Month: 7 X-DOI: 10.1080/13691060701605538 File-URL: http://hdl.handle.net/10.1080/13691060701605538 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:1:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: David Large Author-X-Name-First: David Author-X-Name-Last: Large Author-Name: Steven Muegge Author-X-Name-First: Steven Author-X-Name-Last: Muegge Title: Venture capitalists' non-financial value-added: an evaluation of the evidence and implications for research Abstract: Much research has suggested that venture capital (VC) investors can contribute post-investment to the success of new ventures in ways other than financing, but the specifics of such post-investment non-financial value-added (NFVA) are still not well understood. We systematically review, organize and evaluate the empirical research on VC NFVA, and compile together results that were previously scattered across many papers. In the 20 salient studies of VC NFVA published between 1986 and 2005, we observe little consensus regarding the definition and measurement of value-adding inputs and value-added outcomes, and little consensus regarding which of the VCs' value-adding inputs are most important. We further observe that NFVA studies have employed either qualitative methods or quantitative measures of retrospective perceptions. To guide future research, we propose a provisional model of VC exit success and a provisional eight-category typology of value-adding inputs that accommodates the findings in the literature. Two categories of the typology (legitimation and outreach) have an external orientation and six categories (recruiting, mandating, strategizing, mentoring, consulting and operating) have an internal orientation. The empirical evidence to date suggests that operating, outreach, consulting, mentoring and recruiting may be the most influential categories, but the evidence is far from definitive. We argue that future studies should examine ‘VC exit success’ as a high-impact dependent variable, and place greater emphasis on the measurement of directly observable events for both value-adding inputs and value-added outcomes. Journal: Venture Capital Pages: 21-53 Issue: 1 Volume: 10 Year: 2007 Month: 5 X-DOI: 10.1080/13691060701605488 File-URL: http://hdl.handle.net/10.1080/13691060701605488 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:1:p:21-53 Template-Type: ReDIF-Article 1.0 Author-Name: Sofia Avdeitchikova Author-X-Name-First: Sofia Author-X-Name-Last: Avdeitchikova Title: On the structure of the informal venture capital market in Sweden: developing investment roles Abstract: This paper has two objectives: first, to estimate the size of informal venture capital market in Sweden, and second, to explore the heterogeneity of informal investing behaviour. Based on quantitative data on 278 informal venture capital investors and 422 investments, this paper provides an estimation of the size of the informal venture capital market in Sweden and an analysis of its structure by making a categorization of informal investors' investment roles. Four investment roles are identified based on the level of contribution of financial and human resources in the investment situation. The results show that the investment role that an individual assumes in the informal venture capital investment situation is dependent on the availability of the financial and human capital resources, as well as factors related to the willingness to supply them. The actual resource requirements of the firm have been shown to be of less importance in explaining the investment behaviour. Journal: Venture Capital Pages: 55-85 Issue: 1 Volume: 10 Year: 2007 Month: 5 X-DOI: 10.1080/13691060701605504 File-URL: http://hdl.handle.net/10.1080/13691060701605504 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:1:p:55-85 Template-Type: ReDIF-Article 1.0 Author-Name: Stuart M. Locke Author-X-Name-First: Stuart M. Author-X-Name-Last: Locke Author-Name: Kartick Gupta Author-X-Name-First: Kartick Author-X-Name-Last: Gupta Title: The performance of entrepreneurial companies post-listing on the New Zealand Stock Exchange Abstract: The paper reports an investigation of the returns obtained on a listed portfolio of entrepreneurial companies comparing these with a portfolio of listed small businesses and the stock market overall. The initial findings produce counter-intuitive results in that the returns on the portfolio of entrepreneurial companies appear to be less than those for other small companies and for the market overall. Further, initial public offerings of entrepreneurial companies appear to be overpriced and suffer a price decline post-listing that takes approximately a year and a half to recover. An implication of such results is that money will not flow to the entrepreneurial firms, which may have unfavourable longer-term consequences for economic growth. Various government polices are directed towards achieving sustainable economic growth through the smaller business sector and encouraging these businesses to expand and list on the stock exchange. The overpricing of IPOs and lower returns are not likely to encourage investor support for the entrepreneurial companies, making it difficult for these policies to succeed. Journal: Venture Capital Pages: 87-110 Issue: 1 Volume: 10 Year: 2007 Month: 5 X-DOI: 10.1080/13691060701605454 File-URL: http://hdl.handle.net/10.1080/13691060701605454 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:1:p:87-110 Template-Type: ReDIF-Article 1.0 Author-Name: Leonardo de Lima Ribeiro Author-X-Name-First: Leonardo Author-X-Name-Last: de Lima Ribeiro Author-Name: Antonio Gledson de Carvalho Author-X-Name-First: Antonio Author-X-Name-Last: Gledson de Carvalho Title: Private equity and venture capital in an emerging economy: evidence from Brazil Abstract: The Private Equity and Venture Capital (PE/VC) financial model was initially developed in the US and, therefore, designed for the US institutional environment. The degree to which the US PE/VC model can perform in other institutional environments is an interesting question. This article is based on data supplied by all of the 65 PE/VC organizations with offices in Brazil in 2004. Comparing Brazil and the US, we found that the main similarities are: an industry composed mostly of independent organizations, managing capital coming mostly from institutional investors; capital is heavily concentrated regionally and in few organizations; investments are made within a close geographical distance; and software and IT are preferred sectors. The main differences are that for Brazil: investments are concentrated in more advanced stages of corporate development; since credit is scarce, few LBOs take place; low levels of sector specialization (PE/VC investing in a broad variety of industrial sectors); firm concentration in Sao Paulo's financial district suggests a quest for commercial partners and strategic buyers for portfolio companies; and Brazilian PE/VC regulation recognizes the inefficiency of the legal system and forces the use of arbitration. We also discuss possible reasons for these adaptations. Journal: Venture Capital Pages: 111-126 Issue: 2 Volume: 10 Year: 2007 Month: 12 X-DOI: 10.1080/13691060801946121 File-URL: http://hdl.handle.net/10.1080/13691060801946121 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:2:p:111-126 Template-Type: ReDIF-Article 1.0 Author-Name: Diamanto Politis Author-X-Name-First: Diamanto Author-X-Name-Last: Politis Title: Business angels and value added: what do we know and where do we go? Abstract: Business angels have been highlighted as important stakeholders for potential high-growth ventures. Extant empirical research provides evidence that they not only contribute with money but also bring added value to the ventures in which they have invested. However, despite the reported benefits of the value added provided by these investors there are very few studies that try to conceptualize this important issue. The present study seeks to meet this shortcoming by presenting a review of literature and research on business angels and value added. The overall objective is to recognize the range of value added activities that business angels have been reported to perform, aggregate the findings into a set of distinct but complementary value adding roles, and then link these roles to theoretical perspectives that explain why they have the potential to contribute to added value. Four different value added roles performed by informal investors are presented together with an explanation of how they can be seen as complementary to each other. The following discussion is then used to guide future studies of business angels and value added towards areas where our knowledge is still limited. Journal: Venture Capital Pages: 127-147 Issue: 2 Volume: 10 Year: 2007 Month: 9 X-DOI: 10.1080/13691060801946147 File-URL: http://hdl.handle.net/10.1080/13691060801946147 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:2:p:127-147 Template-Type: ReDIF-Article 1.0 Author-Name: Dodo Zu Knyphausen-Aufseß Author-X-Name-First: Dodo Author-X-Name-Last: Zu Knyphausen-Aufseß Author-Name: Rouven Westphal Author-X-Name-First: Rouven Author-X-Name-Last: Westphal Title: Do business angel networks deliver value to business angels? Abstract: Business angel networks act as a financial intermediary between investors and start-ups and are a means of overcoming the problem of matching entrepreneurs and business angels. In reality, most business angel networks do not accomplish this goal. Using the results of an empirical survey and five exploratory case studies, we develop three propositions concerning the business model of angel networks. We find theoretical and empirical evidence that angel networks actually foster adverse selection during the investment process. Consequently, angels, especially serial business angels, do not receive sustainable benefits from network services and actually face new risks during the investment process. Journal: Venture Capital Pages: 149-169 Issue: 2 Volume: 10 Year: 2007 Month: 11 X-DOI: 10.1080/13691060801946188 File-URL: http://hdl.handle.net/10.1080/13691060801946188 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:2:p:149-169 Template-Type: ReDIF-Article 1.0 Author-Name: Volker Bruns Author-X-Name-First: Volker Author-X-Name-Last: Bruns Author-Name: Margaret Fletcher Author-X-Name-First: Margaret Author-X-Name-Last: Fletcher Title: Banks' risk assessment of Swedish SMEs Abstract: Building on the literatures on asymmetric information and risk taking, this paper applies conjoint experiments to investigate lending officers' probabilities of supporting credit to established or existing SMEs. Using a sample of 114 Swedish lending officers, we test hypotheses concerning how information on the borrower's ability to repay the loan; alignment of risk preferences; and risk sharing affect their willingness to grant credit. Results suggest that features that reduce the risk to the bank and shift the risk to the borrower have the largest impact. The paper highlights the interaction between factors that influence the credit decision. Implications for SMEs, banks and research are discussed. Journal: Venture Capital Pages: 171-194 Issue: 2 Volume: 10 Year: 2007 Month: 11 X-DOI: 10.1080/13691060801946089 File-URL: http://hdl.handle.net/10.1080/13691060801946089 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:2:p:171-194 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Author-Name: Sofia Johan Author-X-Name-First: Sofia Author-X-Name-Last: Johan Title: Information asymmetries, agency costs and venture capital exit outcomes Abstract: This paper provides theory and evidence relating information asymmetries and agency costs to exit outcomes in venture capital-backed entrepreneurial firms. Where venture capitalists are able to better mitigate information asymmetries and agency costs faced by the new owners of the firm, they will be more likely to have a successful exit outcome. Information asymmetries and agency costs will vary depending on the characteristics of the venture capitalist and entrepreneurial firm, as well as the structure of the financing arrangement. This paper introduces a new dataset comprising all venture capital exits in Canada for the years 1991 to 2004. The data provide strong support for the conjecture that the ability to mitigate information asymmetries and agency costs is a central factor in influencing exit outcomes. Journal: Venture Capital Pages: 197-231 Issue: 3 Volume: 10 Year: 2008 Month: 2 X-DOI: 10.1080/13691060802151788 File-URL: http://hdl.handle.net/10.1080/13691060802151788 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:3:p:197-231 Template-Type: ReDIF-Article 1.0 Author-Name: Jonathan Levie Author-X-Name-First: Jonathan Author-X-Name-Last: Levie Author-Name: Eli Gimmon Author-X-Name-First: Eli Author-X-Name-Last: Gimmon Title: Mixed signals: why investors may misjudge first time high technology venture founders Abstract: This paper seeks to explain an unexpected result of a previous quantitative study which suggested suboptimal evaluation by investors of the human capital of first time high tech venture founders. A literature review revealed two possible reasons for this finding: biases/heuristics and signalling. Six investors across three countries (one venture capitalist and one business angel each from the US, UK and Israel) with experience in investing in early stage high technology ventures were interviewed using an identical semi-structured interview protocol. This research design is appropriate for research that seeks to reflect back unexpected findings of previous quantitative research on the subjects of research. Interviewees were first asked to state their own investment criteria, and then presented with the results of the quantitative study and asked for their views. Previous research suggesting a gap between in-use and espoused criteria, and extensive use of gut feeling in decision-making, was supported. Interviewees focused on harvest potential and de-emphasised measures of founder technology capability that predicted early survival and growth in the earlier study. The paper concludes by suggesting how investors might improve funding decisions in high tech ventures led by first time entrepreneurs, noting the study's limitations and making recommendations for further research. Journal: Venture Capital Pages: 233-256 Issue: 3 Volume: 10 Year: 2007 Month: 12 X-DOI: 10.1080/13691060802151820 File-URL: http://hdl.handle.net/10.1080/13691060802151820 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2007:i:3:p:233-256 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Clark Author-X-Name-First: Colin Author-X-Name-Last: Clark Title: The impact of entrepreneurs' oral ‘pitch’ presentation skills on business angels' initial screening investment decisions Abstract: This study adds new insights to the growing body of research showing that entrepreneurs' communication skills and personal attributes influence investor decision making. Twenty-four business angels attending a UK investor forum completed questionnaires evaluating 32 ‘presentational’ and ‘non-presentational’ aspects of three entrepreneurs' oral pitch presentations. The business angels' level of investor interest was significantly related to their evaluations of the quality and content of the entrepreneurs' presentations: the higher an entrepreneur's overall presentation score, the greater the likelihood that the business angels would be interested in pursuing that investment opportunity. Presentational factors (relating to the entrepreneurs' style of delivery, etc.) tended to have the highest influence on the overall score an entrepreneur received as well as on business angels' level of investment interest. However, the business angels appeared to be unaware of (or were reluctant to acknowledge) the influence presentational factors had on their investment-related decisions: the stated reasons for their post-presentation intentions were focused firmly on substance-oriented non-presentational criteria (company, market, product, funding/finance issues, etc.). More generally, comments about the entrepreneurs' presentations centred on presentational issues relating to clarity/understandability and structure, the level of information provided, the entrepreneurs' personal characteristics, and their ability to sell themselves and their investment opportunity. Journal: Venture Capital Pages: 257-279 Issue: 3 Volume: 10 Year: 2008 Month: 4 X-DOI: 10.1080/13691060802151945 File-URL: http://hdl.handle.net/10.1080/13691060802151945 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:3:p:257-279 Template-Type: ReDIF-Article 1.0 Author-Name: Romeo V. Ţurcan Author-X-Name-First: Romeo V. Author-X-Name-Last: Ţurcan Title: Entrepreneur--venture capitalist relationships: mitigating post-investment dyadic tensions Abstract: This paper addresses the notion of goal alignment in venture-backed firms. Aligning the goals of entrepreneurs to VCs' goals, and vice versa, may be the first step towards building strong mutual relationships between the two. Yet, little is know about the long-term outcomes of the aspects of these relationships as the literature to date has considered to a great extent the relationship between VC and entrepreneur as a ‘black box’. This paper makes an attempt to half-open this ‘black box’ by exploring the dyadic tensions between VCs and entrepreneurs in the course of de-internationalization that is perceived as a negative deviation from what is normal or expected. The data emerged from a case study research that used critical incident technique for data collection, analysis and interpretation. Grounded in data, the paper proposes the typology of goal alignment that was generated by cross-tabulating entrepreneurs' and VCs’ agendas. Four types of alignment emerged: life changing opportunity, enslavement, no marriage and illusive alignment. The concept of goal alignment is unidirectional; it is geared towards the VCs' agenda of a quick exit. Journal: Venture Capital Pages: 281-304 Issue: 3 Volume: 10 Year: 2008 Month: 4 X-DOI: 10.1080/13691060802151960 File-URL: http://hdl.handle.net/10.1080/13691060802151960 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:3:p:281-304 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Author-Name: Colin M. Mason Author-X-Name-First: Colin M. Author-X-Name-Last: Mason Title: Sampling and data collection in business angel research Journal: Venture Capital Pages: 305-308 Issue: 4 Volume: 10 Year: 2008 Month: 10 X-DOI: 10.1080/13691060802380080 File-URL: http://hdl.handle.net/10.1080/13691060802380080 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:4:p:305-308 Template-Type: ReDIF-Article 1.0 Author-Name: Colin M. Mason Author-X-Name-First: Colin M. Author-X-Name-Last: Mason Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Title: Measuring business angel investment activity in the United Kingdom: a review of potential data sources Abstract: Business angels play a critical role in the creation of an entrepreneurial climate. However, measuring business angel investment activity on either a cross-sectional or time series basis is extremely problematic. This paper reviews various approaches to measuring business angel investment activity: simple extrapolations, supply-side approaches, demand-side approaches, hybrid approaches, investment-oriented approaches, tax incentive schemes and angel syndicates. It advocates that all developed countries should produce time series data on business angel investment activity to provide policy-makers with an overview of the financing environment and to monitor the effects of interventions in the market. This requires a clear definition of a business angel and a focus on investments rather than investors. The paper recommends a multi-methods approach to collecting data on the UK business angel market. Journal: Venture Capital Pages: 309-330 Issue: 4 Volume: 10 Year: 2008 Month: 7 X-DOI: 10.1080/13691060802380098 File-URL: http://hdl.handle.net/10.1080/13691060802380098 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:4:p:309-330 Template-Type: ReDIF-Article 1.0 Author-Name: Ellen Farrell Author-X-Name-First: Ellen Author-X-Name-Last: Farrell Author-Name: Carole Howorth Author-X-Name-First: Carole Author-X-Name-Last: Howorth Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Title: A review of sampling and definitional issues in informal venture capital research Abstract: This paper presents the argument for broadening the definition of informal venture capital populations and improving sampling methodologies for informal venture capital research. It is argued that the widely enumerated difficulties regarding sampling methods are driving the definition of a business angel. Sampling difficulties such as unknowable populations limit the ability of researchers to study (survey) business angels. This limitation precipitates narrow definitions of business angels in order to justify the sampling method used. The more narrow definition ultimately results in precluding various cohorts of angels from appearing in the data. This paper reviews a range of studies, their definitions and methodologies, and speculates on the angel cohorts that chosen methodologies may exclude. The paper proposes a protocol that adopts a broad definition of informal venture capital, and a sampling method that produces a more representative range of informal venture capital investors. The method samples from a known population, namely publicly available business registration data, to create a representative sample of business angels. A broad definition and a representative sampling method allow comparisons and generalisable results that current sampling methods preclude. The conclusion highlights that standardised definitions and representative samples will allow studies to make reliable comparisons across types of informal investors, such as family, friends, arch angels and micro-investors. Journal: Venture Capital Pages: 331-353 Issue: 4 Volume: 10 Year: 2008 Month: 4 X-DOI: 10.1080/13691060802151986 File-URL: http://hdl.handle.net/10.1080/13691060802151986 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:4:p:331-353 Template-Type: ReDIF-Article 1.0 Author-Name: Allan L. Riding Author-X-Name-First: Allan L. Author-X-Name-Last: Riding Title: Business angels and love money investors: segments of the informal market for risk capital Abstract: This empirical study reports that returns on informal investments made by business angels are significantly higher than those made by non-angels. However, rates of return on informal investments made by friends and family members of business founders are, on average, dismal. This finding reinforces warnings that it may be counterproductive for public policy to encourage ‘amateur’ informal investors, yet stimulation of value-adding business angel investment seems well advised. The relative sizes, in terms of the annual flow of investment funds, in the main segments comprising the informal market were estimated. Love money accounts for more than three times as much annual investment as business angels, who in turn invest more than twice as much annually -- and in many more firms -- as institutional venture capitalists. Journal: Venture Capital Pages: 355-369 Issue: 4 Volume: 10 Year: 2008 Month: 6 X-DOI: 10.1080/13691060802351222 File-URL: http://hdl.handle.net/10.1080/13691060802351222 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:4:p:355-369 Template-Type: ReDIF-Article 1.0 Author-Name: Sofia Avdeitchikova Author-X-Name-First: Sofia Author-X-Name-Last: Avdeitchikova Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Author-Name: Nils Månsson-super-1 Author-X-Name-First: Nils Author-X-Name-Last: Månsson-super-1 Title: What do we mean when we talk about business angels? Some reflections on definitions and sampling Abstract: Early research on business angels recognized a couple of methodological obstacles that significantly have hindered knowledge accumulation about the phenomenon. In this article we will reflect upon these methodological obstacles with focus on definitional issues and sampling techniques. The purpose is to provide a framework that systemizes and inter-relates the variety of definitions within the field as well as to critically review the sampling techniques currently applied in the research field. We maintain that researchers need to make conscious definitional choices when conducting studies of informal investors and business angels, and argue that changing the unit of analysis from investor level to deal level can help to avoid definitional inconsistencies. Further, we suggest two alternative ways of creating high quality samples of business angels and informal investors -- the random sample approach and the multi-sample approach. Both procedures reduce the sample bias and allow for longitudinal analysis which is argued to be essential in future research. Journal: Venture Capital Pages: 371-394 Issue: 4 Volume: 10 Year: 2008 Month: 7 X-DOI: 10.1080/13691060802351214 File-URL: http://hdl.handle.net/10.1080/13691060802351214 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:10:y:2008:i:4:p:371-394 Template-Type: ReDIF-Article 1.0 Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Author-Name: John Gilligan Author-X-Name-First: John Author-X-Name-Last: Gilligan Author-Name: Kevin Amess Author-X-Name-First: Kevin Author-X-Name-Last: Amess Title: The economic impact of private equity: what we know and what we would like to know Abstract: Private equity and management buyouts have been the subject of considerable controversy. There have been recent calls for more systematic evidence on the impact of private equity and buyouts. Yet there is already an extensive body of scientific evidence stretching back over the past two decades that provides a platform for understanding the current context. This article summarises what we know about private equity from a comprehensive review of approximately 100 studies from around the world under the following headings: the returns to investors; profitability and productivity; the drivers of effects on profitability and productivity; the impact on employment and wages; growth and investment strategies; the extent to which high leverage is associated with failure; the generation of gains from asset disposals (asset stripping); the reselling of assets within short periods of time (asset flipping); and whether the effects persist after private equity firms have exited. This scientific evidence indicates that private equity and buyouts bring particularly important economic and social benefits. What we would like to know about private equity and buyouts is discussed under five broad headings: the difference between the second wave of deals and the first wave; the nature of the fund and its impact on returns; the distinction between secondary and primary buyouts; the failure rate of buyouts; and the tax implications. Implications for policy and practitioners are also discussed. Journal: Venture Capital Pages: 1-21 Issue: 1 Volume: 11 Year: 2008 Month: 3 X-DOI: 10.1080/13691060802151887 File-URL: http://hdl.handle.net/10.1080/13691060802151887 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:1:p:1-21 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Author-Name: Sofia Johan Author-X-Name-First: Sofia Author-X-Name-Last: Johan Title: Legality and venture capital fund manager compensation Abstract: This paper introduces a new dataset from 50 venture capital and private equity funds from 17 countries in Africa, North and South America, Europe and Australasia. We analyse compensation in regard to fixed management fees (as a percentage of fund size), performance fees (the carried interest percentage), clawbacks (reduced fees for poor performance), and cash versus share distributions (payment to institutional investors). We control for a variety of factors including market conditions, institutional investor and fund manager characteristics. The data indicate that legal conditions by far have the most robust statistically and economically significant effect on compensation across countries: fixed fees are higher and performance fees are lower in countries with poor legal conditions; clawbacks are more likely in countries with poor legal conditions; and cash-only distributions are much more likely to be mandated among offshore funds. Journal: Venture Capital Pages: 23-54 Issue: 1 Volume: 11 Year: 2008 Month: 6 X-DOI: 10.1080/13691060802351206 File-URL: http://hdl.handle.net/10.1080/13691060802351206 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:1:p:23-54 Template-Type: ReDIF-Article 1.0 Author-Name: G. Romaní Author-X-Name-First: G. Author-X-Name-Last: Romaní Author-Name: M. Atienza Author-X-Name-First: M. Author-X-Name-Last: Atienza Author-Name: J. E. Amorós Author-X-Name-First: J. E. Author-X-Name-Last: Amorós Title: Financing entrepreneurial activity in Chile: scale and scope of public support programs Abstract: This paper overviews the sources currently financing entrepreneurship in Chile, with special emphasis on public instruments, and uses the information gathered by Global Entrepreneurship Monitor (GEM) Chile between 2003 and 2006 to test the hypothesis that, despite public efforts, there is still a finance gap, and that this may significantly influence domestic economic performance in the long term. After a thorough bibliographic review regarding financial alternatives in Chile and a descriptive analysis of GEM data, results show that while there is sufficient available public funding in Chile, it is not being channeled to a sufficiently wide range of entrepreneurs. Some of the factors that reduce the impact of Chilean public financing policies and that require further research include the lack of competitive high-tech clusters within the country; the lack of attention given to informal investment and to the training of entrepreneurs; and the existence of centrally designed programs that do not take into account the geographical organization of capital markets and the spatial differences and gaps in private financing. Journal: Venture Capital Pages: 55-70 Issue: 1 Volume: 11 Year: 2008 Month: 6 X-DOI: 10.1080/13691060802351230 File-URL: http://hdl.handle.net/10.1080/13691060802351230 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:1:p:55-70 Template-Type: ReDIF-Article 1.0 Author-Name: Joakim Winborg Author-X-Name-First: Joakim Author-X-Name-Last: Winborg Title: Use of financial bootstrapping in new businesses: a question of last resort? Abstract: This study examines motives for using financial bootstrapping in new businesses. First, it identifies and labels groups of new business founders based on their motives for using bootstrapping. Second, it examines the relation between variables referring to the founder and the business and the motives. The data were collected in a questionnaire sent by post to 120 new business founders in Swedish business incubators. The results show that ‘lower costs’ is the most important motive, followed by ‘lack of capital’, and, surprisingly, ‘fun helping others and getting help from others’. On the basis of a cluster analysis three groups of founders were identified, based on differences in their motives for using bootstrapping. The groups were labeled cost-reducing bootstrappers, capital-constrained bootstrappers and risk-reducing bootstrappers. The relative experience of the founder is the most significant influence for using bootstrapping. As experience is gained the new business founder learns more about the advantages and motives for using bootstrapping. The resource acquisition behavior changes from initially focusing on reducing costs towards a proactive focus on reducing the risk in the business. Journal: Venture Capital Pages: 71-83 Issue: 1 Volume: 11 Year: 2008 Month: 4 X-DOI: 10.1080/13691060802351248 File-URL: http://hdl.handle.net/10.1080/13691060802351248 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:1:p:71-83 Template-Type: ReDIF-Article 1.0 Author-Name: David Citron Author-X-Name-First: David Author-X-Name-Last: Citron Author-Name: Robert Cressy Author-X-Name-First: Robert Author-X-Name-Last: Cressy Author-Name: Xavier Gerard Author-X-Name-First: Xavier Author-X-Name-Last: Gerard Title: Prospectus forecast publication and forecast errors: the role of venture capitalist certification Abstract: Using a dataset of French IPOs over the period 1996--2000 we provide a test of the certification ability of venture capitalists (VCs). We do this in two ways. First we compare forecast publication between VC- and non-VC-backed IPOs. Secondly, conditional on publication, we investigate the accuracy of VC-backed versus non-VC-backed IPOs' prospectus forecasts. We also test for the association between VC reputation and both forecast issuance and forecast accuracy. VC concerns for reputation should result in lower chances of issuing a forecast and in more accurate forecasts for VC-backed IPOs. Our main findings are that (i) the prospectuses of IPOs backed by VCs are indeed less likely to include financial forecasts; (ii) high-reputation VC backers are associated with lower forecast errors. These findings are consistent with the Certification Hypothesis and are robust to controlling for both sample selection bias, due to the discretionary nature of prospectus forecast issuance, and for earnings management practices. Journal: Venture Capital Pages: 87-105 Issue: 2 Volume: 11 Year: 2008 Month: 8 X-DOI: 10.1080/13691060802525296 File-URL: http://hdl.handle.net/10.1080/13691060802525296 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:2:p:87-105 Template-Type: ReDIF-Article 1.0 Author-Name: Patrick Sentis Author-X-Name-First: Patrick Author-X-Name-Last: Sentis Title: Insider trading, pricing and the long-run performance of IPOs: evidence from the French market during the high-tech bubble Abstract: This article empirically examines the relationship between insider (entrepreneurs and venture capitalists) trading and underpricing and long-run performance in a sample of 120 initial public offerings (IPOs) that took place on the Nouveau Marché in France during the high-tech bubble. We hypothesize that insiders were better informed than the market about the future prospect of the firms, particularly during the high-tech bubble characterized by strong information asymmetry. Trading activity was measured at the IPO date and over a three-year period after this date. We find no evidence suggesting that entrepreneurs and venture capitalists knowingly issue overvalued equity at the IPO date. However, there is weak, but statistically significant, evidence that suggests that entrepreneurs and venture capitalists acquire private information during the first years of flotation and have the ability to take advantage of it by selling overvalued equity. Both these types of insider seem to be the best informed on the future value of the firm. However, changes in ownership of banks and other shareholders are not followed by significant change in the firm's long term value. Journal: Venture Capital Pages: 107-132 Issue: 2 Volume: 11 Year: 2008 Month: 12 X-DOI: 10.1080/13691060902764621 File-URL: http://hdl.handle.net/10.1080/13691060902764621 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:2:p:107-132 Template-Type: ReDIF-Article 1.0 Author-Name: Junfu Zhang Author-X-Name-First: Junfu Author-X-Name-Last: Zhang Title: Why do some US universities generate more venture-backed academic entrepreneurs than others? Abstract: In this study, I identify academic entrepreneurs using biographical information on start-up founders contained in a comprehensive venture capital database. Multivariate analyses are conducted to investigate why some US universities generate more venture-backed academic entrepreneurs than others. I find that national academy membership and total faculty awards are the most significant variables in explaining the number of venture-backed entrepreneurs from a university. In contrast, the abundance of venture capital near the university has no significant effect, which is surprising given that this study focuses exclusively on venture-backed entrepreneurs. Journal: Venture Capital Pages: 133-162 Issue: 2 Volume: 11 Year: 2008 Month: 8 X-DOI: 10.1080/13691060802525270 File-URL: http://hdl.handle.net/10.1080/13691060802525270 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:2:p:133-162 Template-Type: ReDIF-Article 1.0 Author-Name: Dorothea Schäfer Author-X-Name-First: Dorothea Author-X-Name-Last: Schäfer Author-Name: Dirk Schilder Author-X-Name-First: Dirk Author-X-Name-Last: Schilder Title: Smart capital in German start-ups -- an empirical analysis Abstract: What kind of smart capital relational investors actually supply, especially in a bank-based financial system such as the German one, is still an open question. We divide smart capital into single components and conduct a survey with 85 German suppliers of start-up finance. The results show that the degree of ‘smartness’ is determined by the financial product used and partly also by the financiers' institutional background and business strategy, the expected time-horizon of the investment and the stage of development of the firm financed. However, we find that all types of financiers offer smart capital, at least up to a certain level. Journal: Venture Capital Pages: 163-183 Issue: 2 Volume: 11 Year: 2008 Month: 8 X-DOI: 10.1080/13691060802525304 File-URL: http://hdl.handle.net/10.1080/13691060802525304 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:2:p:163-183 Template-Type: ReDIF-Article 1.0 Author-Name: Alessandro Rosiello Author-X-Name-First: Alessandro Author-X-Name-Last: Rosiello Author-Name: Stuart Parris Author-X-Name-First: Stuart Author-X-Name-Last: Parris Title: The patterns of venture capital investment in the UK bio-healthcare sector: the role of proximity, cumulative learning and specialisation Abstract: This paper focuses on the patterns of venture capital (VC) investment in dedicated biotech firms (DBFs) in the therapeutic and diagnostic sectors (bio-healthcare). We use a database of 655 UK bio-healthcare deals to map the geographical flows of VC investment and measure the co-location of investors and DBFs. Then, using 20 face-to-face interviews with venture capitalists (VCs) and DBF firms in Cambridge and Scotland, we study the strategic motives underlying the co-location of investors and investee companies and reflect on the catalytic role VCs play in context of the Scottish and Cambridge bio-clusters. From the viewpoint of VC-related policies, we find that our study is more in line with arguments stressing the attractive power of ‘investor-ready’ opportunities (Mason and Harrison 2003) than supply-side approaches that take for granted VC presence at the core of high-tech clusters. In line with Avnimelech, Rosiello, and Teubal (2008), we propose that VC policy should be consistent with the wider strategic objectives of innovation and technology policy. Journal: Venture Capital Pages: 185-211 Issue: 3 Volume: 11 Year: 2009 Month: 2 X-DOI: 10.1080/13691060902973016 File-URL: http://hdl.handle.net/10.1080/13691060902973016 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:3:p:185-211 Template-Type: ReDIF-Article 1.0 Author-Name: Maya Waisman Author-X-Name-First: Maya Author-X-Name-Last: Waisman Author-Name: Haizhi Wang Author-X-Name-First: Haizhi Author-X-Name-Last: Wang Author-Name: Robert Wuebker Author-X-Name-First: Robert Author-X-Name-Last: Wuebker Title: Delaware incorporation matters for new ventures: evidence from venture capital investment and the going public process Abstract: In the United States, corporate actors choose their state of incorporation and are subject to the laws of the state in which they are incorporated. Incorporating in Delaware is a common move for most US firms, especially those interested in attracting venture capital, as the state's corporation laws are clearer, more fully defined and business friendly, courts have more experience judging corporate cases, antitakeover laws are less restrictive, and financing or merger deals are more quick and efficient than in most other states. Using a large sample of privately held companies, we empirically investigate the implications of Delaware incorporation and examine its effect on access to VC financing and the process of going public. The results suggest that companies incorporated in Delaware receive more venture financing and attract more involvement from different venture capitalists than entrepreneurial firms incorporated elsewhere. In addition, we find that Delaware incorporated venture-backed firms are more likely to reach the stage of going public, get to that stage faster, and generate more IPO proceeds or higher acquisition values than similar firms incorporated elsewhere. Overall, our study reveals the first empirical evidence about the importance of state laws to privately held, informationally opaque firms seeking venture capital support. Journal: Venture Capital Pages: 213-227 Issue: 3 Volume: 11 Year: 2009 Month: 2 X-DOI: 10.1080/13691060902975128 File-URL: http://hdl.handle.net/10.1080/13691060902975128 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:3:p:213-227 Template-Type: ReDIF-Article 1.0 Author-Name: Oskari Lehtonen Author-X-Name-First: Oskari Author-X-Name-Last: Lehtonen Author-Name: Tom Lahti Author-X-Name-First: Tom Author-X-Name-Last: Lahti Title: The role of advisors in the venture capital investment process Abstract: Despite the extensive research on venture capitalists and entrepreneurs, there is at least one group of actors whose role has been overlooked, namely advisors that specialise in helping entrepreneurs raise venture capital funding. This explorative study aims to fill this gap. Based on qualitative case study data, this paper shows that the activities of advisors have several benefits for entrepreneurs seeking funding. Advisors appear to accelerate the process of acquiring funding and improve the terms and conditions of the funding. By participating in the preparation of written documents that are required when approaching investors advisors can contribute to increasing the investment readiness of an entrepreneurial venture. They also typically participate in investment negotiations. This may reduce the possibility that negotiations between the venture capitalist and the entrepreneur become confrontational which could, in turn, adversely affect the venture capital--entrepreneur post-investment relationship. The findings in this study strongly suggest that using advisors increases the likelihood that entrepreneurs will successfully obtain venture capital funding. This paper recommends that inexperienced entrepreneurs in particular should seek support from advisors when seeking to raise venture capital. Journal: Venture Capital Pages: 229-254 Issue: 3 Volume: 11 Year: 2009 Month: 2 X-DOI: 10.1080/13691060902972851 File-URL: http://hdl.handle.net/10.1080/13691060902972851 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:3:p:229-254 Template-Type: ReDIF-Article 1.0 Author-Name: S. M. Locke Author-X-Name-First: S. M. Author-X-Name-Last: Locke Author-Name: Kartick Gupta Author-X-Name-First: Kartick Author-X-Name-Last: Gupta Title: The return to initial public offerings: a Sino-Indian comparison Abstract: The ability of entrepreneurs and other promoters of start-up businesses to exit through an initial public offering is an important component of a mature capital market. The returns on initial public offerings (IPOs) on the Shanghai and Bombay stock exchanges over a 14-year period to May 2007 are analysed in this paper. Consideration is given to the medium to longer-term returns accruing to the new listings. The focus is not on initial subscribers' gains or losses on listing but rather on the extent to which new listings continue and generate at least normal returns. The two emerging economies considered have differing political, legal and economic systems and exhibit significantly different return patterns. Journal: Venture Capital Pages: 255-277 Issue: 3 Volume: 11 Year: 2009 Month: 2 X-DOI: 10.1080/13691060902975185 File-URL: http://hdl.handle.net/10.1080/13691060902975185 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:3:p:255-277 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Title: Venture capital in crisis? Abstract: The venture capital industry is widely thought to be in crisis. The huge amount of money that flowed into the industry in recent years has driven down returns. This has had knock-on effects on fund-raising and investment activity. Many commentators believe that the industry needs to downsize. There are signs that this is already occurring. New investment models are emerging, notably boutique funds, often angel-backed, based on making small investments in early stage businesses and seeking an early exit through a trade sale. Research needs to engage with the venture capital industry's new dynamic. A number of lines of enquiry are proposed. Journal: Venture Capital Pages: 279-285 Issue: 4 Volume: 11 Year: 2009 Month: 10 X-DOI: 10.1080/13691060903303775 File-URL: http://hdl.handle.net/10.1080/13691060903303775 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:4:p:279-285 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Kedrosky Author-X-Name-First: Paul Author-X-Name-Last: Kedrosky Title: Right-sizing the US venture capital industry-super-† Abstract: There is reason to believe that the venture capital industry, at least in the USA, will be differently sized and structured in the future. Its investment performance has deteriorated following the dot.com crash. This is attributed to the maturing of its main investment sectors, the emergence of new sectors that are less competitive and a decline in IPOs. In the face of these trends -- declining returns and reduced investment opportunities -- the venture capital industry needs to downsize, perhaps by as much as half, for it to resume its position as both a credible asset class and a significant force for economic development. Journal: Venture Capital Pages: 287-293 Issue: 4 Volume: 11 Year: 2009 Month: 6 X-DOI: 10.1080/13691060903190255 File-URL: http://hdl.handle.net/10.1080/13691060903190255 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:4:p:287-293 Template-Type: ReDIF-Article 1.0 Author-Name: Joern Block Author-X-Name-First: Joern Author-X-Name-Last: Block Author-Name: Philipp Sandner Author-X-Name-First: Philipp Author-X-Name-Last: Sandner Title: What is the effect of the financial crisis on venture capital financing? Empirical evidence from US Internet start-ups Abstract: Employing a large dataset of venture capital investments in US Internet firms, we analyse the effect of the current financial crisis on the venture capital market. Using regression analysis, we find that the financial crisis is associated with a 20% decrease in the average amount of funds raised per funding round. This effect, however, can only be found in later funding rounds. We argue that firms in later financing rounds that need capital to survive cannot avoid a deduction induced by the financial crisis, whereas firms that seek initial funding postpone their funding and expansion plans until the capital markets have stabilized. Furthermore, firms in later phases of the venture cycle are more likely to be negatively affected by the weak IPO market than firms seeking initial funding. Our results suggest that the financial crisis can lead to a severe ‘funding gap’ in the financing of technological development and innovation. Journal: Venture Capital Pages: 295-309 Issue: 4 Volume: 11 Year: 2009 Month: 6 X-DOI: 10.1080/13691060903184803 File-URL: http://hdl.handle.net/10.1080/13691060903184803 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:4:p:295-309 Template-Type: ReDIF-Article 1.0 Author-Name: Steven Pinch Author-X-Name-First: Steven Author-X-Name-Last: Pinch Author-Name: Peter Sunley Author-X-Name-First: Peter Author-X-Name-Last: Sunley Title: Understanding the role of venture capitalists in knowledge dissemination in high-technology agglomerations: a case study of the University of Southampton spin-off cluster Abstract: This project examines the role of venture capitalists (VCs) as disseminators of knowledge in the cluster of high-technology businesses that have spun off from research undertaken at the University of Southampton UK. The analysis was inspired by work of Zook on the Internet industry in the San Francisco Bay Area of the US. This research suggested that it was not just the amount of venture capital that was available in the region that led to its prominence but also the technical and commercial acumen on the part of the local VCs that gave their investees a key advantage in the Internet industry. In contrast, this study of Southampton spin-outs found no equivalent cluster-based infrastructure spreading technical knowledge. The knowledge spread by UK VCs tended to consist of business advice, the evaluation of commercial strategy and the recruitment and scrutiny of key company personnel. Despite many recent initiatives in the UK, many start-up firms reported a relative shortage of experienced early stage investors who were willing and able to act as ‘company builders’. The results suggest that while investors in the Southampton case provide valuable general business and commercial knowledge, there is little evidence that they supply specialist and tacit knowledge via strong relational partnerships. In the context of some of the difficulties and ambiguities pertaining to spin-out experiences with venture capital, the paper documents how a university has turned to an institutionalised partnership with an intellectual property commercialisation firm. Journal: Venture Capital Pages: 311-333 Issue: 4 Volume: 11 Year: 2009 Month: 3 X-DOI: 10.1080/13691060902972885 File-URL: http://hdl.handle.net/10.1080/13691060902972885 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:4:p:311-333 Template-Type: ReDIF-Article 1.0 Author-Name: Julia Sass Rubin Author-X-Name-First: Julia Sass Author-X-Name-Last: Rubin Title: Developmental venture capital: conceptualizing the field Abstract: Developmental venture capital is the financing of businesses with equity and near-equity in order to achieve both social and financial objectives. The social returns include economic development of distressed urban and rural geographies; creation of high-quality jobs for low-income populations; building wealth for women and people of color; and creation of products that benefit society, such as those that lower poverty or contribute to a cleaner environment. This article introduces a conceptual framework for the developmental venture capital industry based on the social objectives of individual funds. The framework distinguishes between funds that have corrective versus additive objectives. Funds with corrective objectives are designed to address inadequate access to traditional venture capital by specific geographies and populations. Funds with additive objectives are meant to further specific social goals, such as fighting poverty or environmental degradation. This framework further differentiates between two forms of corrective venture capital, based on the capital access obstacles that each is trying to address and whether the resulting economic models require subsidy. Journal: Venture Capital Pages: 335-360 Issue: 4 Volume: 11 Year: 2009 Month: 7 X-DOI: 10.1080/13691060903184829 File-URL: http://hdl.handle.net/10.1080/13691060903184829 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2009:i:4:p:335-360 Template-Type: ReDIF-Article 1.0 Author-Name: Mukund R. Dixit Author-X-Name-First: Mukund R. Author-X-Name-Last: Dixit Author-Name: Amit Karna Author-X-Name-First: Amit Author-X-Name-Last: Karna Author-Name: Sunil Sharma Author-X-Name-First: Sunil Author-X-Name-Last: Sharma Title: Entrepreneurial growth actions and their financial consequences in a start-up: insights from a low cost airline venture in a competitive environment Abstract: This paper investigates the financial consequences of entrepreneurial growth actions in a start-up. It argues that the growth actions in a start-up create an imbalance in the demand for and supply of money for the start-up. This imbalance does not hurt if the external business environment is munificent. However, if the environment turns hostile the imbalance may force the entrepreneur to take crisis decisions that destroy the very texture of the venture. We develop insights into this situation by tracing the development of a low cost airline venture in India. We identify two distinct growth phases: early growth and emergent growth. We present a comparative analysis of these two phases on different parameters: growth actions of the venture, financial consequences, stance of the environment and implications for the texture of the venture. The paper concludes with a discussion on start-up aspirations, growth actions, financial imbalance and maintenance of the texture of the venture. Journal: Venture Capital Pages: 361-378 Issue: 4 Volume: 11 Year: 2008 Month: 11 X-DOI: 10.1080/13691060903184779 File-URL: http://hdl.handle.net/10.1080/13691060903184779 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:11:y:2008:i:4:p:361-378 Template-Type: ReDIF-Article 1.0 Author-Name: Mark V. Cannice Author-X-Name-First: Mark V. Author-X-Name-Last: Cannice Author-Name: Arthur H. Bell Author-X-Name-First: Arthur H. Author-X-Name-Last: Bell Title: Metaphors used by venture capitalists: Darwinism, architecture and myth Abstract: In this paper we develop a catalog of metaphor families that Silicon Valley venture capitalists use in their public communications. In establishing this preliminary catalog we aim to provide additional insight into the venture capitalist perspective and also lay the foundation for the development of a grounded cultural model of Silicon Valley venture capitalists. To develop this catalog we surveyed on average 30 venture capitalists each quarter from Q1 2004 to Q1 2009. We analyzed these 21 qualitative datasets, coding and categorizing more than 10,000 words of direct venture capitalists' communications. We found that VC communications fall into 14 dominant metaphor families (e.g. Darwinism, physics, religion, etc.). We contribute to the literature on venture capital by establishing a catalog of predominant VC metaphor families as an initial step toward a grounded cultural model of venture capital. This catalog may also provide further context for related studies on VC decision-making and an additional tool for stakeholders of the venture capital industry in better interpreting VC communications. Journal: Venture Capital Pages: 1-20 Issue: 1 Volume: 12 Year: 2009 Month: 6 X-DOI: 10.1080/13691060903184787 File-URL: http://hdl.handle.net/10.1080/13691060903184787 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:1:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: Andrew Burke Author-X-Name-First: Andrew Author-X-Name-Last: Burke Author-Name: Chantal Hartog Author-X-Name-First: Chantal Author-X-Name-Last: Hartog Author-Name: André van Stel Author-X-Name-First: André Author-X-Name-Last: van Stel Author-Name: Kashifa Suddle Author-X-Name-First: Kashifa Author-X-Name-Last: Suddle Title: How does entrepreneurial activity affect the supply of informal investors? Abstract: This paper examines the prevalence and the determinants of informal entrepreneurial investment activity (including investors in firms of family and friends, and business angels), using a dataset of more than 175,000 individuals -- including some 4000 informal investors -- in 28 highly developed countries over the period 2002--04. We distinguish between micro-level and macro-level determinants. The results uncover a positive virtuous circle where the demand for informal investment tends to generate its own supply as a result of micro and macro factors. Our results also suggest that higher levels of entrepreneurial activity at the country level increase the probability that venture capital and informal investment work in tandem with one another as complements rather than substitutes. Overall, we find that entrepreneurial activity whether ongoing or having resulted in exit appears to boost the supply of informal investors. This effect applies to both friends and family (F&F) and business angel investor types. Journal: Venture Capital Pages: 21-47 Issue: 1 Volume: 12 Year: 2009 Month: 10 X-DOI: 10.1080/13691060903435775 File-URL: http://hdl.handle.net/10.1080/13691060903435775 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:1:p:21-47 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas A. Bosse Author-X-Name-First: Douglas A. Author-X-Name-Last: Bosse Author-Name: Tom Arnold Author-X-Name-First: Tom Author-X-Name-Last: Arnold Title: Trade credit: a real option for bootstrapping small firms Abstract: This study uses a real options framework to predict small firm bootstrapping behavior with regard to trade credit discounts. Findings from a sample of 606 small firms suggest their managers place high value on the ability to adjust their decisions over time in response to firm-specific changes in (1) the uncertainty they face; and (2) the irreversibility of their decisions. The insights provided by this study can help scholars and small firm managers better understand how trade discount strategies should be analyzed with respect to other sources of bootstrap and long-term capital. Journal: Venture Capital Pages: 49-63 Issue: 1 Volume: 12 Year: 2009 Month: 9 X-DOI: 10.1080/13691060903411560 File-URL: http://hdl.handle.net/10.1080/13691060903411560 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:1:p:49-63 Template-Type: ReDIF-Article 1.0 Author-Name: Jimmy Schwarzkopf Author-X-Name-First: Jimmy Author-X-Name-Last: Schwarzkopf Author-Name: Moren Lévesque Author-X-Name-First: Moren Author-X-Name-Last: Lévesque Author-Name: Andrew Maxwell Author-X-Name-First: Andrew Author-X-Name-Last: Maxwell Title: How entrepreneurs-in-residence increase seed investment rates Abstract: This article investigates the role of entrepreneurs-in-residence (EIRs) in closing the equity gap born by a lack of venture capital investment in early stage businesses. We conducted interviews with 10 Israeli-based venture capitalists and four EIRs to identify the mechanisms and actions used by EIRs when operating in venture capital firms, and subsequently in funded ventures, that lead to a greater proportion of funds targeted to seed investments. The findings of our exploratory study suggest that EIRs facilitate investment decisions by acting as catalysts in the development of the relationship between the venture capitalist and the fund-seeking entrepreneur. EIRs can thus prevent some of the problems that preclude venture success through the nurturing of trusted relationships with both fund-seeking entrepreneurs and venture capitalists. Furthermore, ex-ante, during and ex-post investment, through building these trusted relationships, EIRs act as transaction-cost reducers, thus increasing expected return on investments from early stage ventures. In an attempt to help reduce the equity gap by developing a better understanding of this key phenomenon, these findings provide guidance to rising entrepreneurs as they develop their early stage businesses, to venture capitalists as they look for investment opportunities, and to governments eager to increase the rate of seed funding. Journal: Venture Capital Pages: 65-81 Issue: 1 Volume: 12 Year: 2009 Month: 10 X-DOI: 10.1080/13691060903435783 File-URL: http://hdl.handle.net/10.1080/13691060903435783 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:1:p:65-81 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Peneder Author-X-Name-First: Michael Author-X-Name-Last: Peneder Title: The impact of venture capital on innovation behaviour and firm growth Abstract: This paper uses a novel research design to investigate the effects of venture capital financing on corporate performance by applying a two-stage propensity score matching on Austrian micro-data. Controlling for differences in industry, location, legal status, size, age, credit rating, export and innovation behaviour, the findings (i) assert the financing function of venture capital, showing that recipients lacked access to satisfactory alternative sources of capital; (ii) identify selection effects, where venture capital is invested in firms with high performance potential; and finally (iii) confirm the value adding function in terms of a genuine causal impact of venture capital on firm growth, yet not on innovation output. Journal: Venture Capital Pages: 83-107 Issue: 2 Volume: 12 Year: 2009 Month: 11 X-DOI: 10.1080/13691061003643250 File-URL: http://hdl.handle.net/10.1080/13691061003643250 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:2:p:83-107 Template-Type: ReDIF-Article 1.0 Author-Name: Andrew Zacharakis Author-X-Name-First: Andrew Author-X-Name-Last: Zacharakis Author-Name: Truls Erikson Author-X-Name-First: Truls Author-X-Name-Last: Erikson Author-Name: Bradley George Author-X-Name-First: Bradley Author-X-Name-Last: George Title: Conflict between the VC and entrepreneur: the entrepreneur's perspective Abstract: In this study, the effects of conflict on confidence in partner cooperation are explored. While the literature on VC--entrepreneur interactions is well developed, viewing the impact of conflict within the dyad is less developed. The data are based on a survey of 57 entrepreneurs who have received venture capital investments. Whereas past research finds that VCs view task conflict favorably, the current study finds that entrepreneurs do not, which leads to reduced confidence in partner cooperation. Furthermore, intragroup conflict within the entrepreneurial team increases conflict between the entrepreneurial team and VC. The implications of the findings suggest that it is important for the entrepreneurial team to build cohesion both within the team and with the VC so that if conflict arises, it doesn't lead to lower overall performance. Journal: Venture Capital Pages: 109-126 Issue: 2 Volume: 12 Year: 2010 Month: 3 X-DOI: 10.1080/13691061003771663 File-URL: http://hdl.handle.net/10.1080/13691061003771663 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2010:i:2:p:109-126 Template-Type: ReDIF-Article 1.0 Author-Name: Oswald Jones Author-X-Name-First: Oswald Author-X-Name-Last: Jones Author-Name: Dilani Jayawarna Author-X-Name-First: Dilani Author-X-Name-Last: Jayawarna Title: Resourcing new businesses: social networks, bootstrapping and firm performance Abstract: It is commonly reported that new businesses have difficulty in accessing finance. Such businesses can engage in ‘bootstrapping’ activities as a way of compensating for the lack of finance and other resources. This paper extends prior research on start-up finance by investigating how social networks can help new ventures to acquire bootstrapped resources and how these resources influence business performance. Based on theoretical considerations, the paper proposes a framework linking social networks and bootstrapping activities to the performance of firms during the early stages of operation. The model is tested using structural equation modelling. Results obtained from the longitudinal study based on a sample of 211 entrepreneurs indicate that social networks play a key role in the acquisition of bootstrapped resources. The study differentiates between the roles of strong ties, weak ties and brokerage in accessing three different types of bootstrapped resources: payment related, owner related and joint utilisation techniques. Furthermore, bootstrapped resources make a direct impact on firm performance as well as mediating the impact of social networks. It is suggested that the results of this study have significant implications for scholarly interest in business start-ups as well as those involved with supporting nascent entrepreneurs. Journal: Venture Capital Pages: 127-152 Issue: 2 Volume: 12 Year: 2010 Month: 1 X-DOI: 10.1080/13691061003658886 File-URL: http://hdl.handle.net/10.1080/13691061003658886 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2010:i:2:p:127-152 Template-Type: ReDIF-Article 1.0 Author-Name: Geoff Roach Author-X-Name-First: Geoff Author-X-Name-Last: Roach Title: Is angel investing worth the effort? A study of Keiretsu Forum-super-† Abstract: This paper provides a case study of Keiretsu Forum, a Silicon Valley-based angel group. Computing an internal rate of return for the group's investments reveals that they generated higher returns than could have been obtained from the broader equity market as measured by popular index funds. Perhaps more important, this study also indicated that the processes developed by and regularly used by the angel group are effective at identifying potential failed deals but are not so restrictive as to bypass potential winners. Journal: Venture Capital Pages: 153-166 Issue: 2 Volume: 12 Year: 2009 Month: 7 X-DOI: 10.1080/13691061003643276 File-URL: http://hdl.handle.net/10.1080/13691061003643276 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:2:p:153-166 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Title: Entrepreneurial finance in a regional economy Journal: Venture Capital Pages: 167-172 Issue: 3 Volume: 12 Year: 2010 Month: 7 X-DOI: 10.1080/13691066.2010.507033 File-URL: http://hdl.handle.net/10.1080/13691066.2010.507033 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2010:i:3:p:167-172 Template-Type: ReDIF-Article 1.0 Author-Name: David North Author-X-Name-First: David Author-X-Name-Last: North Author-Name: Robert Baldock Author-X-Name-First: Robert Author-X-Name-Last: Baldock Author-Name: Ignatius Ekanem Author-X-Name-First: Ignatius Author-X-Name-Last: Ekanem Title: Is there a debt finance gap relating to Scottish SMEs? A demand-side perspective Abstract: This paper investigates whether or not there is evidence of market failure in the provision of bank finance to Scottish SMEs. The key question is whether SMEs have been experiencing difficulties because of the unsuitability of the business case they were putting to the banks or because of sub-optimal lending practices. The paper draws upon evidence from the 2006 Annual Small Business Survey (Scotland), based on a survey of 1014 Scottish SMEs, and a follow-up in-depth survey of 39 SMEs that had reported problems in accessing bank finance. While the findings show that less than one-fifth of the firms trying to access bank finance encountered problems and that only a small minority had to abandon their projects completely as a result, both start-up and early stage businesses and manufacturing SMEs were disproportionately likely to experience problems. These were largely attributed by owner-managers to their lack of a track record of debt management in the case of young businesses and difficulties of providing the necessary collateral in the case of manufacturing SMEs. The risks associated with projects involving product and market diversification was also a factor. The paper concludes that these funding gaps are likely to have become larger since 2007 as a result of the credit crunch. Journal: Venture Capital Pages: 173-192 Issue: 3 Volume: 12 Year: 2009 Month: 6 X-DOI: 10.1080/13691061003658670 File-URL: http://hdl.handle.net/10.1080/13691061003658670 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:3:p:173-192 Template-Type: ReDIF-Article 1.0 Author-Name: David Deakins Author-X-Name-First: David Author-X-Name-Last: Deakins Author-Name: Geoff Whittam Author-X-Name-First: Geoff Author-X-Name-Last: Whittam Author-Name: Janette Wyper Author-X-Name-First: Janette Author-X-Name-Last: Wyper Title: SMEs' access to bank finance in Scotland: an analysis of bank manager decision making Abstract: This paper focuses on supply-side issues relating to access to bank finance by entrepreneurs in Scotland. We analyse bank manager decision making of real business propositions through verbal protocol analysis. The paper discusses the nature of the decision-making process from interviews with bank loan officers utilising verbal protocol analysis with validated real entrepreneur business proposals to give insights into the decision making of bank loan officers in the processing of bank funding proposals. Hence this paper reports the supply-side findings from the larger study on SMEs' access to bank finance in Scotland. Journal: Venture Capital Pages: 193-209 Issue: 3 Volume: 12 Year: 2009 Month: 6 X-DOI: 10.1080/13691061003658647 File-URL: http://hdl.handle.net/10.1080/13691061003658647 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:3:p:193-209 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Author-Name: Gavin Don Author-X-Name-First: Gavin Author-X-Name-Last: Don Author-Name: Keith Glancey Johnston Author-X-Name-First: Keith Author-X-Name-Last: Glancey Johnston Author-Name: Malcolm Greig Author-X-Name-First: Malcolm Author-X-Name-Last: Greig Title: The early-stage risk capital market in Scotland since 2000: issues of scale, characteristics and market efficiency Abstract: In this paper we provide a detailed profile and analysis of the regional risk capital market in Scotland, using an innovative methodology and specially developed databases which cover risk capital investment in young companies in the periods 2000--04 and 2005--07. This identifies the investment activity of all actors in the market and provides estimates of the total flow of risk capital investment into early-stage Scottish companies over the period. The paper concludes by drawing out the implications for policy makers (providing a more robust evidence base for the development, implementation and monitoring of policy) and for academic researchers (on the methodologies for estimating market scale and efficiency). Journal: Venture Capital Pages: 211-239 Issue: 3 Volume: 12 Year: 2009 Month: 12 X-DOI: 10.1080/13691066.2010.486149 File-URL: http://hdl.handle.net/10.1080/13691066.2010.486149 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:3:p:211-239 Template-Type: ReDIF-Article 1.0 Author-Name: Stuart Paul Author-X-Name-First: Stuart Author-X-Name-Last: Paul Author-Name: Geoff Whittam Author-X-Name-First: Geoff Author-X-Name-Last: Whittam Title: Business angel syndicates: an exploratory study of gatekeepers Abstract: The objective of this paper is to examine the role of the individuals who control access to and manage much of the day-to-day operation of informal investment syndicates. We give these people the name business angel gatekeepers. Guided by an analytical framework developed from the research and development literature, empirical findings are presented from a series of in-depth interviews with a representative sample of Scotland-based gatekeepers. The paper proposes a definition of the term ‘business angel gatekeeper’, identifies the function and roles of gatekeepers and examines the skills required to perform the role. The paper concludes by considering the implications for stakeholders in the business angel market. Journal: Venture Capital Pages: 241-256 Issue: 3 Volume: 12 Year: 2009 Month: 9 X-DOI: 10.1080/13691061003711438 File-URL: http://hdl.handle.net/10.1080/13691061003711438 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:3:p:241-256 Template-Type: ReDIF-Article 1.0 Author-Name: Massimo G. Colombo Author-X-Name-First: Massimo G. Author-X-Name-Last: Colombo Author-Name: Terttu Luukkonen Author-X-Name-First: Terttu Author-X-Name-Last: Luukkonen Author-Name: Philippe Mustar Author-X-Name-First: Philippe Author-X-Name-Last: Mustar Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Title: Venture capital and high-tech start-ups Journal: Venture Capital Pages: 261-266 Issue: 4 Volume: 12 Year: 2010 Month: 10 X-DOI: 10.1080/13691066.2010.486153 File-URL: http://hdl.handle.net/10.1080/13691066.2010.486153 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2010:i:4:p:261-266 Template-Type: ReDIF-Article 1.0 Author-Name: Mirjam Knockaert Author-X-Name-First: Mirjam Author-X-Name-Last: Knockaert Author-Name: Bart Clarysse Author-X-Name-First: Bart Author-X-Name-Last: Clarysse Author-Name: Andy Lockett Author-X-Name-First: Andy Author-X-Name-Last: Lockett Title: Are technology VC investors a distinct species on the investment market? Abstract: We address the question: do technology investors differ from traditional investors? Employing a conjoint methodology, we identified 28 technology investors from a sample of 68 European early stage investors. Comparing the two groups of investors we found that: (1) technology investors were not more likely to receive public funding than traditional investors; (2) technology investors had more investment management experience than traditional investors; and (3) technology investors had more consulting experience than traditional investors. Our research has implications for public policy, aimed at resolving the market failure for high-tech investments, high-tech entrepreneurs looking for venture capital (VC) funding, and VC funds. Journal: Venture Capital Pages: 267-283 Issue: 4 Volume: 12 Year: 2009 Month: 12 X-DOI: 10.1080/13691066.2010.486161 File-URL: http://hdl.handle.net/10.1080/13691066.2010.486161 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:4:p:267-283 Template-Type: ReDIF-Article 1.0 Author-Name: Pedro Ortín-Ángel Author-X-Name-First: Pedro Author-X-Name-Last: Ortín-Ángel Author-Name: Ferran Vendrell-Herrero Author-X-Name-First: Ferran Author-X-Name-Last: Vendrell-Herrero Title: Why do university spin-offs attract more venture capitalists? Abstract: This paper provides empirical evidence that young university spin-offs are more likely to receive venture capital than other technological start-ups. In addition, this fact is explained mainly by the lack of managerial skills among the founders of certain university spin-offs. The data used have been obtained from a questionnaire answered by 64 Spanish technological firms founded between the years 1993 and 2005. Forty of the firms are university spin-offs; the remainder are independent technology-based start-ups. The results support the complementary-assets view that academic entrepreneurs use venture capitalists as a means of gaining access to managerial skills. These results are maintained even when we control for financial constraints, levels of debt and intellectual property protection. Although these latter variables explain why certain high-tech firms are more likely to receive venture capital, we do not find statistical evidence that they explain the differences between university spin-offs and technological start-ups in terms of being backed by venture capitalists. The results therefore suggest that universities and policy makers can stimulate the creation and growth of university spin-offs by facilitating contact and trust between venture capitalists and academic entrepreneurs, mostly with respect to those cases in which there is a severe lack of managerial skills. Journal: Venture Capital Pages: 285-306 Issue: 4 Volume: 12 Year: 2009 Month: 11 X-DOI: 10.1080/13691066.2010.486166 File-URL: http://hdl.handle.net/10.1080/13691066.2010.486166 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:4:p:285-306 Template-Type: ReDIF-Article 1.0 Author-Name: Fabio Bertoni Author-X-Name-First: Fabio Author-X-Name-Last: Bertoni Author-Name: Annalisa Croce Author-X-Name-First: Annalisa Author-X-Name-Last: Croce Author-Name: Diego D'Adda Author-X-Name-First: Diego Author-X-Name-Last: D'Adda Title: Venture capital investments and patenting activity of high-tech start-ups: a micro-econometric firm-level analysis Abstract: The aim of this paper is to analyse empirically the impact of venture capital (VC) finance on the innovation output of new technology-based firms (NTBFs) as reflected by their patenting activity. In particular, we compare the patenting rates of VC-backed and non-VC-backed NTBFs. To investigate whether VC investments spur patenting activity, we consider a unique longitudinal dataset composed of 351 Italian NTBFs operating in high-tech manufacturing industries and software, 33 of which are VC-backed. We estimate different econometric models on panel data, controlling for factors that may affect a firm's patenting behaviour other than the presence of VC, like founders' human capital and use of other sources of financing. The results show that VC investments positively affect subsequent patenting activity and that before receiving VC, VC-backed firms do not exhibit a higher patenting propensity than other firms. Journal: Venture Capital Pages: 307-326 Issue: 4 Volume: 12 Year: 2009 Month: 11 X-DOI: 10.1080/13691066.2010.486157 File-URL: http://hdl.handle.net/10.1080/13691066.2010.486157 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:12:y:2009:i:4:p:307-326 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Cressy Author-X-Name-First: Robert Author-X-Name-Last: Cressy Author-Name: Federico Munari Author-X-Name-First: Federico Author-X-Name-Last: Munari Author-Name: Alessandro Malipiero Author-X-Name-First: Alessandro Author-X-Name-Last: Malipiero Title: Creative destruction? Evidence that buyouts shed jobs to raise returns Abstract: Building on the work of Cressy, Munari, and Malipiero (2007a) which showed that buyouts have higher operating profitability in the post-buyout period than matched companies, the paper examines contradictory popular claims that private equity (PE)-backed leveraged buyouts (LBOs) generate or destroy jobs as a result of the process of ‘rationalisation’. Using a sample of up to 57 UK whole-company buyouts and a matched sample of up to 83 controls over the period 1995--2000 we run loglinear employment regressions for one to five years after the buyout with buyout year variables as regressors. A PE dummy represents companies that have PE backing while other variables control for initial employment, gearing, investee size and profitability together with industry and macro effects. We find that there is no PE-‘choice’ effect: in the buyout year there are no significant differences between buyout companies and controls in terms of employment. But in the post-buyout regressions the PE dummy is highly significant and negative reaching a peak of 23% per annum after four years. So to achieve efficiency gains, buyouts bring about quick and substantial reductions in employment in target companies during the initial period of ‘rationalisation’. However, initial profitability, three-year average post-buyout profitability and three-year sales growth have positive elasticities with respect to future employment suggesting that buyouts, by generating higher operating profits from job cuts, may ultimately be associated with compensating job creation. This, however, is the subject for future research. Journal: Venture Capital Pages: 1-22 Issue: 1 Volume: 13 Year: 2010 Month: 4 X-DOI: 10.1080/13691066.2010.490066 File-URL: http://hdl.handle.net/10.1080/13691066.2010.490066 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:1:p:1-22 Template-Type: ReDIF-Article 1.0 Author-Name: Riccardo Ferretti Author-X-Name-First: Riccardo Author-X-Name-Last: Ferretti Author-Name: Antonio Meles Author-X-Name-First: Antonio Author-X-Name-Last: Meles Title: Underpricing, wealth loss for pre-existing shareholders and the cost of going public: the role of private equity backing in Italian IPOs Abstract: This study analyses the role of private equity investors in solving asymmetric information problems and the relationship to underpricing, wealth loss for pre-existing shareholders and the cost of going public. According to certification theory, companies backed by private equity investors are expected to have lower underpricing at the moment of an initial public offering, as they have fewer adverse selection problems, and there is less ex-ante uncertainty. However, the relationship between private equity backing and the cost of going public to issuers is less clear. We use a dataset of 66 private equity-backed and 94 non-private equity-backed companies that went public on the Milan Stock Exchange between January 1998 and June 2008. Our findings provide evidence that out of the PE-backed firms, only those backed by private equity syndication show lower initial-day returns and indirect issuance opportunity cost, while there is no difference in the certification role between bank-related and non bank-related private equity investors. We also find that the benefits persist for IPOs backed by private equity syndication, although to a lesser extent, even after adjusting for direct costs (gross spreads) the opportunity cost of issuance. Journal: Venture Capital Pages: 23-47 Issue: 1 Volume: 13 Year: 2010 Month: 9 X-DOI: 10.1080/13691066.2010.543321 File-URL: http://hdl.handle.net/10.1080/13691066.2010.543321 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:1:p:23-47 Template-Type: ReDIF-Article 1.0 Author-Name: Tom Lahti Author-X-Name-First: Tom Author-X-Name-Last: Lahti Title: Categorization of angel investments: an explorative analysis of risk reduction strategies in Finland Abstract: Recent studies have proposed that future research on business angel typologies should focus on individual investments rather than investors. This study is a response to this proposal. It suggests that investments can be divided into subgroups in accordance with the comprehensiveness of business angels' due diligence and the strength of their involvement in the ventures. The sample comprises 53 investments by Finnish business angels. Four investment categories were identified: (a) gambles; (b) conventional angel investments; (c) due diligence-driven investments; and (d) professionally safeguarded investments. These investments are compared with respect to the general characteristics of the investors and investments, investment criteria and general investment preferences and to the level of relationship-specific investments by entrepreneurs. The results point to several substantial differences between these groups. The study helps entrepreneurs to understand what they can expect from angel investments. Journal: Venture Capital Pages: 49-74 Issue: 1 Volume: 13 Year: 2010 Month: 3 X-DOI: 10.1080/13691066.2010.543322 File-URL: http://hdl.handle.net/10.1080/13691066.2010.543322 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:1:p:49-74 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Title: Public policy and the creation of active venture capital markets Journal: Venture Capital Pages: 75-94 Issue: 1 Volume: 13 Year: 2010 Month: 4 X-DOI: 10.1080/13691066.2010.492989 File-URL: http://hdl.handle.net/10.1080/13691066.2010.492989 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:1:p:75-94 Template-Type: ReDIF-Article 1.0 Author-Name: Marco Da Rin Author-X-Name-First: Marco Author-X-Name-Last: Da Rin Author-Name: Giovanna Nicodano Author-X-Name-First: Giovanna Author-X-Name-Last: Nicodano Author-Name: Alessandro Sembenelli Author-X-Name-First: Alessandro Author-X-Name-Last: Sembenelli Title: A reply to Douglas Cumming's Review Essay: ‘Public policy and the creation of active venture capital markets’ Journal: Venture Capital Pages: 95-98 Issue: 1 Volume: 13 Year: 2010 Month: 10 X-DOI: 10.1080/13691066.2010.543856 File-URL: http://hdl.handle.net/10.1080/13691066.2010.543856 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:1:p:95-98 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Title: Misinforming the public about public policy towards venture capital Journal: Venture Capital Pages: 99-102 Issue: 1 Volume: 13 Year: 2010 Month: 10 X-DOI: 10.1080/13691066.2010.543541 File-URL: http://hdl.handle.net/10.1080/13691066.2010.543541 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:1:p:99-102 Template-Type: ReDIF-Article 1.0 Author-Name: Josée St-Pierre Author-X-Name-First: Josée Author-X-Name-Last: St-Pierre Author-Name: Théophile Serge Nomo Author-X-Name-First: Théophile Serge Author-X-Name-Last: Nomo Author-Name: Kristina Pilaeva Author-X-Name-First: Kristina Author-X-Name-Last: Pilaeva Title: The non-financial contribution of venture capitalists to VC-backed SMEs: the case of traditional sectors Abstract: Unlike other types of finance providers, the contribution made by venture capitalists (VCs) to the small and medium-sized enterprises (SMEs) they back is not strictly financial in nature. Because they have a stake in the firms' profits and losses, they often play an active role as investors, for example by helping to introduce business processes and practices conducive to long-term development and performance. This type of contribution has not been examined in depth in previous research, since authors have tended to concentrate on the financial contribution of VCs and its impacts on stock market performance. However, the stock market is no longer the principal outlet for VCs, particularly when they work with firms in traditional sectors, and we therefore felt it was appropriate to examine a sample of SMEs in order to identify the impacts of VC activities. A statistical study of the strategic capabilities of VC-financed and non-VC-financed SMEs revealed significant differences in favour of the former group. On the other hand, most of these differences no longer existed when we restricted our sample to gazelle-type SMEs with similar growth rates. This specific finding may reflect a client effect, in that, as other authors have pointed out, firms approached by VCs need to exhibit real potential for growth and profit. Given this, it is not possible to affirm that the more sophisticated development exhibited by the VC-financed firms is due specifically to the VCs' interventions, a situation that raises a number of other research questions. Journal: Venture Capital Pages: 103-118 Issue: 2 Volume: 13 Year: 2010 Month: 10 X-DOI: 10.1080/13691066.2011.558361 File-URL: http://hdl.handle.net/10.1080/13691066.2011.558361 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:2:p:103-118 Template-Type: ReDIF-Article 1.0 Author-Name: Henrik Berglund Author-X-Name-First: Henrik Author-X-Name-Last: Berglund Title: Early stage venture capital investing: comparing California and Scandinavia Abstract: While venture capital has become a global phenomenon, our knowledge about regional differences in venture capitalist (VC) behavior is quite poor. Most cross-regional comparisons have been quantitative replications of US based studies, which has made it difficult to discern qualitative differences. To help remedy this situation, we conducted semi-structured interviews with altogether 12 early stage VCs in California and Scandinavia. The results, which are presented in some detail, reveal substantial differences in VC activities and priorities during deal flow generation, investment, post-investment involvement, and exit. Taking a cue from these specific findings, we conclude by suggesting that VCs can be conceived of as fulfilling three ideal typical roles as investors, coaches and partners. Since they imply quite different modes of engaging with portfolio companies, it is also suggested that these roles -- while based on a limited sample -- may be useful for discriminating between VCs also in other settings. Journal: Venture Capital Pages: 119-145 Issue: 2 Volume: 13 Year: 2011 Month: 1 X-DOI: 10.1080/13691066.2011.558366 File-URL: http://hdl.handle.net/10.1080/13691066.2011.558366 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:2:p:119-145 Template-Type: ReDIF-Article 1.0 Author-Name: Tom Lahti Author-X-Name-First: Tom Author-X-Name-Last: Lahti Title: Angel investing: an examination of the evolution of the Finnish market Abstract: Since the study by Lumme, Mason and Suomi (1998) (Lumme, A., C.M. Mason, and M. Suomi. 1998. Informal venture capital: Investors, investments and policy in Finland. Boston: Kluwer Academic Publishers) more than a decade ago there has been very limited research on Finnish business angels (BAs). Thus, the primary aim of this study is to provide a more up-to-date picture of angel investing in Finland, reflecting market conditions in year 2006. The results are compared to Lumme, Mason and Suomi (1998) who portray the Finnish BA market in year 1994. In order to understand how the market has evolved over the years, the results are analysed with respect to changes in general economic conditions, the stock market development, the financial system, the entrepreneurial landscape and the marketplace for BAs. The current study draws upon interviews with 53 Finnish BAs. The results suggest that Finnish BAs have reduced their exposure to risk by increasing their prevalence to syndicate investments, investing in more mature ventures, holding more negligible shares of ownership, being more strict in their screening and placing more focus on due diligence. However, their involvement in the operations of the companies they fund has declined over the years. The analysis indicates that the change in the marketplace with the greatest impact on market development has been the establishment of a business introductory service. It has increased transparency in the market, and enables the formation of investment syndicates and transferral of investment practices. Based on the results implications are provided for BAs, entrepreneurs and policy-makers. Journal: Venture Capital Pages: 147-173 Issue: 2 Volume: 13 Year: 2011 Month: 5 X-DOI: 10.1080/13691066.2011.600282 File-URL: http://hdl.handle.net/10.1080/13691066.2011.600282 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:2:p:147-173 Template-Type: ReDIF-Article 1.0 Author-Name: Alexander P. Groh Author-X-Name-First: Alexander P. Author-X-Name-Last: Groh Author-Name: Heinrich v. Liechtenstein Author-X-Name-First: Heinrich v. Author-X-Name-Last: Liechtenstein Title: Determinants for allocations to Central Eastern Europe venture capital and private equity limited partnerships Abstract: Growth expectations and institutional settings in Central Eastern Europe (CEE) seem favorable for establishing a vibrant venture capital and private equity (VC/PE) market. However, the risk capital supply there is rather small in relation to the growth prospects. We examine the determinants of institutional investors' CEE allocation decisions through a questionnaire addressed to limited partners worldwide. Investors in CEE VC/PE limited partnerships are very knowledgeable about the region, they also appreciate other emerging regions, they regard entrepreneurial opportunities in CEE as very favorable, and they attribute local general partners in CEE with a high level of professional quality. In more detail, they appreciate team independence and the match of fund strategies with the teams' backgrounds. As economic growth expectations are fairly high in all emerging regions, investors focus on other allocation determinants, notably on the potential of institutional and cultural characteristics to turn the economic growth into entrepreneurial activism. Journal: Venture Capital Pages: 175-194 Issue: 2 Volume: 13 Year: 2010 Month: 7 X-DOI: 10.1080/13691066.2011.558359 File-URL: http://hdl.handle.net/10.1080/13691066.2011.558359 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2010:i:2:p:175-194 Template-Type: ReDIF-Article 1.0 Author-Name: Geertjan De Vries Author-X-Name-First: Geertjan Author-X-Name-Last: De Vries Author-Name: Joern H. Block Author-X-Name-First: Joern H. Author-X-Name-Last: Block Title: Venture capital syndication in times of economic crisis Abstract: This study analyses the effects of the 2000--2001 dot-com crisis and the 2008--2009 financial crisis on venture capital syndication. Using propensity score matching analysis, we show that during the two crises, venture capital firms (VCFs) had a lower tendency to syndicate their investments, and the size of the syndicates was smaller. This effect is found to be stronger for later-stage financing than for early stage financing. We explain the lower propensity to syndicate and the reduction in syndicate size by the existence of fewer exit opportunities for VCFs and a lower supply of funds for the venture capital industry. Implications for VCFs and start-up firms are discussed. Journal: Venture Capital Pages: 195-213 Issue: 3 Volume: 13 Year: 2011 Month: 6 X-DOI: 10.1080/13691066.2011.600278 File-URL: http://hdl.handle.net/10.1080/13691066.2011.600278 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:3:p:195-213 Template-Type: ReDIF-Article 1.0 Author-Name: Ian Clark Author-X-Name-First: Ian Author-X-Name-Last: Clark Author-Name: Clive Bawden Author-X-Name-First: Clive Author-X-Name-Last: Bawden Title: Investment in the UK retail sector by mid-market private equity: 2000--2008 Abstract: This study examines 107 ‘mid-market’ private equity investments in established businesses in the retail sector between 2000 and 2008. The research design comprises a bespoke data set built by the authors. Our reason for adopting this methodology is to create a specific data set on the retail sector which is derived from the views of private equity practitioners on what constitutes the mid-market in this sector. The findings from the data set lead us to present three conclusions which are of relevance to academics and practitioners. Firstly, the data set and related qualitative interview material suggest that there is no common definition of mid-market to report a diversity of private equity practitioner approaches to and definitions of the mid-market. Secondly, management capability in potential portfolio firms is a decisive factor in private equity investment in the retail sector but that it is not the key factor. Thirdly, mid-market investors in the retail sector find it difficult to realise an exit in terms of trade or sector buyers. Journal: Venture Capital Pages: 215-241 Issue: 3 Volume: 13 Year: 2011 Month: 6 X-DOI: 10.1080/13691066.2011.600284 File-URL: http://hdl.handle.net/10.1080/13691066.2011.600284 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:3:p:215-241 Template-Type: ReDIF-Article 1.0 Author-Name: Harveen Chugh Author-X-Name-First: Harveen Author-X-Name-Last: Chugh Author-Name: Nicos Nicolaou Author-X-Name-First: Nicos Author-X-Name-Last: Nicolaou Author-Name: Simon Barnes Author-X-Name-First: Simon Author-X-Name-Last: Barnes Title: How does VC feedback affect start-ups? Abstract: This study examines how venture capital (VC) feedback affects start-ups through a three-year qualitative study of university spin-offs. We present a taxonomy of VC feedback into (i) inconsistent, (ii) consistent and workable, and (iii) consistent and unworkable feedback. We find that when start-ups fail to raise VC, inconsistent VC feedback leads to a greater escalation of commitment than consistent and workable VC feedback. We show that single-loop learning mediates the relationship between VC feedback and escalation of commitment. We find that consistent and unworkable VC feedback increases the likelihood of a firm's exit, and that inhibited double-loop learning mediates the relationship between VC feedback and an exit. Journal: Venture Capital Pages: 243-265 Issue: 3 Volume: 13 Year: 2011 Month: 6 X-DOI: 10.1080/13691066.2011.600285 File-URL: http://hdl.handle.net/10.1080/13691066.2011.600285 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:3:p:243-265 Template-Type: ReDIF-Article 1.0 Author-Name: Stephanie A. Macht Author-X-Name-First: Stephanie A. Author-X-Name-Last: Macht Title: The role of investee company managers in business angels' involvement: empirical insights from dyadic data Abstract: This article explores the roles that the managing directors (MDs) of investee companies play in influencing the post-investment involvement of their business angels (BAs). Primary data were collected from four matched BA--MD dyads, which were purposefully selected according to the BAs’ level of post-investment involvement. The dyadic parties were interviewed independently from one another on four occasions over the period of one year. Interview questions were loosely structured around involvement and interaction. Coding and extensive iterative cross-case comparisons resulted in the emergence of four key themes relating to MDs' roles in involvement: MDs' responsiveness to involvement; MDs' communication of/feedback on their responses to involvement; MDs' reactions to queries from their BAs; and MDs' roles in initiating involvement activities. The article explores each of these roles by providing insights into the qualitative data in comparison with extant literature surrounding those themes. The article concludes with a number of propositions which suggest that (i) MDs play a ‘gatekeeper’ role which requires them to be responsive if the involvement of the investor in the business is to occur, and for the investor to add value; (ii) BA--MD interactions are affected by the quality of MDs' feedback in case of non-responsiveness, the way in which MDs react to queries from their investors and the MDs' attitudes towards learning from BAs; (iii) BAs expect their involvement to be acknowledged and (iv) MDs can initiate involvement themselves. The study further shows that involvement is not a purely investor-centred concept, which is an insight that needs to be investigated further, on a larger scale and with the help of a conceptual framework. Journal: Venture Capital Pages: 267-293 Issue: 3 Volume: 13 Year: 2011 Month: 2 X-DOI: 10.1080/13691066.2011.622864 File-URL: http://hdl.handle.net/10.1080/13691066.2011.622864 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:3:p:267-293 Template-Type: ReDIF-Article 1.0 Author-Name: Darek Klonowski Author-X-Name-First: Darek Author-X-Name-Last: Klonowski Title: Private equity in Poland after two decades of development: evolution, industry drivers, and returns Abstract: Poland represents the most developed private equity market in Central and Eastern Europe (CEE) and is one of the leaders across emerging markets. This article provides an overview of two decades of private equity market development in Poland. Three main conclusions are offered. Firstly, private equity in Poland has developed in four distinct phases (development, expansion, stagnation, and buyout). Secondly, the continued development of private equity in Poland is deeply rooted in the four pillars of stable economic growth, strong entrepreneurship, institutional infrastructure improvements, and exit market development. Thirdly, the Polish private equity industry has generated strong and consistent average returns over the last two decades, both in comparison to other CEE countries and other emerging markets. Journal: Venture Capital Pages: 295-311 Issue: 4 Volume: 13 Year: 2011 Month: 10 X-DOI: 10.1080/13691066.2011.642146 File-URL: http://hdl.handle.net/10.1080/13691066.2011.642146 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:4:p:295-311 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin K. Boeh Author-X-Name-First: Kevin K. Author-X-Name-Last: Boeh Author-Name: Colette Southam Author-X-Name-First: Colette Author-X-Name-Last: Southam Title: Impact of initial public offering coalition on deal completion Abstract: Measures of underwriter and top management team prestige have been shown to signal the underlying quality of a company in an initial public offering (IPO). We extend these measures to include the entire coalition (i.e., managers, board, venture capitalists (VCs), underwriters, auditors, and both sets of lawyers) and surprisingly find VCs to have the highest explanatory power in predicting IPO outcomes (completion or withdrawal). Companies with deep management and a separation of the CEO/chair role are more likely to hire prestigious underwriters and successfully complete IPOs. Although companies with prestigious VCs are more likely to have prestigious underwriters, companies with VC-backing are more likely to withdraw the offering, likely to take advantage of better market opportunities. Companies with prestigious underwriters are more likely to have successful IPOs, although we show that the capabilities of underwriters and other intermediaries are more likely driven by activity level (i.e., market share), rather than prestige in affecting IPO outcome. Using an agency framework, we test how signals of monitoring, information asymmetry, bonding, and incentive alignment affect IPO outcomes and show that signals of lower agency costs are associated with a greater likelihood of IPO completion. Finally, because many of these measures are shown to endogenously affect IPO completion, a selection bias may exist in previous IPO studies as up to 70% of IPOs filed annually are not completed. Journal: Venture Capital Pages: 313-336 Issue: 4 Volume: 13 Year: 2011 Month: 9 X-DOI: 10.1080/13691066.2011.642148 File-URL: http://hdl.handle.net/10.1080/13691066.2011.642148 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:4:p:313-336 Template-Type: ReDIF-Article 1.0 Author-Name: Jesper Lindgaard Christensen Author-X-Name-First: Jesper Author-X-Name-Last: Lindgaard Christensen Title: Should government support business angel networks? The tale of Danish business angels network Abstract: Policies promoting informal venture capital generally and business angel networks (BANs) in particular have gained increased attention in recent years. As a consequence, BANs are now widespread across Europe. However, there continues to be a debate whether BANs should be supported with public money. This article discusses the possible rationale for governments to support BANs and what criteria to apply when evaluating such networks. The article is based on an in-depth observation study of the whole life cycle of a national BAN -- the Danish Business Angel Network (DBAN) -- and a comparison with a similar national angel network in Wales. Results show that applying traditional evaluation criteria for assessing BANs may provide only a partial picture. DBAN was squeezed between political pressures, impatience and lack of understanding of the broader benefits of an angel network. It was therefore left to die. This contrasts Wales where Xenos was shown more patience and persistence and it was rapidly integrated into the investment community. The implication is that lack of consistent funding, even in economic downswings, may erase the position and awareness of BANs in the capital markets. When governments consider whether to provide continuing support to BANs they should evaluate not only their immediate effectiveness but also whether BANs should be considered a part of the general small business support infrastructure. Journal: Venture Capital Pages: 337-356 Issue: 4 Volume: 13 Year: 2011 Month: 4 X-DOI: 10.1080/13691066.2011.642513 File-URL: http://hdl.handle.net/10.1080/13691066.2011.642513 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:13:y:2011:i:4:p:337-356 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Freiburg Author-X-Name-First: Markus Author-X-Name-Last: Freiburg Author-Name: Dietmar Grichnik Author-X-Name-First: Dietmar Author-X-Name-Last: Grichnik Title: Institutional investments in private equity funds: social ties and the reduction of information asymmetry Abstract: The reduction of information asymmetry between institutional investors and private equity (PE) firms is one of the key challenges for the successful fundraising of PE funds in an increasingly competitive market. Social ties provide a potential mechanism to reduce information asymmetry. Therefore, this paper investigates the role of social ties for institutional investments in PE funds. Based on our fieldwork and a data set of 136 institutional investors and PE firms in Germany, we show that both direct and indirect social ties influence the investment decisions of institutional investors for PE firms. This influence is not restricted to functions of information transfer but also includes mechanisms of trust building. Interestingly, direct and indirect ties reveal different effects. Direct ties transfer information and increase goodwill trust. Indirect ties also transfer information but show no effect on trust building. Our results suggest that social ties can reduce information asymmetry between institutional investors and PE firms and thereby help to establish a financing relationship. Journal: Venture Capital Pages: 1-26 Issue: 1 Volume: 14 Year: 2011 Month: 10 X-DOI: 10.1080/13691066.2011.642147 File-URL: http://hdl.handle.net/10.1080/13691066.2011.642147 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2011:i:1:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: William C. Johnson Author-X-Name-First: William C. Author-X-Name-Last: Johnson Author-Name: Jeffrey Sohl Author-X-Name-First: Jeffrey Author-X-Name-Last: Sohl Title: Angels and venture capitalists in the initial public offering market Abstract: In this article, we examine angel investors and venture capital investors to determine how they interact in the market for small firm equity investment. We first generate a novel dataset of firms going through their initial public offerings and using the disclosures required by the Securities and Exchange Commission, classify firms having angel investors, venture capital investors, or both angel and venture capital investors. We find that the location, industry, and timing of firms backed by these different investor groups are strikingly different. We then compare the post-IPO operating performance of the firms in our sample for backed versus unbacked firms and find a significant difference for venture-backed firms, but not for angel-backed firms. For a subset of firms with angel and venture capital backing, we find some complementarities in the investment of angel and venture capital investors. However, on the whole, our results suggest that angel investors and venture capital investors serve different sets of firms who need to obtain outside equity financing. Journal: Venture Capital Pages: 27-42 Issue: 1 Volume: 14 Year: 2012 Month: 1 X-DOI: 10.1080/13691066.2012.660743 File-URL: http://hdl.handle.net/10.1080/13691066.2012.660743 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:1:p:27-42 Template-Type: ReDIF-Article 1.0 Author-Name: Ronit Yitshaki Author-X-Name-First: Ronit Author-X-Name-Last: Yitshaki Title: Relational norms and entrepreneurs’ confidence in venture capitalists' cooperation: the mediating role of venture capitalists' strategic and managerial involvement Abstract: This study examines the relationships between relational norms and entrepreneurs' confidence in the cooperation of their venture capitalist (VC) investors. Based on quantitative data collected from 120 Israeli high tech entrepreneurs, thefindings indicate that relational norms between entrepreneurs and VCs (i.e., shared beliefs and perceived similarities) are positively associated with entrepreneurs' confidence in their VCs' cooperation. However, it was found that VCs' strategic involvement mediates the positive relationship between relational norms and entrepreneurs confidence in their VCs' cooperation, whereas VCs' managerial involvement mediates the negative relationship between relational norms and entrepreneurs' confidence in VCs' cooperation. These findings are supported by six interviews made with entrepreneurs. The findings extend the current literature by indicating that although relational norms serve as a prime criterion for selecting between investment opportunities by VCs, they cannot ensure relational continuity over time as entrepreneurs' confidence in their VCs' cooperation is mediated by VCs' involvement. The findings also suggest that entrepreneurs consider ‘the optimal balance' between relational norms and control as aligned with strategic rather managerial involvement. Journal: Venture Capital Pages: 43-59 Issue: 1 Volume: 14 Year: 2012 Month: 1 X-DOI: 10.1080/13691066.2012.662839 File-URL: http://hdl.handle.net/10.1080/13691066.2012.662839 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:1:p:43-59 Template-Type: ReDIF-Article 1.0 Author-Name: Dmitry Khanin Author-X-Name-First: Dmitry Author-X-Name-Last: Khanin Author-Name: Ofir Turel Author-X-Name-First: Ofir Author-X-Name-Last: Turel Title: Short-termism, long-termism, and regulatory focus in venture capitalists' investment decisions Abstract: Short-termism and long-termism are characterized in the literature as suboptimal intertemporal trade-offs defined, respectively, as prioritizing the short term over the long term (to the detriment of the long term) and prioritizing the long term over the short term (to the detriment of the short term). Advancing this perspective, we argue that short-termism and long-termism could be approached as opportunistic strategies utilized by agents to earn private benefits at the principal's expense. Venture Capitalists (VCs) may use either of these strategies to take advantage of limited partners and entrepreneurs. How can principals detect opportunistic tendencies on the part of VCs as agents? We argue that the principals can do so by examining the effect of the two suboptimal intertemporal trade-offs on VCs’ investment proclivities. Thus, we contend that short-termism amplifies VCs’ eagerness to invest whereas long-termism magnifies VC's eagerness to provide follow-on investment. Counterintuitively, short-termism may also augment long-termism but only under promotion and not prevention framing. Hierarchical linear modeling analysis of the data from a survey of 50 US-based VCs provided support for all the proposed hypotheses. Journal: Venture Capital Pages: 61-76 Issue: 1 Volume: 14 Year: 2012 Month: 1 X-DOI: 10.1080/13691066.2012.666072 File-URL: http://hdl.handle.net/10.1080/13691066.2012.666072 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:1:p:61-76 Template-Type: ReDIF-Article 1.0 Author-Name: Einar Rasmussen Author-X-Name-First: Einar Author-X-Name-Last: Rasmussen Author-Name: Roger Sørheim Author-X-Name-First: Roger Author-X-Name-Last: Sørheim Title: Obtaining early-stage financing for technology entrepreneurship: reassessing the demand-side perspective Abstract: New technology-based firms face particular challenges in obtaining early-stage financing to develop and grow their business. Seen from the supply-side, high levels of uncertainty make investors reluctant and create a liability related to the supply of financing to these ventures. This introductory article reassesses the demand-side perspective to financing of technology entrepreneurship by considering how entrepreneurs can improve their chances of obtaining external financing. We propose that the perceptions and preferences of the entrepreneurs, the content and presentation of the business case, the networks and the relationships of the entrepreneurs, and the process of obtaining financing are issues of key importance for understanding how entrepreneurs can enhance the ‘investment readiness’ of their ventures. We synthesize the papers in this special issue and their contributions to research from the demand-side perspective. Moreover, we outline prospective areas for future research and implications for practice. Journal: Venture Capital Pages: 77-89 Issue: 2-3 Volume: 14 Year: 2012 Month: 2 X-DOI: 10.1080/13691066.2012.667908 File-URL: http://hdl.handle.net/10.1080/13691066.2012.667908 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:2-3:p:77-89 Template-Type: ReDIF-Article 1.0 Author-Name: Christophe Bonnet Author-X-Name-First: Christophe Author-X-Name-Last: Bonnet Author-Name: Peter Wirtz Author-X-Name-First: Peter Author-X-Name-Last: Wirtz Title: Raising capital for rapid growth in young technology ventures: when business angels and venture capitalists coinvest Abstract: We investigate the relational dynamics of raising equity finance to support strong growth in a technology venture when different investor types (business angels and venture capitalists) coinvest. Our objective is to ascertain which of two theoretical frameworks, agency theory or the cognitive approach to entrepreneurial finance, is the strongest predictor of the interactions between investors and entrepreneurs. We conducted a prospective case study whose analysis yields overall support for both approaches, while it also indicates that the relevance of agency-related and cognitive concerns clearly depends on the stage of the process and on investor-type. We conclude that first-time entrepreneurs may have an interest in addressing both formal and informal venture capitalists and that the proper timing and combination of investor-profiles may help to lower the cost of capital and contribute to future growth. Journal: Venture Capital Pages: 91-110 Issue: 2-3 Volume: 14 Year: 2011 Month: 12 X-DOI: 10.1080/13691066.2012.654603 File-URL: http://hdl.handle.net/10.1080/13691066.2012.654603 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2011:i:2-3:p:91-110 Template-Type: ReDIF-Article 1.0 Author-Name: Candida G. Brush Author-X-Name-First: Candida G. Author-X-Name-Last: Brush Author-Name: Linda F. Edelman Author-X-Name-First: Linda F. Author-X-Name-Last: Edelman Author-Name: Tatiana S. Manolova Author-X-Name-First: Tatiana S. Author-X-Name-Last: Manolova Title: Ready for funding? Entrepreneurial ventures and the pursuit of angel financing Abstract: Drawing on literature from organizational behavior, strategic change and management of technology, we examine the new ventures’ readiness for funding by angel investors, using a dataset of 332 firms that sought investment from a prominent angel group located outside of Boston, MA during 2007--2008. Findings suggest that perceptions of venture readiness for funding change throughout the angel evaluation process. Tangible, objective organizational characteristics are important during the first decision-making stage, while intangible, subjective new venture characteristics are more important during subsequent decision stages. This suggests that what the entrepreneur perceives as an organization ready for outside funding may be very different from the angel investor's perception. Interestingly, location of the new venture remains significant throughout the angel investment decision-making process, implying that entrepreneurs need to think carefully before applying for funding outside their local area. Implications are discussed. Journal: Venture Capital Pages: 111-129 Issue: 2-3 Volume: 14 Year: 2011 Month: 9 X-DOI: 10.1080/13691066.2012.654604 File-URL: http://hdl.handle.net/10.1080/13691066.2012.654604 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2011:i:2-3:p:111-129 Template-Type: ReDIF-Article 1.0 Author-Name: Joris Heuven Author-X-Name-First: Joris Author-X-Name-Last: Heuven Author-Name: Aard Groen Author-X-Name-First: Aard Author-X-Name-Last: Groen Title: The role of social networks in financing technology-based ventures: An empirical exploration Abstract: The focus of this study is on the role of networks in both identifying and accessing financial resource providers by technology-based ventures. We explore the role of networks by taking into account several specifications. We (1) acknowledge that new ventures can access financial resource providers both directly and through referral, (2) make an analytical distinction between the identification of financial opportunities and the access to financial resource providers, and (3) study the contingencies that influence the effectiveness of certain network positions and relationships in the new venture financing process. In order to explore the role of networks in financing, we conducted case studies in four technology-based ventures. Our findings show that for identifying financial opportunities and resource providers, a positional network that is rich in structural holes is favourable for new ventures. In a relational sense, for new ventures that directly access financial resource providers, having weak network ties are most effective. When new ventures use a referral to access a financial resource provider, referrals from referral sources that are strongly tied to the venture are the most effective. Furthermore, our results show that the effectiveness of certain network positions and relations largely depends on contingencies. Based on our findings, we shape several propositions that provide new directions for future research. The current study makes several contributions to theory and provides several interesting guidelines for start-up entrepreneurs. Journal: Venture Capital Pages: 131-149 Issue: 2-3 Volume: 14 Year: 2012 Month: 1 X-DOI: 10.1080/13691066.2012.659473 File-URL: http://hdl.handle.net/10.1080/13691066.2012.659473 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:2-3:p:131-149 Template-Type: ReDIF-Article 1.0 Author-Name: Tarek Miloud Author-X-Name-First: Tarek Author-X-Name-Last: Miloud Author-Name: Arild Aspelund Author-X-Name-First: Arild Author-X-Name-Last: Aspelund Author-Name: Mathieu Cabrol Author-X-Name-First: Mathieu Author-X-Name-Last: Cabrol Title: Startup valuation by venture capitalists: an empirical study Abstract: How to value a new venture is critical in entrepreneurial financing. This article develops an integrated theoretical framework to examine whether venture capitalists' valuation of a new venture can be explained by factors identified in the strategy theories as important to firm performance. Empirical results from the analyses of 184 rounds of early-stage venture capital investments in 102 new ventures support the central proposition that venture capitalists do take into consideration those factors that are important to firm performance in their valuation of new ventures. More specifically, this article finds that attractiveness of the industry, the quality of the founder and top management team, as well as external relationships of a new venture significantly and positively affect its valuation by venture capitalists when it seeks venture capital financing in its early stages of development. These empirical findings help to establish an initial linkage between the well-developed theories in strategic management and under-researched venture capital valuation practice. It brings more theoretical rigor to the venture capital investment literature by introducing a systematic approach to identify and measure factors important to new venture valuation. It explores a possibility to develop a supplementary method to value an early-stage new venture when extant valuation methods fail to yield consistent results because these methods require accounting information that a new venture typically cannot provide. Journal: Venture Capital Pages: 151-174 Issue: 2-3 Volume: 14 Year: 2012 Month: 2 X-DOI: 10.1080/13691066.2012.667907 File-URL: http://hdl.handle.net/10.1080/13691066.2012.667907 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:2-3:p:151-174 Template-Type: ReDIF-Article 1.0 Author-Name: Diamanto Politis Author-X-Name-First: Diamanto Author-X-Name-Last: Politis Author-Name: Jonas Gabrielsson Author-X-Name-First: Jonas Author-X-Name-Last: Gabrielsson Author-Name: Oxana Shveykina Author-X-Name-First: Oxana Author-X-Name-Last: Shveykina Title: Early-stage finance and the role of external entrepreneurs in the commercialization of university-generated knowledge Abstract: The past decade has seen a plethora of policy initiatives that seek to bridge the chasm between investments in public R&D and its effective diffusion in society. This article uses a case study approach to explore and contrast the effectiveness of different entrepreneur models in financing and developing university spin-offs (USOs). The distinction between different entrepreneur models is based on whether the USOs are championed by university employees that seek to commercialize their own inventions or by external entrepreneurs who are not the original inventors but with acquired rights to develop and commercialize technology originating from university research. Our analysis show that external entrepreneurs have a different mind-set that makes them better equipped to deal with opportunities and obstacles related to financing and developing USOs. However, the development paths of USOs are embedded in a more complex web of path-dependent interactions, where the championship of the USO becomes interwoven with existing and emerging social relationships and opportunities, and challenges related to the technology that is commercialized. Journal: Venture Capital Pages: 175-198 Issue: 2-3 Volume: 14 Year: 2012 Month: 1 X-DOI: 10.1080/13691066.2012.667905 File-URL: http://hdl.handle.net/10.1080/13691066.2012.667905 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:2-3:p:175-198 Template-Type: ReDIF-Article 1.0 Author-Name: Allan Riding Author-X-Name-First: Allan Author-X-Name-Last: Riding Author-Name: Barbara Orser Author-X-Name-First: Barbara Author-X-Name-Last: Orser Author-Name: Tyler Chamberlin Author-X-Name-First: Tyler Author-X-Name-Last: Chamberlin Title: Investing in R&D: small- and medium-sized enterprise financing preferences Abstract: This work adds to our understanding of financing decisions among owners of small- and medium-sized enterprises (SMEs), with particular reference to SMEs that conduct research and development (R&D). The work examines, conceptually and empirically, the forms of financing that are preferred by primary owners of SMEs that invest in R&D relative to preferences of owners of SMEs that do not conduct R&D. The work develops a conceptual rationale as to why SMEs engaged in R&D might hold particular preferences with respect to preferred sources of financial capital. Empirical analysis draws on large-scale survey data of actual applications for financing (as opposed to financing received) as reported by business owners and controls for systemic factors that include firm size and sector. Findings include that financing preferences do not follow a ‘one-size-fits-all’ prescription. Rather, preferences vary according to growth goals, the nature of ownership, age of firm, firm size and sector; however, it was also clear that firms that invest in R&D are much more likely to seek equity financing than otherwise comparable firms that do not invest in R&D. Journal: Venture Capital Pages: 199-214 Issue: 2-3 Volume: 14 Year: 2011 Month: 12 X-DOI: 10.1080/13691066.2012.654601 File-URL: http://hdl.handle.net/10.1080/13691066.2012.654601 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2011:i:2-3:p:199-214 Template-Type: ReDIF-Article 1.0 Author-Name: Wolfgang Bessler Author-X-Name-First: Wolfgang Author-X-Name-Last: Bessler Author-Name: Martin Seim Author-X-Name-First: Martin Author-X-Name-Last: Seim Title: The performance of venture-backed IPOs in Europe Abstract: The importance of venture capitalists (VCs) to the success of start-up firms and for economic growth has been well documented in the US. This study investigates the performance of European venture-backed initial public offerings (IPOs) during the period from 1996 to 2010 which includes two stock market cycles and IPO waves. We focus on underpricing (UP) and long-run performance and differentiate between various stock exchanges and firm characteristics. Our findings indicate that venture-backed IPOs generate positive returns for some time after the IPO. This result holds not only for investments in the primary market but also for investments made later on in the secondary market. During the new economy period (1996 to 2003) IPOs have higher UP and first year returns compared to IPOs during the second stock market cycle (2003 to 2010), but in the long run there are no significant performance differences. We also find higher abnormal returns for venture-backed firms that went public on main markets and for larger VC-backed firms for nearly three years after going public. Most importantly, the group of venture-backed IPOs consistently and significantly outperforms a large group of non-venture-backed IPOs. Overall, we provide empirical evidence that venture-backed IPOs in Europe generate positive and superior returns to investors. Journal: Venture Capital Pages: 215-239 Issue: 4 Volume: 14 Year: 2012 Month: 10 X-DOI: 10.1080/13691066.2012.702447 File-URL: http://hdl.handle.net/10.1080/13691066.2012.702447 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:4:p:215-239 Template-Type: ReDIF-Article 1.0 Author-Name: Cheryl R. Mitteness Author-X-Name-First: Cheryl R. Author-X-Name-Last: Mitteness Author-Name: Melissa S. Baucus Author-X-Name-First: Melissa S. Author-X-Name-Last: Baucus Author-Name: Richard Sudek Author-X-Name-First: Richard Author-X-Name-Last: Sudek Title: Horse vs. Jockey? How stage of funding process and industry experience affect the evaluations of angel investors Abstract: Angel investors make evaluations at different stages of the funding process; so we explore how the importance angels place on different investment criteria varies and how industry experience impacts their evaluations. Data were collected at the screening stage as angel investors evaluated the strength of the entrepreneur and the opportunity, and made decisions regarding whether the deal should proceed to due diligence, as well as their personal interest in making an investment. Additional data were collected regarding whether these angels made an investment at the funding stage. We tested our hypotheses using a multilevel approach to account for the nested nature of the data -- multiple evaluations nested within each angel, nested within each screening presentation. Our results show that the entrepreneur matters most when angels are deciding whether a deal should proceed to due diligence; opportunity strength represents a more important investment criterion when angels switch to determining whether a deal matches their own investment goals as the deal progresses through the funding process. Additionally, we find that three types of industry experience differ in their impact on the evaluation process. The findings offer new insights and underscore the importance of considering how individual characteristics impact evaluations of funding potential. Journal: Venture Capital Pages: 241-267 Issue: 4 Volume: 14 Year: 2012 Month: 10 X-DOI: 10.1080/13691066.2012.689474 File-URL: http://hdl.handle.net/10.1080/13691066.2012.689474 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:4:p:241-267 Template-Type: ReDIF-Article 1.0 Author-Name: Li Xiao Author-X-Name-First: Li Author-X-Name-Last: Xiao Author-Name: David North Author-X-Name-First: David Author-X-Name-Last: North Title: Institutional transition and the financing of high-tech SMEs in China: A longitudinal perspective Abstract: This article examines changes in Chinese high-tech SMEs’ access to both bank and informal finance in response to the institutional changes relating to the private sector and financial transactions. It draws upon two rounds of face-to-face interviews with the owners of high-tech SMEs and finance providers in the Chinese provinces of Guangdong and Guangxi covering two consecutive time periods: from 1998 to 2004 and then from 2004 to 2009. The findings show that the effects of the changes in institutional regulations on the availability of finance to high-tech SMEs vary according to the type of finance provider. Access to informal sources of finance grew, including to longer-term equity finance, whereas that to bank finance did not significantly improve. Journal: Venture Capital Pages: 269-287 Issue: 4 Volume: 14 Year: 2012 Month: 10 X-DOI: 10.1080/13691066.2012.688578 File-URL: http://hdl.handle.net/10.1080/13691066.2012.688578 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:4:p:269-287 Template-Type: ReDIF-Article 1.0 Author-Name: William Scheela Author-X-Name-First: William Author-X-Name-Last: Scheela Author-Name: Thawatchai Jittrapanun Author-X-Name-First: Thawatchai Author-X-Name-Last: Jittrapanun Title: Do institutions matter for business angel investing in emerging Asian markets? Abstract: We report on business angel (BA) investing in the emerging Asian economy of Thailand. Our research question is: How can BAs survive in an emerging economy, which lacks the fully developed institutions that are necessary to support formal and informal venture capital investing? Institutional theory was used as the framework to expand BA research to an emerging economy. We interviewed 20 Thai Chinese BA investors in 2006 and 2007, and studied their investment strategies. We adopted a mixed-methods research design to analyze the data. Results indicate that the BAs find it a challenge to invest in and operate new ventures in a highly uncertain and competitive environment where there is high political uncertainty, weak legal and financial support for investors and inefficient government support for small- and medium-sized enterprises. In spite of these challenges, BAs generally report strong investment returns. To overcome weak institutional support (institutional void), BA investors develop informal institutions by co-investing and networking with family members and government officials. They also conduct in-depth due diligence before investing and closely monitor their investee companies after investing. Journal: Venture Capital Pages: 289-308 Issue: 4 Volume: 14 Year: 2012 Month: 10 X-DOI: 10.1080/13691066.2012.672020 File-URL: http://hdl.handle.net/10.1080/13691066.2012.672020 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:4:p:289-308 Template-Type: ReDIF-Article 1.0 Author-Name: Roger Kelly Author-X-Name-First: Roger Author-X-Name-Last: Kelly Title: Drivers of private equity investment activity: are buyout and venture investors really so different? Abstract: This paper investigates the drivers of private equity activity by undertaking a panel data study for 17 European countries. Activity is affected by both cyclical and structural factors. We control for the cyclical factors and examine structural drivers of investment in private equity. We examine whether these drivers are different for venture capital and buyout investors, and find that indeed there is a strong distinction between the factors influencing investment in these two groups of investors. Based on our results, we consider policy options for governments to attract more investment. Journal: Venture Capital Pages: 309-330 Issue: 4 Volume: 14 Year: 2012 Month: 10 X-DOI: 10.1080/13691066.2012.688494 File-URL: http://hdl.handle.net/10.1080/13691066.2012.688494 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:4:p:309-330 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin K. Boeh Author-X-Name-First: Kevin K. Author-X-Name-Last: Boeh Author-Name: Colette Southam Author-X-Name-First: Colette Author-X-Name-Last: Southam Title: Impact of initial public offering coalition on deal completion Journal: Venture Capital Pages: 331-331 Issue: 4 Volume: 14 Year: 2012 Month: 10 X-DOI: 10.1080/13691066.2012.679821 File-URL: http://hdl.handle.net/10.1080/13691066.2012.679821 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:14:y:2012:i:4:p:331-331 Template-Type: ReDIF-Article 1.0 Author-Name: Juan Florin Author-X-Name-First: Juan Author-X-Name-Last: Florin Author-Name: Richard Dino Author-X-Name-First: Richard Author-X-Name-Last: Dino Author-Name: M. Nesij Huvaj Author-X-Name-First: M. Nesij Author-X-Name-Last: Huvaj Title: Research on angel investing: a multilevel framework for an emerging domain of inquiry Abstract: We develop a multilevel conceptual framework of angel investing grounded on prospect theory. The framework provides an integrative foundation for this emerging domain of inquiry, delineates the boundaries of the domain, synthesizes research to date into distinctive levels of analysis, and identifies potentially interesting relationships between constructs across levels and across time. We discuss the domain's relevance and the opportunities it affords for insights into a variety of theoretical perspectives and develop propositions to illustrate the potential for unique contributions with a multilevel approach. The focus on angel portals and networks highlights the need for an extension of the multilevel paradigm for organizational phenomena that exhibit permeable boundaries. Journal: Venture Capital Pages: 1-27 Issue: 1 Volume: 15 Year: 2013 Month: 1 X-DOI: 10.1080/13691066.2012.757424 File-URL: http://hdl.handle.net/10.1080/13691066.2012.757424 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:1:p:1-27 Template-Type: ReDIF-Article 1.0 Author-Name: Jan-Georg Streletzki Author-X-Name-First: Jan-Georg Author-X-Name-Last: Streletzki Author-Name: Reinhard Schulte Author-X-Name-First: Reinhard Author-X-Name-Last: Schulte Title: Which venture capital selection criteria distinguish high-flyer investments? Abstract: This study is based on an analysis of 64 ventures that were funded by German Venture Capital (VC) firms in order to identify VC selection criteria that distinguish non-high-flyer exits from high-flyer exits (exits that returned more than five times the VC's first-round money invested). Based on highly sensitive data, which are the venture's first-round business plan and the VC's return rate of the particular venture at exit, three high-flyer predictors were identified: company, product and market related. Logistic regression and discrimination analysis revealed that ventures with the following characteristics have the best chance of generating a VC high-flyer exit: targeting the business-to-customers market, being location in a metropolitan cluster and close to the lead investor, raising VC financed prior to the proof of concept level and having strategic partners raising the first round of VC investment. Ventures that have spun out from corporate institutions perform below average in terms of VC exit performance. Journal: Venture Capital Pages: 29-52 Issue: 1 Volume: 15 Year: 2013 Month: 1 X-DOI: 10.1080/13691066.2012.724232 File-URL: http://hdl.handle.net/10.1080/13691066.2012.724232 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:1:p:29-52 Template-Type: ReDIF-Article 1.0 Author-Name: Miwako Nitani Author-X-Name-First: Miwako Author-X-Name-Last: Nitani Author-Name: Allan Riding* Author-X-Name-First: Allan Author-X-Name-Last: Riding* Title: Fund size and the syndication of venture capital investments Abstract: This article argues that the structure of a country's venture capital (VC) sector is a critical factor in the effectiveness of the sector. In particular, it is argued that the balance between small funds and large funds is important: that a preponderance of small VC funds leads to excessive syndication which compromises firm and fund performance, reduces the ability to raise additional capital and leads to a reliance on foreign investors. This implies that public policies that seek to stimulate early-stage VC can lead to a VC sector that is bottlenecked in the sense that the successful portfolio firms may be unable to obtain late-stage investment capital and may be forced to rely on foreign investors. This work tests this premise empirically using data for the Canadian setting and finds results consistent with these expectations. Journal: Venture Capital Pages: 53-75 Issue: 1 Volume: 15 Year: 2013 Month: 1 X-DOI: 10.1080/13691066.2012.730654 File-URL: http://hdl.handle.net/10.1080/13691066.2012.730654 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:1:p:53-75 Template-Type: ReDIF-Article 1.0 Author-Name: Harvey Johnstone Author-X-Name-First: Harvey Author-X-Name-Last: Johnstone Title: Business model innovation: a case study of venture capital in a depleted community Abstract: Venture finance is a pillar of new growth. However, economic growth and decline occur unevenly over space. Among other things, this unevenness creates a set of depleted communities. Some argue that there is little point in trying to rejuvenate these localities, which they see as the very antithesis of modern, thriving environments. But distressed environments can give rise to innovations. This paper analyses an initiative that has introduced an innovative model of venture capital into the context provided by a depleted community. Business model analysis parsimoniously identifies the unique combination of techniques that have allowed this company to operate successfully within a depleted environment. Modelling converts tacit knowledge into explicit knowledge and encourages replication of this initiative and diffusion of innovation. Journal: Venture Capital Pages: 77-90 Issue: 1 Volume: 15 Year: 2013 Month: 1 X-DOI: 10.1080/13691066.2013.760767 File-URL: http://hdl.handle.net/10.1080/13691066.2013.760767 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:1:p:77-90 Template-Type: ReDIF-Article 1.0 Author-Name: Gianni Romaní Author-X-Name-First: Gianni Author-X-Name-Last: Romaní Author-Name: Miguel Atienza Author-X-Name-First: Miguel Author-X-Name-Last: Atienza Title: Introduction Journal: Venture Capital Pages: 91-94 Issue: 2 Volume: 15 Year: 2013 Month: 4 X-DOI: 10.1080/13691066.2013.788823 File-URL: http://hdl.handle.net/10.1080/13691066.2013.788823 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:2:p:91-94 Template-Type: ReDIF-Article 1.0 Author-Name: Gianni Romaní Author-X-Name-First: Gianni Author-X-Name-Last: Romaní Author-Name: Miguel Atienza Author-X-Name-First: Miguel Author-X-Name-Last: Atienza Author-Name: José Ernesto Amorós Author-X-Name-First: José Ernesto Author-X-Name-Last: Amorós Title: The development of business angel networks in Latin American countries: the case of Chile Abstract: This article analyses the recent development of business angel networks (BANs) in Chile, in order to understand the limitations of the current public policies to encourage informal venture capital and especially the BANs. We describe the evolution of this policy and apply a semi-structured interview to managers of Chilean BANs. The poor results in total investments in the case of Chilean BANs allow us to understand how government programmes exclusively oriented towards the supply of the informal venture capital market are insufficient to promote the dynamism of this industry. It is necessary to implement articulated programmes both from the supply and demand side, accompanied by the continuous evaluation of their results. Journal: Venture Capital Pages: 95-113 Issue: 2 Volume: 15 Year: 2013 Month: 4 X-DOI: 10.1080/13691066.2013.788822 File-URL: http://hdl.handle.net/10.1080/13691066.2013.788822 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:2:p:95-113 Template-Type: ReDIF-Article 1.0 Author-Name: Manuel Gonzalo Author-X-Name-First: Manuel Author-X-Name-Last: Gonzalo Author-Name: Juan Federico Author-X-Name-First: Juan Author-X-Name-Last: Federico Author-Name: Sergio Drucaroff Author-X-Name-First: Sergio Author-X-Name-Last: Drucaroff Author-Name: Hugo Kantis Author-X-Name-First: Hugo Author-X-Name-Last: Kantis Title: Post-investment trajectories of Latin American young technology-based firms: an exploratory study Abstract: This study identifies and discusses the different post-investment trajectories of Latin American young technology-based firms (YTBFs). Two contrasting types of post-investment trajectories were identified: the ‘fast sale’, in which local YTBFs are purchased by a foreign firm and founders decide to leave the company, and the ‘multilatina’, in which the YTBF grows mainly by organic means and also through acquisitions until it becomes one of the industry's big global payers, with the founders still playing a leading role. There is also a continuum of intermediate situations such as in the case of Core where the original location remains as an R&D center in the context of the emerging post-investment configuration of the firm. These differences are related to the local resources in the emerging organizational configuration, notably the match between entrepreneurs' skills and vision, the growing demands of the firm after the investment, and the level of development of the local ecosystem. Foreign venture capital (VC) could play an important role in this regard by accelerating the pace of growth and internationalization faced by these firms. However, this could also lead to the exit of the entrepreneurs. The impact of these trajectories at the regional level should take account of the ‘entrepreneurial recycling’ concept suggested by Mason and Harrison (2006) by considering what happens with the entrepreneurs after the investment. Journal: Venture Capital Pages: 115-133 Issue: 2 Volume: 15 Year: 2013 Month: 4 X-DOI: 10.1080/13691066.2013.791088 File-URL: http://hdl.handle.net/10.1080/13691066.2013.791088 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:2:p:115-133 Template-Type: ReDIF-Article 1.0 Author-Name: Carlos Arruda Author-X-Name-First: Carlos Author-X-Name-Last: Arruda Author-Name: Afonso Cozzi Author-X-Name-First: Afonso Author-X-Name-Last: Cozzi Author-Name: Guilherme Souza Author-X-Name-First: Guilherme Author-X-Name-Last: Souza Author-Name: Érika Penido Author-X-Name-First: Érika Author-X-Name-Last: Penido Title: Towards an understanding of corporate venturing practices in Brazil Abstract: Corporate venturing (CV) is an important mechanism for companies seeking to renew their product offerings by creating new markets, launching new products and forming new stand-alone business units. It is a common practice amongst companies in developed countries but remains underutilized by companies in developing countries. This paper examines CV in Brazil. A survey of the 100 largest companies in Brazil indicates that it is uncommon. Most of the CV activities that do exit are less than 5 years old. Case studies of Intel Corporation and Telefônica illustrate the strategic objectives of CV in these companies. Intel uses external CV to promote the development of its ecosystem. At Telefônica, CV is used to stimulate radical innovation through investment in new ideas generated both within the company and externally. Journal: Venture Capital Pages: 135-149 Issue: 2 Volume: 15 Year: 2013 Month: 4 X-DOI: 10.1080/13691066.2013.791426 File-URL: http://hdl.handle.net/10.1080/13691066.2013.791426 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:2:p:135-149 Template-Type: ReDIF-Article 1.0 Author-Name: Luiz Egydio Malamud Rossi Author-X-Name-First: Luiz Egydio Author-X-Name-Last: Malamud Rossi Author-Name: Roy Martelanc Author-X-Name-First: Roy Author-X-Name-Last: Martelanc Title: An analysis of the management practices of Brazilian private equity firms and their impact on company performance Abstract: This paper examines the proposition that private equity funds (PEFs) improve the performance of their investee companies. The study was divided into two parts: (i) an analysis of the characteristics of the private equity investment cycle that impact on corporate performance and (ii) validation that companies that received investments from PEFs outperformed firms that did not receive an investment from PEFs. The analysis of the characteristics and practices of PEFs was based on questionnaires sent to the senior executives. Examination of the performance of companies that had attracted investment from PEFs was based on an analysis of various operational and financial indicators of firms in the three years preceding and following their initial public offering (IPO). This confirmed the thesis that there are common practices among PEFs and that they create value for their investees' companies. Journal: Venture Capital Pages: 151-172 Issue: 2 Volume: 15 Year: 2013 Month: 4 X-DOI: 10.1080/13691066.2013.802165 File-URL: http://hdl.handle.net/10.1080/13691066.2013.802165 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:2:p:151-172 Template-Type: ReDIF-Article 1.0 Author-Name: Malte Brettel Author-X-Name-First: Malte Author-X-Name-Last: Brettel Author-Name: René Mauer Author-X-Name-First: René Author-X-Name-Last: Mauer Author-Name: Daniel Appelhoff Author-X-Name-First: Daniel Author-X-Name-Last: Appelhoff Title: The entrepreneur's perception in the entrepreneur--VCF relationship: the impact of conflict types on investor value Abstract: The role of conflict has been the subject of extensive research in the area of psychology and sociology and -- more recently -- in the context of the entrepreneur--investor relationship. This study examines the effect of perceived task conflict and relationship conflict on the perceived value that an entrepreneur ascribes to her venture capital firm (VCF). We analyzed survey data of 152 German ventures and find relationship conflict to be detrimental for perceived investor value, whereas task conflict significantly increases an entrepreneur's perception of investor value. This effect is even stronger in the absence of relationship conflict. In addition, we tested a set of interaction effects on this relationship. We build on Sapienza's (1992) seminal work, who studied a predecessor of task conflict -- divergence of perspective -- and extend research by linking the most important conflict types to investor value in the context of young ventures. We contribute to the literature on conflict between entrepreneurs and VCFs and reveal clear patterns regarding the effects and interactions of task conflict and relationship conflict. Journal: Venture Capital Pages: 173-197 Issue: 3 Volume: 15 Year: 2013 Month: 7 X-DOI: 10.1080/13691066.2013.782625 File-URL: http://hdl.handle.net/10.1080/13691066.2013.782625 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:3:p:173-197 Template-Type: ReDIF-Article 1.0 Author-Name: Christos Kolympiris Author-X-Name-First: Christos Author-X-Name-Last: Kolympiris Author-Name: Nicholas Kalaitzandonakes Author-X-Name-First: Nicholas Author-X-Name-Last: Kalaitzandonakes Title: The geographic extent of venture capital externalities on innovation Abstract: A stream of literature has demonstrated that venture capital generates externalities that enhance the knowledge base of a given region and accordingly assist firms in high-technology industries to improve their innovative performance. What has gone largely unexamined in this literature is the geographic extent of such externality impact. In this research we address the issue at hand. We do so by analyzing the association between the patenting rate of all life sciences firms (LSFs) that have won Small Business Innovation Research grants from 1983 to 2006 and the venture capital investments that have occurred at increasingly distant spatial units from those firms. Controlling for firm-specific and environmental factors as well as for endogeneity concerns, we document that LSFs tend to produce more patents whenever they are situated in very close proximity to where venture capital investments occur. Further, we find that improvements of the patenting rate of focal firms largely emanate from investments that reflect the expertise of venture capitalists on advancing existing prototypes closer to commercialization. We conclude the paper with a discussion on research and policy implications of our findings. Journal: Venture Capital Pages: 199-236 Issue: 3 Volume: 15 Year: 2013 Month: 7 X-DOI: 10.1080/13691066.2013.804749 File-URL: http://hdl.handle.net/10.1080/13691066.2013.804749 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:3:p:199-236 Template-Type: ReDIF-Article 1.0 Author-Name: David North Author-X-Name-First: David Author-X-Name-Last: North Author-Name: Robert Baldock Author-X-Name-First: Robert Author-X-Name-Last: Baldock Author-Name: Farid Ullah Author-X-Name-First: Farid Author-X-Name-Last: Ullah Title: Funding the growth of UK technology-based small firms since the financial crash: are there breakages in the finance escalator? Abstract: This paper presents recent research assessing the impact of the financial crisis on young and established technology-based small firms (TBSFs) and considers whether their ability to contribute to economic growth is being affected by ongoing problems in obtaining external finance. It reports on original findings from a survey of 100 TBSFs undertaken in late 2010 as well as 20 in-depth interviews with a range of finance providers. The surviving TBSFs exhibited considerable demand for external finance since 2007, particularly for working capital and early stage R&D, sought mainly from banks, but also with younger TBSFs seeking business angel finance and innovation grants and more mature TBSFs seeking venture capital finance. However, both debt and equity finance have become harder to access for TBSFs, particularly for early stage funding and for more R&D intensive firms, hampering their growth potential. Where external finance has been available, the terms and conditions set by providers were often unacceptable to business owners. The paper concludes that the smooth operation of the finance escalator has proved difficult to achieve under recent financial conditions and identifies a number of breakpoints relating to TBSFs which government policy needs to address. Journal: Venture Capital Pages: 237-260 Issue: 3 Volume: 15 Year: 2013 Month: 7 X-DOI: 10.1080/13691066.2013.804755 File-URL: http://hdl.handle.net/10.1080/13691066.2013.804755 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:3:p:237-260 Template-Type: ReDIF-Article 1.0 Author-Name: Gunter W. Festel Author-X-Name-First: Gunter W. Author-X-Name-Last: Festel Author-Name: Sven H. De Cleyn Author-X-Name-First: Sven H. Author-X-Name-Last: De Cleyn Title: Founding angels as an emerging subtype of the angel investment model in high-tech businesses Abstract: Some important hurdles hamper the commercialisation of (scientific) knowledge, especially in Europe. Currently, the support provided by investors and technology transfer offices seems insufficient for new technology-based firms (NTBFs) and academic spin-offs to overcome these. Both from a financial perspective and from an operational perspective, opportunities are emerging for investment models to support their development. This paper introduces the founding angels' (FAs) concept as an emerging subtype of the angel investment model and provides empirical evidence based on 16 case studies in Germany and Switzerland to elucidate the potential of this investment model. FAs join the start-up teams of NTBFs, complementing the scientific members coming mainly from universities and research institutions with business expertise and scientific understanding. They make significantly fewer investments than in the case of business angels (BAs), but because of their very early engagement, they hold more shares and are much more engaged operationally. FAs have more the role of a founder and an entrepreneur and less that of an investor because of their early engagement in the venture. They complement BAs and venture capitalists and normally support the start-up's efforts to raise funding. Journal: Venture Capital Pages: 261-282 Issue: 3 Volume: 15 Year: 2013 Month: 7 X-DOI: 10.1080/13691066.2013.807059 File-URL: http://hdl.handle.net/10.1080/13691066.2013.807059 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:3:p:261-282 Template-Type: ReDIF-Article 1.0 Author-Name: Richard Harrison Author-X-Name-First: Richard Author-X-Name-Last: Harrison Title: Crowdfunding and the revitalisation of the early stage risk capital market: catalyst or chimera? Journal: Venture Capital Pages: 283-287 Issue: 4 Volume: 15 Year: 2013 Month: 10 X-DOI: 10.1080/13691066.2013.852331 File-URL: http://hdl.handle.net/10.1080/13691066.2013.852331 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:4:p:283-287 Template-Type: ReDIF-Article 1.0 Author-Name: Othmar M. Lehner Author-X-Name-First: Othmar M. Author-X-Name-Last: Lehner Title: Crowdfunding social ventures: a model and research agenda Abstract: Crowdfunding (CF) in a social entrepreneurship (SE) context is praised in media narrations for its multifaceted potential. From an academic point of view, little has been written about CF as a whole, and enquiries from the SE sphere are mostly concerned with donation-based CF. This paper first reviews extant literature on financing social ventures and CF. Based upon the findings, the author draws up a schema of CF's inner workings and subsequently discusses it in an SE context. From this model, a research agenda consisting of eight themes is derived: types and utility functions; corporate governance; investor relations, reporting and risk; opportunity recognition; networking; legitimacy; financial metrics and legal and regulatory hurdles. Journal: Venture Capital Pages: 289-311 Issue: 4 Volume: 15 Year: 2013 Month: 10 X-DOI: 10.1080/13691066.2013.782624 File-URL: http://hdl.handle.net/10.1080/13691066.2013.782624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:4:p:289-311 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Belleflamme Author-X-Name-First: Paul Author-X-Name-Last: Belleflamme Author-Name: Thomas Lambert Author-X-Name-First: Thomas Author-X-Name-Last: Lambert Author-Name: Armin Schwienbacher Author-X-Name-First: Armin Author-X-Name-Last: Schwienbacher Title: Individual crowdfunding practices Abstract: This study investigates characteristics of individual crowdfunding practices and drivers of fundraising success, where entrepreneurs can tailor their crowdfunding initiatives better than on standardized platforms. Our data indicate that most of the funds provided are entitled to receive either financial compensations (equity and profit-share arrangement) or nonfinancial benefits (final product and token of appreciation), while donations are less common. Moreover, crowdfunding initiatives that are structured as nonprofit organizations tend to be significantly more successful than other organizational forms in achieving their fundraising targets, even after controlling for various project characteristics. This finding is in line with theoretical arguments developed by the contract failure literature which postulates that nonprofit organizations may find it easier to attract money for initiatives that are of interest for the general community due to their reduced focus on profits. Journal: Venture Capital Pages: 313-333 Issue: 4 Volume: 15 Year: 2013 Month: 10 X-DOI: 10.1080/13691066.2013.785151 File-URL: http://hdl.handle.net/10.1080/13691066.2013.785151 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:4:p:313-333 Template-Type: ReDIF-Article 1.0 Author-Name: Alan Tomczak Author-X-Name-First: Alan Author-X-Name-Last: Tomczak Author-Name: Alexander Brem Author-X-Name-First: Alexander Author-X-Name-Last: Brem Title: A conceptualized investment model of crowdfunding Abstract: Crowdfunding is growing in popularity as a new form of both investment opportunity and source of venture capital. This article takes a view on whether crowdfunding is a replacement or an addition to traditional seed capital sources in the early stages of a new venture. With access to angel investment decreasing since the financial crisis of 2008, crowdfunding is of great importance to start-ups seeking starting capital. However, little effort has been made to define the investment model of crowdfunding with both crowdfunder and crowdfundee in mind. Drawing on an in-depth review of current literature on crowdfunding, this article creates an investment model of crowdfunding with various reward models available to investor and investee in mind. This article provides an extensive survey of the environment of crowdfunding based on current literature. It offers a jumping off point and a thorough literature review for researchers of crowdfunding, providing a detailed examination of the current landscape of crowdfunding based on available literary sources. Journal: Venture Capital Pages: 335-359 Issue: 4 Volume: 15 Year: 2013 Month: 10 X-DOI: 10.1080/13691066.2013.847614 File-URL: http://hdl.handle.net/10.1080/13691066.2013.847614 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:4:p:335-359 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Author-Name: Sofia Johan Author-X-Name-First: Sofia Author-X-Name-Last: Johan Title: Demand-driven securities regulation: evidence from crowdfunding Abstract: We study the law production race-to-the-bottom/race-to-the-top debate in a unique context of crowdfunding in which potential agency problems are extreme. Our empirical setting is based on survey data from Canada in 2013 Q1 when equity crowdfunding was not permitted but was openly contemplated by regulators. The data show some tension towards a race to the bottom insofar as start-ups prefer fewer restrictions on their ability to crowdfund, and portals prefer fewer disclosure requirements and fewer restrictions on free trading of crowdfunded shares. However, this evidence is tempered by the fact that investors demand more disclosure, limits on amounts entrepreneurs can raise, and lower thresholds for audited financial statements, among other things. Based on the ease with which the Internet facilitates cross-jurisdictional investment, we infer from the data that investor demands will give rise to a race to the top in the crowdfunding space. Journal: Venture Capital Pages: 361-379 Issue: 4 Volume: 15 Year: 2013 Month: 10 X-DOI: 10.1080/13691066.2013.847635 File-URL: http://hdl.handle.net/10.1080/13691066.2013.847635 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:15:y:2013:i:4:p:361-379 Template-Type: ReDIF-Article 1.0 Author-Name: Dan K. Hsu Author-X-Name-First: Dan K. Author-X-Name-Last: Hsu Author-Name: J. Michael Haynie Author-X-Name-First: J. Michael Author-X-Name-Last: Haynie Author-Name: Sharon A. Simmons Author-X-Name-First: Sharon A. Author-X-Name-Last: Simmons Author-Name: Alexander McKelvie Author-X-Name-First: Alexander Author-X-Name-Last: McKelvie Title: What matters, matters differently: a conjoint analysis of the decision policies of angel and venture capital investors Abstract: Prior studies have examined the importance of economic, strategic, and human factors to decision policies of angel investors and venture capitalists. As more angels professionalize into angel funds and as markets for technologies and ideas become more competitive, it is becoming more important to compare their decision policies with those of venture capitalists. Drawing upon agency theory, we examine whether economic potential, specific human capital, strategic readiness, and passion matter differently to venture capitalists and angel investors. Our study is an experimental conjoint analysis of more than 2700 investment decisions nested within a mixed sample of venture capitalists and angel investors. We find that strategic readiness for funding and affective passion matter more to angel investors, while economic potential matters more to venture capitalists. We also find that both investor types place similar weights on the specific human capital of entrepreneurs. These findings support the agency view that differences in the investment decision policies of angel investors and venture capitalists can be explained by examining the agency costs, market risks, information asymmetry, and control mechanisms that are structured into angel and venture capital deals. Journal: Venture Capital Pages: 1-25 Issue: 1 Volume: 16 Year: 2014 Month: 1 X-DOI: 10.1080/13691066.2013.825527 File-URL: http://hdl.handle.net/10.1080/13691066.2013.825527 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:1:p:1-25 Template-Type: ReDIF-Article 1.0 Author-Name: Malin Malmström Author-X-Name-First: Malin Author-X-Name-Last: Malmström Title: Typologies of bootstrap financing behavior in small ventures Abstract: Bootstrapping behavior in small ventures is examined in this study through a prism of typologies to advance our understanding of entrepreneurial behavior. Based on a survey of 91 entrepreneurs in small ventures and interviews with 10 entrepreneurs, this study develops a taxonomy of strategies for bootstrapping behavior and explores the strategies' constitutive elements and underlying logics. The statistically identified 'chunks' of entrepreneurial bootstrap behavior formed a basis for further qualitative exploration and confirmation of a taxonomy of such behavior. The study offers a multifaceted image of bootstrap financing practiced in small ventures by proposing discriminating strategy profiles. By delineating the nature of three entrepreneurial strategy profiles and their underlying logics, and highlighting their effects, the present research contributes to the understanding of how small ventures orient themselves to resource mobilization and gives insights into why entrepreneurs use specific bootstrapping strategies. The taxonomy outlines three bootstrap financing strategies for resource mobilization in small ventures: 'quick-fix bootstrappers', which emphasize temporary access to resources and prefer internally oriented activities for such purposes; 'proactive bootstrappers', which focus on operational resource issues; and 'efficient bootstrappers', which prefer activities that are externally and vertically oriented, up or down in the value creation chain. Journal: Venture Capital Pages: 27-50 Issue: 1 Volume: 16 Year: 2014 Month: 1 X-DOI: 10.1080/13691066.2013.863064 File-URL: http://hdl.handle.net/10.1080/13691066.2013.863064 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:1:p:27-50 Template-Type: ReDIF-Article 1.0 Author-Name: Steven D. Dolvin Author-X-Name-First: Steven D. Author-X-Name-Last: Dolvin Author-Name: Stephanie A. Fernhaber Author-X-Name-First: Stephanie A. Author-X-Name-Last: Fernhaber Title: Seasonal Affective Disorder and IPO underpricing: implications for young firms Abstract: A critical event in the life of a firm is when it undergoes an initial public offering (IPO). Drawing on the Seasonal Affective Disorder (SAD) literature, which evidences a psychological condition that produces heightened pessimism and risk aversion during the fall and winter months, this study focuses on understanding the potential implications of SAD for young firms. Our results confirm the influence of SAD on IPO underpricing and demonstrate that younger firms experience even higher underpricing during periods most heavily associated with SAD. However, we find that using a higher-quality underwriter or changing the share retention decision can mitigate this impact. Journal: Venture Capital Pages: 51-68 Issue: 1 Volume: 16 Year: 2014 Month: 1 X-DOI: 10.1080/13691066.2013.863066 File-URL: http://hdl.handle.net/10.1080/13691066.2013.863066 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:1:p:51-68 Template-Type: ReDIF-Article 1.0 Author-Name: Yaokuang Li Author-X-Name-First: Yaokuang Author-X-Name-Last: Li Author-Name: Shuoyuan Jiang Author-X-Name-First: Shuoyuan Author-X-Name-Last: Jiang Author-Name: Dan Long Author-X-Name-First: Dan Author-X-Name-Last: Long Author-Name: Huidao Tang Author-X-Name-First: Huidao Author-X-Name-Last: Tang Author-Name: Juan Wu Author-X-Name-First: Juan Author-X-Name-Last: Wu Title: An exploratory study of business angels in China: a research note Abstract: There have been a number of studies shedding light on the characteristics of business angels and their investment behavior across the world, but few are in the Chinese context. This study provides an initial profile of Chinese business angels via a questionnaire survey. Based on a sample of 78 respondents, this paper describes the characteristics and investment behavior of business angels in China. An international comparison is made between the findings reported in this paper and those from the USA, the UK, Japan, Singapore, the Philippines, and Thailand. Chinese business angels are comparable to those in foreign countries in terms of age, educational background and business experience. The key differences lie in the fact that Chinese business angels are not all high net worth individuals and are less involved in hands-on involvement, having large-sized investments and co-investing in many of the deals within their cities with a short holding period. Journal: Venture Capital Pages: 69-83 Issue: 1 Volume: 16 Year: 2014 Month: 1 X-DOI: 10.1080/13691066.2013.833370 File-URL: http://hdl.handle.net/10.1080/13691066.2013.833370 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:1:p:69-83 Template-Type: ReDIF-Article 1.0 Author-Name: Jillian Gordon Author-X-Name-First: Jillian Author-X-Name-Last: Gordon Title: A stage model of venture philanthropy Abstract: This paper explores the practices of venture philanthropy (VP). A stage model is developed from an inductive analysis of high net worth entrepreneurs who are engaged in VP. The study used a qualitative case study research strategy. Informant interviews were conducted with three main groups: the principal philanthropists, foundation philanthropy teams and leaders of investee organisations in receipt of funding. The findings suggest a model of VP with eight distinct stages including deal sourcing, relationship building, screening and information gathering, co-creation, early decision-making, circular reasoning, deal structuring, post-investment after care, disengagement and return. Comparisons with venture capital (VC), developmental VC and business angel investment are drawn and distinct similarities and differences are highlighted. This suggests that VP is a hybrid model that incorporates elements of all three types of approaches. Journal: Venture Capital Pages: 85-107 Issue: 2 Volume: 16 Year: 2014 Month: 4 X-DOI: 10.1080/13691066.2014.897014 File-URL: http://hdl.handle.net/10.1080/13691066.2014.897014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:2:p:85-107 Template-Type: ReDIF-Article 1.0 Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Author-Name: Robert Cressy Author-X-Name-First: Robert Author-X-Name-Last: Cressy Author-Name: Nick Wilson Author-X-Name-First: Nick Author-X-Name-Last: Wilson Author-Name: Hisham Farag Author-X-Name-First: Hisham Author-X-Name-Last: Farag Title: Financial restructuring and recovery in private equity buyouts: the UK evidence Abstract: A large literature has adumbrated the value-added role of private equity (PE) firms in backing buyouts. The present paper examines a different and hitherto unexplored issue: the role of financial restructuring in PE buyouts in the UK both before and after the financial crash of 2007. The UK evidence indicates that while PE buyouts had greater financial risk than comparable public limited companies (PLCs), they (1) already contained provisions to optimize recovery rates under insolvency, raising their recovery rates significantly relative to controls; and (2) rapidly adjusted the capital structures of new deals in response to the changes in financial and economic climate from 2007 onward resulting in failure rates somewhat <italic>lower</italic> than PLCs and non-PE buyouts. Non-PE management buyins (MBIs) by contrast have much higher failure rates than any other category throughout the 12-year period. Our analysis offers important implications for policymakers. First, it shows that there has been greater adjustment over time in the leverage and cash position of buyouts than for other private companies and matched PLCs. Second, policymakers need to recognize that while PE buyouts are highly leveraged, non-PE-backed buyouts are more or less well managed. Third, <italic>ceteris paribus</italic>, PE-backed deals are not riskier than the population of non-buyouts; active involvement by PE firms in helping portfolio companies deal with trading difficulties plays an important role. Fourth, the governance mechanisms in PE buyouts result in greater preservation of value when a portfolio firm enters formal bankruptcy than is the case for PLCs. Journal: Venture Capital Pages: 109-129 Issue: 2 Volume: 16 Year: 2014 Month: 4 X-DOI: 10.1080/13691066.2013.863065 File-URL: http://hdl.handle.net/10.1080/13691066.2013.863065 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:2:p:109-129 Template-Type: ReDIF-Article 1.0 Author-Name: Luca Pennacchio Author-X-Name-First: Luca Author-X-Name-Last: Pennacchio Title: The causal effect of venture capital backing on the underpricing of Italian initial public offerings Abstract: This paper investigates the role of venture capitalists in Italian Initial Public Offerings (IPOs). Between 1999 and 2012, venture capital (VC) backed IPOs are on average less underpriced than non-VC-backed IPOs. By using both matching methods and a regression-based approach to account for the non-random distribution of venture financing across firms, the analysis shows that underpricing difference is actually due to the causal effect of VC backing and that the raw comparison of the average underpricing between the two types of IPOs underestimates such effect. The result is consistent with the certification hypothesis, that is, having certified that the value of issuing firms would reflect all relevant inside information, VC backing will reduce the information asymmetry that arises in the IPO process and the cost of going public. Journal: Venture Capital Pages: 131-155 Issue: 2 Volume: 16 Year: 2014 Month: 4 X-DOI: 10.1080/13691066.2014.899737 File-URL: http://hdl.handle.net/10.1080/13691066.2014.899737 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:2:p:131-155 Template-Type: ReDIF-Article 1.0 Author-Name: Susan Coleman Author-X-Name-First: Susan Author-X-Name-Last: Coleman Author-Name: Dafna Kariv Author-X-Name-First: Dafna Author-X-Name-Last: Kariv Title: 'Deconstructing' entrepreneurial self-efficacy: a gendered perspective on the impact of ESE and community entrepreneurial culture on the financial strategies and performance of new firms Abstract: We examine the impact of entrepreneurial self-efficacy (ESE) and community entrepreneurial culture on financial strategy and firm performance, by gender. In doing so, we 'deconstruct' both ESE and community culture into various components and view them as multidimensional constructs. Our data sample consists of 1214 firms included in the second Panel Study of Entrepreneurial Dynamics. Our findings reveal that men raised larger amounts of financial capital than women did from both internal and external sources. Furthermore, higher levels of ESE were associated with a greater willingness to raise capital from external sources. In contrast, the entrepreneur's perceptions of community entrepreneurial culture had no impact on securing financial capital from either internal or external sources for either gender. Our results also revealed gender differences in the area of performance expectations. For both women and men, higher levels of ESE and the availability of financial capital enhanced performance expectations, whereas community entrepreneurial culture contributed to higher performance expectations for men only. This discrepancy suggests that ESE is even more important for women entrepreneurs in the sense that they need higher levels of self-confidence in order to overcome their perceptions of institutional barriers for securing financial capital and growing their firms. Journal: Venture Capital Pages: 157-181 Issue: 2 Volume: 16 Year: 2014 Month: 4 X-DOI: 10.1080/13691066.2013.863063 File-URL: http://hdl.handle.net/10.1080/13691066.2013.863063 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:2:p:157-181 Template-Type: ReDIF-Article 1.0 Author-Name: Othmar M. Lehner Author-X-Name-First: Othmar M. Author-X-Name-Last: Lehner Title: Finance, risk and accounting perspectives Journal: Venture Capital Pages: 185-188 Issue: 3 Volume: 16 Year: 2014 Month: 7 X-DOI: 10.1080/13691066.2014.921080 File-URL: http://hdl.handle.net/10.1080/13691066.2014.921080 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:3:p:185-188 Template-Type: ReDIF-Article 1.0 Author-Name: C. Royal Author-X-Name-First: C. Author-X-Name-Last: Royal Author-Name: J. Evans Author-X-Name-First: J. Author-X-Name-Last: Evans Author-Name: S.S. Windsor Author-X-Name-First: S.S. Author-X-Name-Last: Windsor Title: The missing strategic link - human capital knowledge, and risk in the finance industry - two mini case studies Abstract: Understanding risks faced by firms and their reactions in response to those risks requires analysis of the ambiguities inherent in human behaviour. Yet, evidence from two case studies on investment and insurance professionals in the finance industry suggests that more focus on human capital may be prudent in reducing epistemic uncertainty particularly considering recent events in which the investing public has had a crisis of confidence in corporate leaders. It is particularly appropriate for regulators to provide a context in which market participants exercise due diligence by ensuring that human capital is enhanced by as much knowledge as possible where more human capital knowledge could reduce both risk in investments and insurance, ultimately challenging the sustainability of organisations during periods of epistemic uncertainty. This paper suggests that investment analysts, fund managers and insurance professionals lack the appropriate competencies, skills, knowledge and abilities required to meet the demands of the analysis of human capital in relation to understanding risk. Such competencies include disciplinary knowledge of sustainable human resource management (HRM) and organisational change systems and their links to corporate performance and risk mitigation. An alignment with HRM/HR that is equally focused on internal and external risk is of strategic importance for such professionals and their organisations in human capital risk mitigation. Journal: Venture Capital Pages: 189-206 Issue: 3 Volume: 16 Year: 2014 Month: 7 X-DOI: 10.1080/13691066.2014.916856 File-URL: http://hdl.handle.net/10.1080/13691066.2014.916856 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:3:p:189-206 Template-Type: ReDIF-Article 1.0 Author-Name: Saadiah Mohamad Author-X-Name-First: Saadiah Author-X-Name-Last: Mohamad Author-Name: Jaizah Othman Author-X-Name-First: Jaizah Author-X-Name-Last: Othman Author-Name: Rosmimah Roslin Author-X-Name-First: Rosmimah Author-X-Name-Last: Roslin Author-Name: Othmar M. Lehner Author-X-Name-First: Othmar M. Author-X-Name-Last: Lehner Title: The use of Islamic hedging instruments as non-speculative risk management tools Abstract: The objectives of this research were, first, to examine how an Islamic hedging instrument can be used as a risk management tool, second, to identify the factors that influence the demand for Islamic hedging, and third, to examine the challenges faced by an Islamic financial institution in promoting the use of Islamic hedging instruments. This research is an exploratory study and involves a qualitative research methodology using case study analysis. Data were gathered using published literature and information from official websites as well as interviews with industry practitioners on Islamic hedging instruments from Bank Muamalat Malaysia Berhad and CIMB Islamic Berhad. The two banks are selected because they are among the major players in the Islamic hedging market in Malaysia. This study reveals that the Islamic hedging instruments offered to corporate clients by the two Islamic banks under study are Islamic Forex, cross-currency and profit rate swaps, and commodity hedging instruments. This study also suggests that price, documentation, bank reputation, awareness, and ownership are factors that influence the demand for Islamic hedging products. Islamic <italic>Shariah</italic>-compliant hedging instruments are meant to appeal more to clients who are looking for <italic>Shariah</italic>-compliant hedging instruments to hedge their risk exposure and less to investors who are looking for speculative ventures to gain large returns much like investing in hedge funds. Its use is still limited and it appears that it is more a question of marketing and branding, as Islamic hedging is still unknown even though the needs for it could easily be established to many corporate clients. Journal: Venture Capital Pages: 207-226 Issue: 3 Volume: 16 Year: 2014 Month: 7 X-DOI: 10.1080/13691066.2014.922824 File-URL: http://hdl.handle.net/10.1080/13691066.2014.922824 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:3:p:207-226 Template-Type: ReDIF-Article 1.0 Author-Name: Pegah Dehghani Author-X-Name-First: Pegah Author-X-Name-Last: Dehghani Author-Name: Ros Zam Zam Sapian Author-X-Name-First: Ros Zam Zam Author-X-Name-Last: Sapian Title: Sectoral herding behavior in the aftermarket of Malaysian IPOs Abstract: The Malaysian initial public offering (IPO) market is characterized by substantial uncertainties due to limited disclosure of information, 'fixed-price pricing mechanism', and cognitive biases of Asian investors. Together, these characteristics might induce investors to engage in herding behavior in the aftermarket of an IPO. This study investigates investors' herding behavior in the IPO aftermarket from 2001 to 2011 using Christie and Huang's [Christie, W. G., and R. D. Huang. 1995. "Following the Pied Piper: Do Individual Returns Herd Around the Market?" <italic>Financial Analysts Journal</italic> 51 (4): 31-37] method. The findings of this study show that for non-private placements, a negative and insignificant β<sub>1</sub> coefficient, as an indication of herding, is reported for Technology sector. The herding behavior that is only constrained to technological firms during down market may be due to the risky nature of the new issues in the down market, rather than the uninformed characteristic of the individual investors. The findings of this study also show that for the private placement category, negative and insignificant coefficients of β<sub>1</sub> and β<sub>2</sub> are reported for Consumer Product and Technology sectors, respectively. Since the negative coefficients are not limited to the down market, with risky and uncertain shares, the results could be an indication of the herding of informed investors in the two mentioned sectors. Journal: Venture Capital Pages: 227-246 Issue: 3 Volume: 16 Year: 2014 Month: 7 X-DOI: 10.1080/13691066.2014.921100 File-URL: http://hdl.handle.net/10.1080/13691066.2014.921100 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:3:p:227-246 Template-Type: ReDIF-Article 1.0 Author-Name: Denis Frydrych Author-X-Name-First: Denis Author-X-Name-Last: Frydrych Author-Name: Adam J. Bock Author-X-Name-First: Adam J. Author-X-Name-Last: Bock Author-Name: Tony Kinder Author-X-Name-First: Tony Author-X-Name-Last: Kinder Author-Name: Benjamin Koeck Author-X-Name-First: Benjamin Author-X-Name-Last: Koeck Title: Exploring entrepreneurial legitimacy in reward-based crowdfunding Abstract: Venture financing through social networks has become a global phenomenon. The processes and drivers of crowdfunding require careful study to identify similarities and distinctions from traditional venture finance. The demonstration of project legitimacy is especially interesting because online crowdfunding limits investors' access to the entrepreneur and organisation. How do rewards-based crowdfunding projects establish and demonstrate legitimacy in this virtual, impersonal context? We employ a novel data-set collected from the Kickstarter crowdfunding platform to explore the characteristics of successful projects, including legitimating signals and content. The data reveal numerous findings linking project characteristics to legitimacy and success. First, lower funding targets and shorter duration signal legitimacy by setting modest, achievable expectations. Rewards structures, such as traditional equity investment terms, appear to generate a sense of legitimate investment returns. Finally, narrative legitimacy in the online crowdfunding context may derive more from the online platform community than the visual pitch. Our study reveals a more nuanced picture of legitimacy formation during rewards-based crowdfunding, with implications for theories of resource assembly and the practice of venture finance. Journal: Venture Capital Pages: 247-269 Issue: 3 Volume: 16 Year: 2014 Month: 7 X-DOI: 10.1080/13691066.2014.916512 File-URL: http://hdl.handle.net/10.1080/13691066.2014.916512 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:3:p:247-269 Template-Type: ReDIF-Article 1.0 Author-Name: Othmar M. Lehner Author-X-Name-First: Othmar M. Author-X-Name-Last: Lehner Author-Name: Alex Nicholls Author-X-Name-First: Alex Author-X-Name-Last: Nicholls Title: Social finance and crowdfunding for social enterprises: a public-private case study providing legitimacy and leverage Abstract: The authors work closely with academia and governmental organizations in the UK and abroad to develop new, innovative schemes for social impact investing. Such schemes include considerations for public-private collaborations, legislative actions, and especially in this case, for the leveraged use of public and philanthropic funds in Crowdfunding (CF). The relatively new phenomenon of CF can not only provide necessary funds for the social enterprises, it may also lead to a higher legitimacy of these through early societal interaction and participation. This legitimacy can be understood as a strong positive signal for further investors. Governmental tax-reliefs and guarantees from venture-philanthropic funds provide additional incentives for investment and endorse future scaling by leveraging additional debt-finance from specialized social banks. This case study identifies idiosyncratic hurdles to why an efficient social finance market has yet to be created and examines a schema as a case of how individual players' strengths and weaknesses can be balanced out by a concerted action. The paper discusses the necessary actions, benefits and implications for the involved actors from the public, private and third sector. Journal: Venture Capital Pages: 271-286 Issue: 3 Volume: 16 Year: 2014 Month: 7 X-DOI: 10.1080/13691066.2014.925305 File-URL: http://hdl.handle.net/10.1080/13691066.2014.925305 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:3:p:271-286 Template-Type: ReDIF-Article 1.0 Author-Name: Evan J. Douglas Author-X-Name-First: Evan J. Author-X-Name-Last: Douglas Author-Name: Martin Carlsson-Wall Author-X-Name-First: Martin Author-X-Name-Last: Carlsson-Wall Author-Name: Tomas Hjelström Author-X-Name-First: Tomas Author-X-Name-Last: Hjelström Title: Negotiating equity share and management control of the entrepreneurial new venture Abstract: The valuation of entrepreneurial start-ups for the purpose of equity allocation to business angel investors is an enduring point of discord between the contracting parties. Lack of information and lack of trust, plus the asymmetry of both information and trust between the parties, typically cause the investor to apply a higher risk premium and argue for a larger share of the firm's equity than the entrepreneur deems reasonable. Recent literature on interpersonal trust and the inclusion of management controls is incorporated into a conceptual model to examine the potential for a win-win situation based on information provision and trust building during the negotiation process. Although the entrepreneur and investor may begin with widely divergent ambit claims, hearing and discussing the other's perspectives will redress information asymmetries, build mutual trust and produce a win-win situation for both parties. Journal: Venture Capital Pages: 287-307 Issue: 4 Volume: 16 Year: 2014 Month: 10 X-DOI: 10.1080/13691066.2014.970334 File-URL: http://hdl.handle.net/10.1080/13691066.2014.970334 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:4:p:287-307 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Fili Author-X-Name-First: Andreas Author-X-Name-Last: Fili Title: Business angel-venture negotiation in the post-investment relationship: the use of the good cop, bad cop strategy Abstract: The paper reports on the utilization of the "good cop, bad cop" negotiation strategy in ongoing investor-venture relationships. Four cases of business angel - venture involvement are studied over a period of several years. Earlier research on the good cop, bad cop strategy has described its efficiency in obtaining maximum distribution in short-term distributive bargaining. This has been explained as a result of the emotional contrast effect unlocked by the sequence of interaction with the bad cop followed by interaction with the good cop. In an ongoing investment relationship, other rules apply. The present findings suggest that only a business angel who is already trusted can become a good cop - by virtue of introducing a bad cop. This is explained as a way of conducting negotiations without destroying the trust that has been built over time in the business angel-venture relationship. The strategy provides a scapegoat for the negativity associated with the negotiations. The bad cop assumes the blame, while the good cop is still trusted and can remain in the relationship, with less risk of being the target of any retained hostility. Journal: Venture Capital Pages: 309-325 Issue: 4 Volume: 16 Year: 2014 Month: 10 X-DOI: 10.1080/13691066.2014.974884 File-URL: http://hdl.handle.net/10.1080/13691066.2014.974884 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:4:p:309-325 Template-Type: ReDIF-Article 1.0 Author-Name: Jan Middelhoff Author-X-Name-First: Jan Author-X-Name-Last: Middelhoff Author-Name: René Mauer Author-X-Name-First: René Author-X-Name-Last: Mauer Author-Name: Malte Brettel Author-X-Name-First: Malte Author-X-Name-Last: Brettel Title: Antecedents of entrepreneurs' trust in their investor in the postinvestment phase - do something good! Abstract: This study sheds light on character- and behavior-based antecedents in driving entrepreneurs' trust in their investors after the investment has been made. By introducing established concepts from trust literature, this study decomposes antecedents of entrepreneurs' trust and helps to further clarify the entrepreneur-investor relationship. The study also advances research by analyzing trust in a nonhierarchical relationship and by working on the interplay of procedural justice and perceived trustworthiness. Using a survey of 104 German entrepreneurs, we find that perceptions about investors' ability, integrity, and benevolence drive entrepreneurs' trust. A moderation analysis reveals that interaction frequency has differing effects in combination with benevolence and integrity. In contrast to some earlier findings, procedural justice does not show a significant relationship with trust in our model. Investors should be aware of the strong and positive influence that the affective factor of benevolence has in the postinvestment phase, and they should take note of the double-edged effect of frequent interactions. Journal: Venture Capital Pages: 327-347 Issue: 4 Volume: 16 Year: 2014 Month: 10 X-DOI: 10.1080/13691066.2014.988381 File-URL: http://hdl.handle.net/10.1080/13691066.2014.988381 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:4:p:327-347 Template-Type: ReDIF-Article 1.0 Author-Name: Eline L. Ingstad Author-X-Name-First: Eline L. Author-X-Name-Last: Ingstad Author-Name: Mirjam Knockaert Author-X-Name-First: Mirjam Author-X-Name-Last: Knockaert Author-Name: Yves Fassin Author-X-Name-First: Yves Author-X-Name-Last: Fassin Title: Smart money for social ventures: an analysis of the value-adding activities of philanthropic venture capitalists Abstract: Philanthropic venture capitalists (PhVCs) provide social entrepreneurs with financial and nonfinancial resources. This paper studies how and why PhVCs engage in value-adding activities. Employing an inductive case study method, our study shows that value-adding activities engaged in by PhVCs are similar to the activities carried out by traditional venture capitalists. Further, we find self-efficacy and goal setting theories to be particularly relevant in studying why PhVCs engage in value-adding activities. Concretely, PhVCs engage in value-adding activities that are in line with their efficacy beliefs and that facilitate the achievement of lower-order goals related to professionalization, self-sustainability, and expansion. As such, they aim at reaching the higher-end goal of scaling the social venture. Journal: Venture Capital Pages: 349-378 Issue: 4 Volume: 16 Year: 2014 Month: 10 X-DOI: 10.1080/13691066.2014.988379 File-URL: http://hdl.handle.net/10.1080/13691066.2014.988379 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:16:y:2014:i:4:p:349-378 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Author-Name: Rob Baldock Author-X-Name-First: Rob Author-X-Name-Last: Baldock Title: Financing SME growth in the UK: meeting the challenges after the global financial crisis Abstract: This paper introduces the Special Issue. It reviews the response of financial institutions to the global financial crisis in the provision of loan and equity finance to SMEs, and highlights the emergence and role of alternative forms of finance, including crowdfunding, microfinance and credit unions. The paper concludes that any continued constraint in the supply of and effective demand for finance for the SME sector will have significant implications for the overall performance of economies in both developed and developing countries. Journal: Venture Capital Pages: 1-6 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1050241 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1050241 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:1-6 Template-Type: ReDIF-Article 1.0 Author-Name: Dan van der Schans Author-X-Name-First: Dan Author-X-Name-Last: van der Schans Title: The British Business Bank's role in facilitating economic growth by addressing imperfections in SME finance markets Abstract: This paper presents an overview of the establishment of the British Business Bank; a new government owned financial institution designed to change the structure of finance markets for smaller businesses, so that these markets work more effectively. The paper focuses on explaining the economic rationale for the Bank by identifying how business access to external finance can affect economic growth through facilitating increases in business investment and productivity. The paper provides an overview of recent cyclical trends in SME debt and equity markets, before identifying a number of specific structural market failures affecting different types of finance that prevents some viable SMEs from raising the finance they need. The paper then provides a description of how British Business Bank funding solutions can help to address these market failures. Journal: Venture Capital Pages: 7-25 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021026 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:7-25 Template-Type: ReDIF-Article 1.0 Author-Name: Dylan Jones-Evans Author-X-Name-First: Dylan Author-X-Name-Last: Jones-Evans Title: Access to finance to SMEs at a regional level - the case of Finance Wales Abstract: Since the economic recession of 2008, there is increasing evidence that small to medium sized enterprises (SMEs) have found it increasingly difficult to access funding from conventional sources such as banks. As a result, there have been various public sector interventions within the UK to close this finance gap, although this has been developed at a national rather than a regional level. This paper examines the development of one of the few publicly owned regional development funds in the UK and its role in supporting the SME sector in Wales during the economic recession. It shows the strategy undertaken was contrary to expectation during a time of economic crisis, especially in the failure to reduce the cost of borrowing to SMEs and to utilise the full range of financial instruments to ensure to maximise its impact. Journal: Venture Capital Pages: 27-41 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1052624 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1052624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:27-41 Template-Type: ReDIF-Article 1.0 Author-Name: David E. Gill Author-X-Name-First: David E. Author-X-Name-Last: Gill Title: Consolidating the gains Abstract: Gaps in the provision of funding for growth-potential firms in the UK are both cyclical and structural. The dynamic nature of the gaps means that their characteristics vary over time, and quantification remains problematic, but recent evidence suggest shortages are most acute in the £2M-£10M range. Government intervention has become increasingly sophisticated, notably in the design and targeting of hybrid public-private funds, such as Enterprise Capital Funds. But mismatches between supply and demand persist, with substantial opportunity costs to the UK economy. The recent creation of the British Business Bank (whose formation was announced in September 2012 and which received EU state-aid clearance in October 2014) opens up an exceptional opportunity to apply government lessons learned in early-stage risk capital. In addition to leveraging further financial resources, the Business Bank has unique convening power to assist in rebuilding the venture market through example and leadership. The structured risk venture activity of the Business Bank (for which precedent exists in Israel and elsewhere) needs to take account of sector and cluster issues. Timing is opportune as Business Bank activity can harness developments in alternative financing, including crowd funding. To ensure that investment remains profitably focused on 'the gap', funds supported must: be of sufficient scale, be structured for the long term, contribute to rebuilding the UK's venture expertise, and be restrained from mutating into mainstream private equity vehicles. The experience of regional funds over the previous decade was largely disappointing, but the emerging divide between the venture markets of the South East and the rest of the UK cannot be ignored. Centralized technical and industry expertise can make localized investment more cost-effective, enabling the UK to replace (but improve on) 3i as it was in the 1970s and 1980s. Journal: Venture Capital Pages: 43-58 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021029 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:43-58 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Baldock Author-X-Name-First: Robert Author-X-Name-Last: Baldock Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Title: Establishing a new UK finance escalator for innovative SMEs: the roles of the Enterprise Capital Funds and Angel Co-Investment Fund Abstract: This paper examines UK public policy addressing the seed and early stage equity finance gap since the global financial crisis (GFC). Drawing on lessons learned from recent studies of UK and international government equity schemes, two contemporary models of government-backed equity finance are examined. The focus is on the Enterprise Capital Funds (ECFs) and the Angel Co-Investment Fund (ACF), the UK government's main schemes operating in the sub-£2m equity finance gap to address the capital requirements for developing the UK's young, potential high growth businesses. The paper highlights the shortcomings of traditional interim fund performance analysis and presents current demand and supply side evidence that establishes that these schemes are making attributable impacts on their portfolio businesses and the wider UK economy. It also demonstrates that they are playing important roles in the establishment of a new post-GFC UK finance escalator. However, whilst these schemes were found to be currently complementary and effective, their future roles within the UK's evolving post-GFC seed and early stage equity markets are also considered. Journal: Venture Capital Pages: 59-86 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021025 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:59-86 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Baldock Author-X-Name-First: Robert Author-X-Name-Last: Baldock Title: What is the role of public feeder markets in developing technology-based small firms? An exploration of the motivations for listing on AIM since the GFC Abstract: In the aftermath of the 2007 global financial crisis, stock markets experienced a sharp decline in listings and a marked reduction in initial public offerings (IPOs). This paper explores the factors determining UK technology-based small firm (TBSF) listings on the UK alternative investment market (AIM) and whether this market has a role to play in their future development. A case-study approach is used to contrast the experiences of five recent AIM-listed TBSFs with five TBSFs approaching private equity investment exit, i.e. considering an IPO exit. The paper concludes that macro market conditions, rather than managerial resource-based or AIM market structural factors, were most influential in TBSF pecking-order preferences to undertake IPOs. From a managerial resource-based perspective, lifelong entrepreneurs were more likely than serial entrepreneurs to favour an IPO exit, as it supported their aims to continue to manage and grow UK-based companies. In addition, with a more buoyant and sustainable AIM market, TBSF investors are more likely to choose IPOs. To conclude, AIM played an important role in the development of listed UK TBSFs. A more buoyant AIM could ease the UK finance escalator's flow, facilitating more rapid UK TBSF growth. Journal: Venture Capital Pages: 87-112 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021028 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:87-112 Template-Type: ReDIF-Article 1.0 Author-Name: Steve Talbot Author-X-Name-First: Steve Author-X-Name-Last: Talbot Author-Name: Ciarán Mac an Bhaird Author-X-Name-First: Ciarán Author-X-Name-Last: Mac an Bhaird Author-Name: Geoff Whittam Author-X-Name-First: Geoff Author-X-Name-Last: Whittam Title: Can credit unions bridge the gap in lending to SMEs? Abstract: Small firms continue to experience difficulty accessing adequate finance from formal external sources, notwithstanding many and varied institutional and policy initiatives introduced to address this seemingly perennial problem. Underpinning research indicates that information asymmetry is the principal reason for the finance gap, particularly for young firms. The aim of legislation introduced in the UK in 2012 is to utilise the credit union sector to increase the amount of new lending to SMEs. The rationale for this legislative change arises because credit unions typically operate within a defined geographic region wherefrom they can compile detailed local knowledge of small businesses and be therefore uniquely placed to minimise information asymmetries thereby reducing the funding gap for small firms. Despite this perceived advantage, credit unions have been reluctant to take advantage of this legislative, and therefore lending by credit unions to SMEs has been negligent to date. We investigate the reasons for this lack of engagement in SME lending by interviewing the chief executives of five credit unions in Scotland. Our findings reveal that the CEOs of the credit unions are reluctant to lend to SMEs at present as they are uncomfortable with the level of risk associated with lending to a sector of which they have little experience or expertise. Furthermore, credit unions will need to offer attractive interest rates to compete with high street banks and an increasing number of microcredit providers. Policy makers need to better understand the structure and function of credit unions before assigning a greater role in SME lending. It is too early to say whether credit unions can play a significant role in SME lending, and our evidence suggests that structural issues must first be resolved before they become an established presence in the SME lending ecosystem. Journal: Venture Capital Pages: 113-128 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021027 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:113-128 Template-Type: ReDIF-Article 1.0 Author-Name: David Deakins Author-X-Name-First: David Author-X-Name-Last: Deakins Author-Name: David North Author-X-Name-First: David Author-X-Name-Last: North Author-Name: Jo Bensemann Author-X-Name-First: Jo Author-X-Name-Last: Bensemann Title: Paradise lost? The case of technology-based small firms in New Zealand in the post-global financial crisis economic environment Abstract: In this paper, we draw on two studies that used face-to-face, qualitative interviews with technology-based small firms (TBSFs) and informal interviews with key informants. The interviews took place with two data-sets of TBSFs, the first with 20 firms in 2011 and the second with 34 agri-businesses in 2013. This study provides some temporal comparisons of the funding environment for TBSFs in New Zealand, but this is not a longitudinal study as the two data-sets were obtained from the recruitment of different firms. However, all the TBSFs were located in New Zealand, a small open economy with a limited domestic market, a population of 4.4 million, GDP per capita of US$32,260 (2010) and arguably an immature and limited financial infrastructure. This environment is complex for founding new businesses by technology-based entrepreneurs as developing and staying in New Zealand means accepting being a long distance from major overseas markets even though TBSFs have potential to be in global markets, in practice. Such TBSFs, therefore, face pressure to move overseas for markets and for finance and other resources; if successful they may make attractive takeover targets for overseas investors and MNCs. Despite these challenges, TBSFs have been promoted as key contributors to GDP and a way of filling the New Zealand productivity gap (compared with Australia and other developed nations). Although we find evidence of the development of embryonic regional and specialised business angel networks on the supply-side of finance, there is still a marked reluctance to undertake a search for external equity and evidence of discouraged borrowing and discouraged grant-based applications on the demand-side. New Zealand is sometimes described as 'paradise' (The use of this term often refers to a fondness for the high quality of life in New Zealand and its economic environment, not just the natural beauty of the country). due to its natural and outstanding beauty, but in our conclusions we suggest that the comparatively stable economic environment has not operated in favour of TBSFs. Journal: Venture Capital Pages: 129-150 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021031 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021031 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:129-150 Template-Type: ReDIF-Article 1.0 Author-Name: Ciarán Mac an Bhaird Author-X-Name-First: Ciarán Author-X-Name-Last: Mac an Bhaird Author-Name: Theo Lynn Author-X-Name-First: Theo Author-X-Name-Last: Lynn Title: Seeding the cloud: financial bootstrapping in the computer software sector Abstract: This study investigates resourcing of computer software companies that have adopted cloud computing for the development and delivery of application software. Use of this innovative technology potentially impacts firm financing because the initial infrastructure investment requirement is much lower than for packaged software, lead time to market is shorter and cloud computing supports instant scalability. We test these predictions by conducting in-depth interviews with founders of 18 independently owned nascent enterprises, of which three-quarters have adopted cloud computing. We identify particular bootstrapping methods used by start-ups in the computer software sector. Cloud computing enables firms to develop and launch products with minimal resources, reducing barriers to entry, with consequent increased competition. The primary business bootstrapping technique is foregoing wages, supplemented by small amounts of grant funding. Customers are a source of knowledge and expertise for product development, which occurs in an iterative process. Product bootstrapping techniques have changed in response to technological innovation, although methods to acquire tangible assets are identical over time. Astutely applied, financial bootstrapping is a resource management strategy essential to the growth and survival of high-technology firms. Journal: Venture Capital Pages: 151-170 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021030 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:151-170 Template-Type: ReDIF-Article 1.0 Author-Name: Othmar M. Lehner Author-X-Name-First: Othmar M. Author-X-Name-Last: Lehner Author-Name: Elisabeth Grabmann Author-X-Name-First: Elisabeth Author-X-Name-Last: Grabmann Author-Name: Carina Ennsgraber Author-X-Name-First: Carina Author-X-Name-Last: Ennsgraber Title: Entrepreneurial implications of crowdfunding as alternative funding source for innovations Abstract: Crowdfunding (CF) is a form of early-stage financing for innovative ventures, which has seen tremendous growth in the past few years - partly because it provides a desperately needed alternative to the scarcity of traditional sources of finance during the so called 'credit crunch'. CF ranges from a simple form of pre-financing to full grown debt or equity investments, but they are typically small pledges that can add up to incredible amounts. Scholarly literature has only started to examine CF and is still in an early stage when it comes to identifying implications for entrepreneurs apart from often over-simplified anecdotal evidence of success. The authors argue that CF can by no means be seen from a financial perspective only, rather it needs to be addressed as a bundle of processes leading to innovative entrepreneurial business-models. This qualitative study explores four extreme cases from the information and communications technology sphere to find out non-financial implications of CF as alternative funding source for innovative entrepreneurs and their business models. Journal: Venture Capital Pages: 171-189 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1037132 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1037132 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:171-189 Template-Type: ReDIF-Article 1.0 Author-Name: Ana C. Silva Author-X-Name-First: Ana C. Author-X-Name-Last: Silva Author-Name: Gonzalo A. Chávez Author-X-Name-First: Gonzalo A. Author-X-Name-Last: Chávez Title: Microfinance, country governance, and the global financial crisis Abstract: This study examines the influence of country institutional and governance characteristics on the performance of microfinance institutions (MFIs) during the global financial crisis of 2008-2009. Using a dataset of 364 MFIs from 47 countries during the 2004-2011 period, we investigate whether MFIs operating in environments characterized by higher institutional quality were more resilient to the effects of the global crisis. We find that microfinance performance is positively related to institutional country characteristics and that MFIs located in countries with stronger governance are less severely impacted by the global financial crisis. Also, our results show that the influence of country governance on microfinance performance is prevalent across MFIs subject to different degrees of regulation and with different individual characteristics. Our objective is to contribute to the body of research that attempts to identify the country institutional characteristics that influence how severely financial institutions are impacted by financial crises. This analysis, which to our knowledge, is the first attempt for the microfinance industry, is particularly relevant since the negative effects of financial and economic shocks are specially felt by the low-income individuals that MFIs serve. Journal: Venture Capital Pages: 191-213 Issue: 1-2 Volume: 17 Year: 2015 Month: 4 X-DOI: 10.1080/13691066.2015.1021032 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1021032 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:1-2:p:191-213 Template-Type: ReDIF-Article 1.0 Author-Name: Xiao Huang Author-X-Name-First: Xiao Author-X-Name-Last: Huang Author-Name: Martin Kenney Author-X-Name-First: Martin Author-X-Name-Last: Kenney Author-Name: Donald Patton Author-X-Name-First: Donald Author-X-Name-Last: Patton Title: Responding to uncertainty: syndication partner choice by foreign venture capital firms in China Abstract: Cross-border venture capital investment has grown dramatically. Drawing upon observations about the liability of foreignness, previous research has shown that foreign venture capitalists (VCs) tend to partner with local VCs in order to offset information asymmetry and the liabilities of foreignness. Much of the literature has suggested that local VCs should help reduce operational uncertainty. This paper examines syndication partner choice in China, which today is likely the most uncertain environment in which foreign VCs operate on a large scale. This provides an ideal environment for understanding partner selection under uncertainty. Our results show that foreign investors are more likely to choose Chinese investors in later rounds and in more mature portfolio firms. While foreign firms with more Chinese experience are more likely to co-invest with Chinese VCs, the older foreign VC firms are less likely to do so. Remarkably, having a Chinese office made foreign VCs less likely to co-invest. In seed-stage investments, when uncertainty is the greatest, foreign firms are least likely to co-invest with Chinese VCs, and this was not affected by the maturation of the market, while at the later stage, when uncertainty is lowest, they are most likely to co-invest. Journal: Venture Capital Pages: 215-235 Issue: 3 Volume: 17 Year: 2015 Month: 7 X-DOI: 10.1080/13691066.2015.1051737 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1051737 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:3:p:215-235 Template-Type: ReDIF-Article 1.0 Author-Name: John Perry Author-X-Name-First: John Author-X-Name-Last: Perry Author-Name: Masud Chand Author-X-Name-First: Masud Author-X-Name-Last: Chand Author-Name: Kirk Ring Author-X-Name-First: Kirk Author-X-Name-Last: Ring Title: Cultural influences in the decision to invest in new ventures: an exploratory study Abstract: Do cultural factors influence whether individuals invest in new ventures? If so, do cultural factors influence in whose new ventures they invest? When making economic decisions, individuals are embedded in their society's cultural norms. Because countries differ on cultural dimensions, we hypothesize that an individual's culture influences whether he or she invests in new ventures. Additionally, for those who do invest, we hypothesize that their culture influences whether they invest in a family member or nonfamily member's venture. The results generally support our hypotheses and show that different cultural dimensions influence whether an individual invests in a new venture, and whether s/he invests in a family or nonfamily member's new venture. Because family members are one of the greatest sources of capital for entrepreneurs when starting a business, these results may explain the differences in new venture funding rates and new business startup rates between nations. Journal: Venture Capital Pages: 237-262 Issue: 3 Volume: 17 Year: 2015 Month: 7 X-DOI: 10.1080/13691066.2015.1051738 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1051738 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:3:p:237-262 Template-Type: ReDIF-Article 1.0 Author-Name: Krista Tuomi Author-X-Name-First: Krista Author-X-Name-Last: Tuomi Author-Name: Barbara Boxer Author-X-Name-First: Barbara Author-X-Name-Last: Boxer Title: The costs and benefits of early-stage business tax credits: a case study of two US states Abstract: Tax credits for investment in early stage business are a common policy measure aimed at fostering innovation and entrepreneurship. Although credits can <italic>theoretically</italic> play an important role in offsetting risk and boosting early-stage investment, there are few <italic>empirical</italic> findings to back the theory. This paper adds to the debate by looking at two US tax credit programs: those of Maryland and Wisconsin. The net economic impact of these states' programs is estimated using the regional input-output modeling system (RIMS II). Journal: Venture Capital Pages: 263-270 Issue: 3 Volume: 17 Year: 2015 Month: 7 X-DOI: 10.1080/13691066.2015.1051757 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1051757 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:3:p:263-270 Template-Type: ReDIF-Article 1.0 Author-Name: Vincenzo Capizzi Author-X-Name-First: Vincenzo Author-X-Name-Last: Capizzi Title: The returns of business angel investments and their major determinants Abstract: This paper provides evidence on the performance of business angels' investments, using a unique data-set covering a representative sample of the main actors in the Italian informal venture capital market. An econometric analysis examines the returns on business angels' investments and their major determinants, making reference to an original set of independent variables. Whereas previous empirical studies have hypothesised linear relationships between the explanatory variables and the performance of informal venture capitalists' investments, this work tests different functional forms, both linear and non-linear. The main findings are as follows: (1) the relationship between experience and internal rate of return (IRR) is U-shaped and significant; (2) the widely accepted expectation that investments with a short holding period earn a lower IRR is confirmed by quantitative data; (3) an original explanatory variable - rejection rate - is put into the model and its impact on business angels' performance is positive, non-linear and significant; (4) the final overall econometric model shows relevant explanatory power, with an <italic>R</italic>-squared close to 35%. The outcomes of the empirical analysis performed in this study allow the identification of new and concrete insights into possible public policy interventions aimed at stimulating the informal venture capital industry and, therefore, entrepreneurship inside the economic system. Journal: Venture Capital Pages: 271-298 Issue: 4 Volume: 17 Year: 2015 Month: 10 X-DOI: 10.1080/13691066.2015.1092264 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1092264 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:4:p:271-298 Template-Type: ReDIF-Article 1.0 Author-Name: Josephine Gemson Author-X-Name-First: Josephine Author-X-Name-Last: Gemson Author-Name: Thillai Rajan Annamalai Author-X-Name-First: Thillai Rajan Author-X-Name-Last: Annamalai Title: A new perspective on private equity stage financing: evidence from investments in infrastructure Abstract: This paper examines the staging of investments when private equity (PE) invests in the infrastructure sector. This sector is characterized by large upfront investment requirements and non-recourse deal structures. Over the last two decades, it has witnessed increasing PE investment activity. PE firms have the option to finance infrastructure project by infusing capital at once, or by staging infusions through multiple investments. In case the PE firm decides to disburse the capital in multiple investments, it creates the staging function, a mechanism successfully used in the past to combat risk and uncertainty. This study hypothesizes that the decision to stage investment is a response to the factors that influence infrastructure deals including institutional and financial environments, project structure, and reputation of the PE firm. This paper examines 358 worldwide infrastructure deals from 1990 to 2009 with PE investments of US$9.74 billion to analyze the choice for, the motives behind, the duration between, and the determinants of staging. We find that developing/transition economies and markets characterized by high inflation and interest rates increases PE propensity to stage. Further deals with larger investment sizes and younger investee companies pose increased risks, and PE firms seem to use their prior infrastructure experience and bargaining power to stage financing. Our results also confirm that long-term relationships between the PE firm and the investee company are advantageous to both parties. We believe that the positive results acquired through the PE staging strategy will help perpetuate it as one of the best tools available for PE investing in the infrastructure sector. Journal: Venture Capital Pages: 299-325 Issue: 4 Volume: 17 Year: 2015 Month: 10 X-DOI: 10.1080/13691066.2015.1052193 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1052193 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:4:p:299-325 Template-Type: ReDIF-Article 1.0 Author-Name: David Lingelbach Author-X-Name-First: David Author-X-Name-Last: Lingelbach Title: Developing venture capital when institutions change Abstract: This paper investigates the impact of formal institutional change on the venture capital (VC) development process. Specifically, it contrasts VC development processes taking place in stable and volatile formal institutional environments. It shows that formal institutional change - both improvement and decline - facilitates the VC development process, and that more change is more beneficial to that process than less change. Macro institutional change plays a larger role in facilitating the VC development process than micro institutional change, and changes in two macro-level dimensions - rule of law and political stability - have the largest positive impact on that process. Employing longitudinal interview and archival data from four emerging economies with a range of institutional change and quality levels, Botswana, Indonesia, Pakistan, and South Africa, empirical support is provided for the propositions. Journal: Venture Capital Pages: 327-363 Issue: 4 Volume: 17 Year: 2015 Month: 10 X-DOI: 10.1080/13691066.2015.1055060 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1055060 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:17:y:2015:i:4:p:327-363 Template-Type: ReDIF-Article 1.0 Author-Name: Mark V. Cannice Author-X-Name-First: Mark V. Author-X-Name-Last: Cannice Author-Name: Jonathan P. Allen Author-X-Name-First: Jonathan P. Author-X-Name-Last: Allen Author-Name: Manuel Tarrazo Author-X-Name-First: Manuel Author-X-Name-Last: Tarrazo Title: What do venture capitalists think of venture capital research? Abstract: Given the growing economic impact of venture capital and the increasing amount of scholarly work in this field, an assessment of the relevance and value of venture capital research to practicing venture capitalists is appropriate. To better understand its usefulness, we employed a Delphi methodology to solicit professional venture capitalists' insight on existing research, on expected changes in the venture capital environment, and on the most relevant research topics going forward. We found VCs seek more research in exit strategies and performance, and less in fundraising. VCs also indicated that ongoing structural changes in the industry can inform future research directions. Journal: Venture Capital Pages: 1-20 Issue: 1 Volume: 18 Year: 2016 Month: 1 X-DOI: 10.1080/13691066.2016.1102393 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1102393 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:1:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: Victoriya Salomon Author-X-Name-First: Victoriya Author-X-Name-Last: Salomon Title: Emergent models of financial intermediation for innovative companies: from venture capital to crowdinvesting platforms in Switzerland Abstract: The recent financial crisis has accelerated the changes with regard to the spatial organization of financial channels. In direct investments, the venture capital industry in Switzerland used to be connected to national and international financial markets. Today, these traditional direct investment players are in decline because their traditional business model is no longer suited to the current economic environment. Instead, a new business model for direct investment has recently emerged at the same time revitalizing this financial sector: crowdinvesting platforms exploit more intensively the possibilities opened by Information and Communication technologies and of specialized, but dispersed, expertise. This article highlights the strengths and weaknesses of both business models as well as their contrasted time and space ways to deal with uncertainty. Journal: Venture Capital Pages: 21-41 Issue: 1 Volume: 18 Year: 2016 Month: 1 X-DOI: 10.1080/13691066.2015.1079953 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1079953 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:1:p:21-41 Template-Type: ReDIF-Article 1.0 Author-Name: Samuel Adomako Author-X-Name-First: Samuel Author-X-Name-Last: Adomako Author-Name: Albert Danso Author-X-Name-First: Albert Author-X-Name-Last: Danso Author-Name: John Ofori Damoah Author-X-Name-First: John Author-X-Name-Last: Ofori Damoah Title: The moderating influence of financial literacy on the relationship between access to finance and firm growth in Ghana Abstract: The literature on access to finance has confirmed a positive relationship between access to finance and firm growth. Yet the boundary conditions for such linkage are less examined in the context of developing economies. This study draws on resource-based view to introduce financial literacy as a moderator of the relationship between access to finance and firm growth. This theoretically derived research model is empirically tested using survey data from 201 small and medium-sized enterprises in Ghana. Our empirical findings suggest that financial literacy positively enhances the access to finance-firm growth relationship. Journal: Venture Capital Pages: 43-61 Issue: 1 Volume: 18 Year: 2016 Month: 1 X-DOI: 10.1080/13691066.2015.1079952 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1079952 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:1:p:43-61 Template-Type: ReDIF-Article 1.0 Author-Name: Shuangshuang Kong Author-X-Name-First: Shuangshuang Author-X-Name-Last: Kong Author-Name: Miwako Nitani Author-X-Name-First: Miwako Author-X-Name-Last: Nitani Author-Name: Allan Riding Author-X-Name-First: Allan Author-X-Name-Last: Riding Title: Cross-border VC investment in Canadian firms: implications for exit patterns Abstract: Over the last few years, growth in the flow of venture capital (VC) in Canada has been driven primarily by increased reliance on foreign, primarily US, investors This is a situation that is not unique to Canada. Other countries (for example, Ireland and several EU nations) have small domestic VC stocks but are geographically situated near countries with relatively large stocks of VC. This paper reports research that shows this to be a mixed blessing. On the one hand, foreign investors make relatively large investments, thereby addressing the downward-skewed size distribution of VC funds in the Canadian VC market. Moreover, compared with domestic investors, foreign VCs' participation is associated with higher propensities of successful exits through IPOs, greater capital availability, and shorter time to exit. On the other hand, this research also documents a relationship between foreign VCs' participation and lower payments at exit per dollar of VC investment, raising concerns about the monetary returns to Canadian founders and early-stage, higher risk, Canadian syndicate VCs. The link between cross-border VC investment and higher likelihood of VC exit through cross-border M&As is also noteworthy. These empirical findings address the role of foreign VCs in financing Canadian growth firms, and help provide a yet more comprehensive understanding of the Canadian VC market. Journal: Venture Capital Pages: 63-93 Issue: 1 Volume: 18 Year: 2016 Month: 1 X-DOI: 10.1080/13691066.2015.1078566 File-URL: http://hdl.handle.net/10.1080/13691066.2015.1078566 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:1:p:63-93 Template-Type: ReDIF-Article 1.0 Author-Name: Markus Fitza Author-X-Name-First: Markus Author-X-Name-Last: Fitza Author-Name: Thomas J. Dean Author-X-Name-First: Thomas J. Author-X-Name-Last: Dean Title: How much do VCS and underwriters matter? A comparative investigation of venture capitalist and underwriter effects on IPO underpricing Abstract: Research on initial public offerings (IPOs) suggests that underwriters as well as venture capitalists (VCs) affect IPO underpricing. However, the magnitude of the effect of VCs on underpricing remains unclear. Are VCs as important as underwriters? We conduct a variance decomposition analysis to compare these two influences. Our results indicate that VCs are of greater importance, and we suggest that VCs’ superior evaluative capacity and signal legitimacy may be responsible for their effects. Journal: Venture Capital Pages: 95-114 Issue: 2 Volume: 18 Year: 2016 Month: 4 X-DOI: 10.1080/13691066.2016.1123347 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1123347 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:2:p:95-114 Template-Type: ReDIF-Article 1.0 Author-Name: Alexandra Moritz Author-X-Name-First: Alexandra Author-X-Name-Last: Moritz Author-Name: Joern H. Block Author-X-Name-First: Joern H. Author-X-Name-Last: Block Author-Name: Andreas Heinz Author-X-Name-First: Andreas Author-X-Name-Last: Heinz Title: Financing patterns of European SMEs -- an empirical taxonomy Abstract: This paper develops an empirical taxonomy of SME financing patterns in Europe by performing a cluster analysis including 12,726 SMEs in 28 European countries. The results reveal that SME financing in Europe is not homogenous but that different financing patterns exist. The cluster analysis identifies six distinct SME financing types: mixed-financed SMEs, state-subsidised SMEs, debt-financed SMEs, flexible-debt-financed SMEs, trade-financed SMEs and internally financed SMEs. These SME financing types differ according to the number of financing instruments used and the combinations thereof. Furthermore, the SME financing types can be profiled according to their firm-, product-, industry- and country-specific characteristics. Our findings support policy-makers in assessing the impact of policy changes on SME financing and in designing financing programmes tailored to the specific needs of SMEs. Journal: Venture Capital Pages: 115-148 Issue: 2 Volume: 18 Year: 2016 Month: 4 X-DOI: 10.1080/13691066.2016.1145900 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1145900 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:2:p:115-148 Template-Type: ReDIF-Article 1.0 Author-Name: Yakir Falik Author-X-Name-First: Yakir Author-X-Name-Last: Falik Author-Name: Tom Lahti Author-X-Name-First: Tom Author-X-Name-Last: Lahti Author-Name: Henrik Keinonen Author-X-Name-First: Henrik Author-X-Name-Last: Keinonen Title: Does startup experience matter? Venture capital selection criteria among Israeli entrepreneurs Abstract: In this study we are concerned with understanding Israeli entrepreneurs’ selection criteria in choosing a venture capital (VC) firm. Our primary aim was to investigate how startup experience impacts entrepreneurs’ trade-offs between resource-related criteria and criteria related to the conditions of the deal. Hypotheses are drawn from agency theory, the resource dependence perspective and extant VC research. Data is gleaned from interviews with 144 Israeli entrepreneurs that are either in the process of acquiring VC or have recent experience of raising it. Hypotheses are tested with ordinal logit models. Results demonstrate that there is a negative relationship between startup experience and the importance entrepreneurs attach to valuation, and that the importance attached to a VC firm’s network and reputation moderates this relationship. In addition, the importance attached to a VC firm’s network moderates the relationship between startup experience and the importance assigned to contractual terms. Furthermore, results indicate that while inexperienced entrepreneurs attach more importance to valuation than experienced ones, they tend to emphasize it less when they seek to gain access to a VC firm’s network of contacts. Entrepreneurs are shown to be more concerned about valuation when they approach less reputable VC firms, particularly if the entrepreneur has substantial startup experience. Journal: Venture Capital Pages: 149-174 Issue: 2 Volume: 18 Year: 2016 Month: 4 X-DOI: 10.1080/13691066.2016.1164109 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1164109 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:2:p:149-174 Template-Type: ReDIF-Article 1.0 Author-Name: Brian Park Author-X-Name-First: Brian Author-X-Name-Last: Park Author-Name: Erik P. M. Vermeulen Author-X-Name-First: Erik P. M. Author-X-Name-Last: Vermeulen Title: Executive forum: we know the saviour … and it is them: the future face(s) of venture capital Abstract: Venture capital has rebounded thanks to a handful of select venture capitalists. The venture capitalists leading this renaissance are returning to the venture capital model in its most traditional form as a real partner to start-ups, as a risk-taker and most importantly as an innovator and disruptor at the fund level. Less than stellar venture capitalists can only hope to replicate these innovative ways in a rapidly changing landscape where they will be forced to adapt or risk being exposed and shepherded out of the ecosystem. The age of easy fundraising has come and gone and with it goes the ability for poor venture capital funds to lurk in the background and ride the coattails of their more innovative counterparts to easy payouts. When taken in conjunction, visibility, disruptive leanings and hyperactivity are game changers, especially for the fittest venture capitalists. These innovators are doing something about the industry’s tarnished reputation. Investors, entrepreneurs and the “other venture capitalists” should take notice. This executive Forum paper introduces them and develops an understanding of what they do and how they do it. Journal: Venture Capital Pages: 175-187 Issue: 2 Volume: 18 Year: 2016 Month: 4 X-DOI: 10.1080/13691066.2016.1123385 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1123385 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:2:p:175-187 Template-Type: ReDIF-Article 1.0 Author-Name: Scott A. Jeffrey Author-X-Name-First: Scott A. Author-X-Name-Last: Jeffrey Author-Name: Moren Lévesque Author-X-Name-First: Moren Author-X-Name-Last: Lévesque Author-Name: Andrew L. Maxwell Author-X-Name-First: Andrew L. Author-X-Name-Last: Maxwell Title: The non-compensatory relationship between risk and return in business angel investment decision making Abstract: By analyzing observed interactions between entrepreneurs and business angels (BAs) on the Canadian reality TV show <italic>Dragons’ Den</italic>, we find that BAs use a non-compensatory decision-making process when evaluating anticipated risk and return. This is consistent with our hypotheses that BAs use decision heuristics (shortcuts) to conserve cognitive effort when deciding whether or not to invest in business opportunities proposed by entrepreneurs. Our results further our understanding of how and when behavioral decision theory can inform real-life BA investment decision processes. Additionally, the results offer practical implications for entrepreneurs interested in pitching proposals to BAs. Journal: Venture Capital Pages: 189-209 Issue: 3 Volume: 18 Year: 2016 Month: 7 X-DOI: 10.1080/13691066.2016.1172748 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1172748 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:3:p:189-209 Template-Type: ReDIF-Article 1.0 Author-Name: Anna Söderblom Author-X-Name-First: Anna Author-X-Name-Last: Söderblom Author-Name: Mikael Samuelsson Author-X-Name-First: Mikael Author-X-Name-Last: Samuelsson Author-Name: Pär Mårtensson Author-X-Name-First: Pär Author-X-Name-Last: Mårtensson Title: Opening the black box: triggers for shifts in business angels’ risk mitigation strategies within investments Abstract: We open up the black box of business angel risk mitigation within investments, exploring triggers that force angels to shift strategies to overcome performance and relationship risks. Primary data were collected from 32 interviews with four matched business angel--entrepreneur dyads. Extensive iterative theory and cross-case comparisons reveal that business angels often shift strategies over the course of an investment cycle due to internal or external context-specific triggers, rather than factors associated with a particular investor, entrepreneur, or investment-related characteristic. Moreover, entrepreneur responses significantly impact business angels’ subsequent risk mitigation strategies. Two triggers emerging particularly strongly from the data were: (i) a shift in the angel’s perception of the entrepreneur’s ability and (ii) the entrance of new investors. We theorize on these findings and derive four novel propositions. Journal: Venture Capital Pages: 211-236 Issue: 3 Volume: 18 Year: 2016 Month: 7 X-DOI: 10.1080/13691066.2016.1175636 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1175636 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:3:p:211-236 Template-Type: ReDIF-Article 1.0 Author-Name: Jan Faber Author-X-Name-First: Jan Author-X-Name-Last: Faber Author-Name: Carolina Castaldi Author-X-Name-First: Carolina Author-X-Name-Last: Castaldi Author-Name: Roel W. M. Muskens Author-X-Name-First: Roel W. M. Author-X-Name-Last: Muskens Title: Venture capitalist-induced relational fit and new venture performance: a Dutch biotech comparative case analysis Abstract: Venture capitalists contribute financially as well as non-financially to new venture development. Their non-financial support consists of both direct strategic advice and indirect advice via networking. But the effectiveness of this advice is more dependent on its acceptance than on its nature. The acceptance of the advice of a venture capitalist by the entrepreneurs has been demonstrated to depend on the latter’s perception of fairness in their relationship with the venture capitalist. In this study, we demonstrate that more dimensions of relational fit than only the perception of fairness of entrepreneurs in their relationship with a venture capitalist play an important role in their relational fit, i.e. goal congruence and complementarity of competences and cognitions. Additionally, this study shows that venture capitalists can improve their relational fit to entrepreneurs and thereby the new venture development by taking some fit improving measures like bonding, avoiding forced decisions and a too large overlap of knowledge, adherence to shared norms of conduct and heterogeneity of the knowledge exchanged. Journal: Venture Capital Pages: 237-256 Issue: 3 Volume: 18 Year: 2016 Month: 7 X-DOI: 10.1080/13691066.2016.1164221 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1164221 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:3:p:237-256 Template-Type: ReDIF-Article 1.0 Author-Name: Jonathan Kimmitt Author-X-Name-First: Jonathan Author-X-Name-Last: Kimmitt Author-Name: Mariarosa Scarlata Author-X-Name-First: Mariarosa Author-X-Name-Last: Scarlata Author-Name: Dimo Dimov Author-X-Name-First: Dimo Author-X-Name-Last: Dimov Title: An empirical investigation of the interplay between microcredit, institutional context, and entrepreneurial capabilities Abstract: Understanding under which conditions microcredit is used by new, growing ventures is becoming increasingly pertinent to scholars. This paper investigates the interplay of the use of microcredit with entrepreneurial capabilities and the moderating role of institutional development in sub-Saharan Africa. Our findings show that higher constraints to entrepreneurial capabilities are associated with higher use of microcredit. In addition, we find that new, growing ventures use microcredit more where <italic>either</italic> economic <italic>or</italic> political institutions are less developed. Our findings suggest the importance of the existence of some type of institutional strength that must be in place to form the basis for microcredit activity. This allows for speculation as to whether microcredit works as the literature currently assumes. Journal: Venture Capital Pages: 257-276 Issue: 3 Volume: 18 Year: 2016 Month: 7 X-DOI: 10.1080/13691066.2016.1191127 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1191127 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:3:p:257-276 Template-Type: ReDIF-Article 1.0 Author-Name: Agnieszka Kwapisz Author-X-Name-First: Agnieszka Author-X-Name-Last: Kwapisz Author-Name: Diana M. Hechavarría Author-X-Name-First: Diana M. Author-X-Name-Last: Hechavarría Title: Women don’t ask: an investigation of start-up financing and gender Abstract: Are women less likely to ask for help financing their businesses? This study investigates whether gender is a factor that impacts the propensity to ask for financing among nascent entrepreneurs. We also investigate if start-up helpers, who do not have an ownership share, have an impact on the likelihood of asking for financing, specifically between men and women. Our findings suggest that being female significantly decreases the probability of asking for financing and the presence of start-up helpers significantly increases the incidence of asking for financing in the nascent stage. In addition, among those who created new firms or were still in the start-up process, the number of start-up helpers exponentially increased the incidence of asking for financing among female founders. We use the Panel Study of Entrepreneurial Dynamics II data, the largest, nationally representative, and longitudinal database on nascent entrepreneurs for the United States. Journal: Venture Capital Pages: 159-190 Issue: 2 Volume: 20 Year: 2018 Month: 4 X-DOI: 10.1080/13691066.2017.1345119 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1345119 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:159-190 Template-Type: ReDIF-Article 1.0 Author-Name: Wejdan Alakaleek Author-X-Name-First: Wejdan Author-X-Name-Last: Alakaleek Author-Name: Sarah Y Cooper Author-X-Name-First: Sarah Y Author-X-Name-Last: Cooper Title: The female entrepreneur’s financial networks: accessing finance for the emergence of technology-based firms in Jordan Abstract: In this paper, we focus on how female entrepreneurs in Jordan finance the establishment and early growth of their technology-based ventures. Previous research exploring the experiences of female entrepreneurs, undertaken primarily in Western, developed countries, had emphasised their early reliance on informal capital, sourced via personal networks, acquaintances, friends and family. Little was known, however, about the experiences of women in developing economies, such as the Middle East, where they represent a growing proportion of the educated and entrepreneurial populations, albeit from a small base. The study discussed here investigated the entrepreneurial journey of the female founders of 16 technology-based firms in Jordan, adopting a network perspective to explore how they accessed sources of finance and investigate the dynamic nature and characteristics of their financial ties, from start-up through to early growth. Our findings show how, compared with their western counterparts, these Jordanian women adopt a very different approach to venture funding from the start, relying more heavily on formal sources and networks. In securing funds from formal business networks ties, they leverage benefits from connections established via formal events and networking platforms to facilitate development of their financial network ties at a very early stage. Journal: Venture Capital Pages: 137-157 Issue: 2 Volume: 20 Year: 2018 Month: 4 X-DOI: 10.1080/13691066.2017.1345120 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1345120 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:137-157 Template-Type: ReDIF-Article 1.0 Author-Name: Candida Brush Author-X-Name-First: Candida Author-X-Name-Last: Brush Author-Name: Patricia Greene Author-X-Name-First: Patricia Author-X-Name-Last: Greene Author-Name: Lakshmi Balachandra Author-X-Name-First: Lakshmi Author-X-Name-Last: Balachandra Author-Name: Amy Davis Author-X-Name-First: Amy Author-X-Name-Last: Davis Title: The gender gap in venture capital- progress, problems, and perspectives Abstract: Financial capital is a critical resource for growing firms, yet women entrepreneurs received very small percent of the funding. This research updates earlier research by the Diana Project using a data base of all venture capital funded firms in the US. We compare funding in those firms led by men and women across stage, sector, state, region and outcomes. Results show women have made progress in attracting venture capital, although there is still a significant gender gap. A research framework and future research directions are proposed. Journal: Venture Capital Pages: 115-136 Issue: 2 Volume: 20 Year: 2018 Month: 4 X-DOI: 10.1080/13691066.2017.1349266 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1349266 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:115-136 Template-Type: ReDIF-Article 1.0 Author-Name: Vanessa Naegels Author-X-Name-First: Vanessa Author-X-Name-Last: Naegels Author-Name: Neema Mori Author-X-Name-First: Neema Author-X-Name-Last: Mori Author-Name: Bert D’Espallier Author-X-Name-First: Bert Author-X-Name-Last: D’Espallier Title: An institutional view on access to finance by Tanzanian women-owned enterprises Abstract: We investigate the limited use of bank and microfinance loans by Tanzanian female entrepreneurs. Using survey data, we observe that female entrepreneurs mainly use informal sources to finance their businesses. We analyze how “perceptions” of gendered cognitive and normative institutions determine whether a female entrepreneur applies for a formal loan. Following results stand out: first, we find that high collateral requirements, interest rates and personal guarantee requirements make formal loans unattractive. Second, female entrepreneurs only apply when they expect to be successful. Since they “perceive” access to finance to be more problematic for women, female entrepreneurs are discouraged from applying. Third, female entrepreneurs “perceive” they have insufficient access to financial knowledge which again will prevent them from applying. This study contributes to theory by exploring the effect of entrepreneurs’ perceptions of the institutional business environment on financing behavior. Furthermore, we show that the low use of formal loans by female entrepreneurs is primarily demand-driven, which calls into question the effectivity of policy recommendations aiming to increase supply of formal loans. Journal: Venture Capital Pages: 191-210 Issue: 2 Volume: 20 Year: 2018 Month: 4 X-DOI: 10.1080/13691066.2017.1358927 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1358927 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:191-210 Template-Type: ReDIF-Article 1.0 Author-Name: Claire Leitch Author-X-Name-First: Claire Author-X-Name-Last: Leitch Author-Name: Friederike Welter Author-X-Name-First: Friederike Author-X-Name-Last: Welter Author-Name: Colette Henry Author-X-Name-First: Colette Author-X-Name-Last: Henry Title: Women entrepreneurs’ financing revisited: taking stock and looking forward Journal: Venture Capital Pages: 103-114 Issue: 2 Volume: 20 Year: 2018 Month: 4 X-DOI: 10.1080/13691066.2018.1418624 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1418624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:103-114 Template-Type: ReDIF-Article 1.0 Author-Name: Susan Coleman Author-X-Name-First: Susan Author-X-Name-Last: Coleman Author-Name: Alicia Robb Author-X-Name-First: Alicia Author-X-Name-Last: Robb Title: Executive forum:linking women’s growth-oriented entrepreneurship policy and practice: results from the Rising Tide Angel Training Program Abstract: The Rising Tide Angel Training Program was launched to address the public policy priority of increasing the number of growth-oriented women-owned firms by expanding the entrepreneurial ecosystem in ways that will benefit women. In particular, the founders sought to address structural weaknesses in a key component of the entrepreneurial ecosystem, women’s access to financial capital in the form of equity, mentorship, and contacts. The Rising Tide Angel Training Program was launched in the fall of 2015 with the goal of increasing the number of women angel investors capable of investing in growth-oriented women-owned firms through a program of education, training, and hands-on experience with the angel investing process. In this paper, we present our findings from the first Rising Tide training cohort in terms of changes in participants’ motivations, attitudes, and expectations as they relate to angel investing. We also present findings on changes in knowledge, skills, and the ability to evaluate investment opportunities. Finally, we identify and discuss key “takeaways” from our first year’s experience with the Rising Tide Angel Training Program and next steps. Journal: Venture Capital Pages: 211-231 Issue: 2 Volume: 20 Year: 2018 Month: 4 X-DOI: 10.1080/13691066.2018.1419845 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1419845 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:2:p:211-231 Template-Type: ReDIF-Article 1.0 Author-Name: Alain Chevalier Author-X-Name-First: Alain Author-X-Name-Last: Chevalier Author-Name: Aurélie Sannajust Author-X-Name-First: Aurélie Author-X-Name-Last: Sannajust Title: Going private transactions performance in emerging economies: a comparative study in Latin America and Asia Abstract: We extend our worldwide research on private equity by studying the drivers of going private operating performance in emerging countries (Asia and Latin America). We select a large set of candidate drivers (financial, governance, macroeconomics, microeconomics, institutional variables) and we analyze their effects on performance over the short and long terms. To conduct our study, we use Capital IQ, Thomson One Banker, World Bank as databases. We contribute to the current literature by doing an investigation of the impact of macroeconomics factors and institutional drivers (political stability, rule of law and regulatory quality) on the buyout performance. Positive and significance results are obtained. We use a sample of 248 going private transactions, which occurred between 2000 and 2011. Our results show that GDP growth and political stability are important drivers that significantly contribute to generate performance in going private. Journal: Venture Capital Pages: 1-33 Issue: 1 Volume: 22 Year: 2020 Month: 1 X-DOI: 10.1080/13691066.2018.1457605 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1457605 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:1:p:1-33 Template-Type: ReDIF-Article 1.0 Author-Name: Miona Milosevic Author-X-Name-First: Miona Author-X-Name-Last: Milosevic Author-Name: Benjamin Le Pendeven Author-X-Name-First: Benjamin Author-X-Name-Last: Le Pendeven Author-Name: Jacqueline Fendt Author-X-Name-First: Jacqueline Author-X-Name-Last: Fendt Title: Follow-on financing through syndication in the VC industry – a signaling perspective of VC human capital and fund characteristics Abstract: Follow-on equity fundraising for young ventures is a key issue for venture capital (VC) performance and entrepreneurial success. VC managers’ antecedents and fund characteristics might play a role here, through a signaling perspective, in securing additional financing for their portfolio ventures. However, the entrepreneurial finance literature has not yet investigated the importance of the lead VC managers’ profiles for syndication in subsequent VC financing rounds. In this mixed-methods study, we examine these antecedents and determinants of follow-on fundraising through syndication. Using a hand-collected dataset of first-round VC deals and their subsequent financing rounds in France we demonstrate the importance of prior innovation and VC experience for successful follow-on fundraising. We find that general, business and consulting experiences of first investors have a negative signaling effect on outside VC investors for follow-on fundraising. Also, we disprove previous beliefs that banking and finance professionals attract follow-on financing through their rich VC and private equity networks. We show the contrary: that homogenous finance experience sends negative signals to outside investors about portfolio quality and value-adding ability. We triangulate, refine and frame our findings with a qualitative research loop grounded in 12 in-depth interviews with leading French VCs. Journal: Venture Capital Pages: 35-69 Issue: 1 Volume: 22 Year: 2020 Month: 1 X-DOI: 10.1080/13691066.2018.1518664 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1518664 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:1:p:35-69 Template-Type: ReDIF-Article 1.0 Author-Name: Amulya Tata Author-X-Name-First: Amulya Author-X-Name-Last: Tata Author-Name: Anja Niedworok Author-X-Name-First: Anja Author-X-Name-Last: Niedworok Title: Is beauty in the eye of the beholder? An empirical study of how entrepreneurs, managers, and investors evaluate business opportunities at the earliest stages Abstract: Existing research suggests that individuals occupying different professional roles, have different human capital and hence vary in their “opportunity templates”, and may thus deviate in their evaluations of a given business opportunity. This paper advances our understanding on how evaluators vary in their assessments of business opportunities in two very early phases by conducting a comparative analysis of three stakeholder groups that are crucial to new ventures: entrepreneurs, managers, and investors. We analyze a unique dataset of 693 business ideas and 379 business-plan proposals submitted to a nationwide startup competition held in Switzerland. Our linguistic analysis reveals heterogeneity in opportunity evaluations between groups with different types of professional roles. However, this divergence in individuals’ evaluations does not emerge at the earlier business-idea phase, but only at the later business-plan stage. The study provides empirical evidence that individuals’ professional role makes them more sensitive to certain aspects of a given business-plan proposal. Journal: Venture Capital Pages: 71-104 Issue: 1 Volume: 22 Year: 2020 Month: 1 X-DOI: 10.1080/13691066.2018.1526449 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1526449 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:1:p:71-104 Template-Type: ReDIF-Article 1.0 Author-Name: Cornelius Maas Author-X-Name-First: Cornelius Author-X-Name-Last: Maas Author-Name: Patrick Steinhagen Author-X-Name-First: Patrick Author-X-Name-Last: Steinhagen Author-Name: Dorian Proksch Author-X-Name-First: Dorian Author-X-Name-Last: Proksch Author-Name: Andreas Pinkwart Author-X-Name-First: Andreas Author-X-Name-Last: Pinkwart Title: The role of innovation in venture capital and private equity investments in different investment phases Abstract: Innovation is an important value lever, especially within small- and medium-sized companies. However, little research has examined its influence within the investment process of equity investment funds – a surprising circumstance since innovation could increase an investment’s value. This study provides insights into equity investment funds’ perspective on innovation throughout the various phases of the investment process. We conducted in-depth interviews with investment professionals from 30 German-based equity investment funds. Our results show that innovation’s importance depends on the strategic orientation of the equity investment fund type. In addition, our study provides an overview of the criteria, methods, and mechanisms equity investment funds use to support innovation. We show that the emphasis of many equity investment funds on innovation during the identification of investment targets is not reflected in the measures the fund later employs to support innovation processes within the portfolio company. This indicates potential for equity investment funds to be more actively involved in the supervision and management of innovation activities of their portfolio companies. Journal: Venture Capital Pages: 105-126 Issue: 1 Volume: 22 Year: 2020 Month: 1 X-DOI: 10.1080/13691066.2018.1526864 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1526864 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:1:p:105-126 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Masiak Author-X-Name-First: Christian Author-X-Name-Last: Masiak Author-Name: Joern H. Block Author-X-Name-First: Joern H. Author-X-Name-Last: Block Author-Name: Alexandra Moritz Author-X-Name-First: Alexandra Author-X-Name-Last: Moritz Author-Name: Frank Lang Author-X-Name-First: Frank Author-X-Name-Last: Lang Author-Name: Helmut Kraemer-Eis Author-X-Name-First: Helmut Author-X-Name-Last: Kraemer-Eis Title: How do micro firms differ in their financing patterns from larger SMEs? Abstract: The vast majority of firms in Europe are micro firms. Still, we know little about their financing patterns. Our paper aims to close this gap. Based on a large European firm-level data set, we find that micro firms differ in their financing patterns from larger SMEs. Our empirical results show that micro firms are more likely to use internal financing instruments, whereas they are less likely to use state subsidies, trade credit or asset-based financing instruments. Furthermore, micro firms differ from larger SMEs by using more short-term debt financing instruments such as credit card overdrafts, credit lines and bank overdrafts. The implications of these findings for micro firms and policy makers are discussed. Journal: Venture Capital Pages: 301-325 Issue: 4 Volume: 21 Year: 2019 Month: 10 X-DOI: 10.1080/13691066.2019.1569333 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1569333 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:4:p:301-325 Template-Type: ReDIF-Article 1.0 Author-Name: Simon Kleinert Author-X-Name-First: Simon Author-X-Name-Last: Kleinert Author-Name: Christine Volkmann Author-X-Name-First: Christine Author-X-Name-Last: Volkmann Title: Equity crowdfunding and the role of investor discussion boards Abstract: Start-ups are increasingly using equity crowdfunding to raise necessary funding at an early stage. In this rather new form of financing, potential investors communicate with each other and the entrepreneurs typically through the discussion boards of mediating online platforms. Using a mixed-methods approach, this explorative study analyses the role of investor-initiated discussions in equity crowdfunding. First, we develop a framework and categorize 574 interactions between potential investors and entrepreneurs posted on the project-related discussion boards of the Crowdcube equity crowdfunding platform. The framework is built on deductive criteria from the context of business angels and inductive criteria that are unique to the equity crowdfunding context. Five discussion topics stand out in relevance: valuation, financial snapshot, likely returns, shareholder rights, and market risk. Exploring the qualitative data reveals that investors are concerned about high information asymmetries and agency risks. Second, we use panel data of 2,258 funding days to analyse whether discussions signal endorsement and increase funding success. The econometric results show that discussions generally propel investments. However, discussions on topics like market risk and shareholder rights harm funding success. The study highlights the complementarity of discussion boards as an information source for investors, providing a more nuanced picture of the investor perspective in equity crowdfunding and proposing avenues for future research. Journal: Venture Capital Pages: 327-352 Issue: 4 Volume: 21 Year: 2019 Month: 10 X-DOI: 10.1080/13691066.2019.1569853 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1569853 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:4:p:327-352 Template-Type: ReDIF-Article 1.0 Author-Name: Sanda Franić Author-X-Name-First: Sanda Author-X-Name-Last: Franić Author-Name: Mateja Drnovšek Author-X-Name-First: Mateja Author-X-Name-Last: Drnovšek Title: The role of regulatory focus and cognitive style in business angels’ evaluation of an investment opportunity Abstract: This paper investigates how two cognitive mechanisms of business angels – regulatory focus and cognitive style – contribute to the process of evaluating an investment opportunity. Analyzing both qualitative and quantitative data collected from an international sample of business angels, indicates that both promotion and prevention regulatory foci are directly associated with the greater likelihood of a business angel positively evaluating an opportunity, and that planning cognitive style moderates these relationships. This research contributes to the existing literature on the phases of business angels’ investment process. The findings are also important for understanding the cognitive underpinnings of an early evaluation of an investment opportunity. Prior research has suggested that a business angel’s early evaluation of an investment opportunity critically influences success in raising equity financing, which is of critical importance for start-up firms in overcoming the liability of newness in their early stages of development. Journal: Venture Capital Pages: 353-377 Issue: 4 Volume: 21 Year: 2019 Month: 10 X-DOI: 10.1080/13691066.2019.1599191 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1599191 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:4:p:353-377 Template-Type: ReDIF-Article 1.0 Author-Name: Bradley George Author-X-Name-First: Bradley Author-X-Name-Last: George Author-Name: Truls Erikson Author-X-Name-First: Truls Author-X-Name-Last: Erikson Author-Name: Annaleena Parhankangas Author-X-Name-First: Annaleena Author-X-Name-Last: Parhankangas Title: Preventing dysfunctional conflict: examining the relationship between different types of managerial conflict in venture capital-backed firms Abstract: Prior literature reports mixed results relative to the performance outcomes of different types of conflict in top management teams. These conflicting results may stem from the complex interactions between different types of conflict. To address this gap in existing knowledge, we set out to explore the interactions between task, process, and affective conflict in entrepreneurial teams of venture-backed firms. Our data are based on a survey among 240 firms that received investment from Norwegian venture capital funds with a response rate of 25% (59 firms). Our results show that task conflict is positively related to affective conflict and that this relationship is partially mediated by process conflict. Furthermore, we find that team size moderates the relationship between task and process conflict. Our results provide a potential explanation for the previously reported inconsistent results on the outcomes of different types of conflict and suggest that especially nascent entrepreneurs with small management teams should be wary of all types of conflict – also those labeled as ‘functional’ by the prior literature. Journal: Venture Capital Pages: 279-296 Issue: 4 Volume: 18 Year: 2016 Month: 10 X-DOI: 10.1080/13691066.2016.1224457 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1224457 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:4:p:279-296 Template-Type: ReDIF-Article 1.0 Author-Name: Dmitry Khanin Author-X-Name-First: Dmitry Author-X-Name-Last: Khanin Author-Name: Ofir Turel Author-X-Name-First: Ofir Author-X-Name-Last: Turel Title: CEOs’ appraisals of venture capitalists’ external and internal support: a transaction cost economics perspective Abstract: Previous research has established that, in addition to provision of financing, venture capitalists (VCs) may add value to new ventures via different types of management support. In this paper, we propose that transaction cost economics (TCE) may complement other theoretical frameworks (e.g., agency theory, the resource-based view, knowledge-based theory, and resource dependence perspective) in explaining CEOs’ polar and ambivalent appraisals of the benefits and costs of different types of VC support and the overall value of VC assistance. Following TCE, we approach VC-funded new ventures as hybrids of markets and hierarchies. Hence, we assume that VCs help their portfolio companies both to externalize, or learn to better operate under the market mode of governance, and internalize, or learn to better operate under the hierarchy mode of governance. We propose that VCs use external support to facilitate venture externalization and use internal support to facilitate venture internalization. Based on structural equation modeling (SEM) analysis of data from an online survey that generated 104 valid responses from CEOs of VC-funded new ventures, we establish that CEOs associate VCs’ external support positively with the perceived benefits of VC assistance and negatively with the perceived costs of VC assistance. In contrast, CEOs associate VCs’ internal support positively both with the perceived benefits and costs of VC assistance. We also demonstrate that CEOs’ assessments of the perceived benefits and costs of VC assistance are, respectively, associated positively and negatively with their appraisals of the overall value of VC assistance. Finally, we ascertain that CEO experience is related negatively to CEOs’ appraisals of the overall value of VC assistance. Implications of these findings for research and practice are discussed. Journal: Venture Capital Pages: 297-320 Issue: 4 Volume: 18 Year: 2016 Month: 10 X-DOI: 10.1080/13691066.2016.1225774 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1225774 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:4:p:297-320 Template-Type: ReDIF-Article 1.0 Author-Name: James Cleaver Author-X-Name-First: James Author-X-Name-Last: Cleaver Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Author-Name: Richard Harrison Author-X-Name-First: Richard Author-X-Name-Last: Harrison Title: Editorial Journal: Venture Capital Pages: 277-277 Issue: 4 Volume: 18 Year: 2016 Month: 10 X-DOI: 10.1080/13691066.2016.1226180 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1226180 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:4:p:277-277 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Author-Name: Tiago Botelho Author-X-Name-First: Tiago Author-X-Name-Last: Botelho Author-Name: Richard Harrison Author-X-Name-First: Richard Author-X-Name-Last: Harrison Title: The transformation of the business angel market: empirical evidence and research implications Abstract: Business angel investing – a key source of finance for entrepreneurial businesses – is rapidly evolving from a fragmented and largely anonymous activity dominated by individuals investing on their own to one that is increasingly characterised by groups of investors investing together through managed angel groups. The implications of this change have been largely ignored by scholars. The paper examines the investment activity and operation of angel groups in Scotland to highlight the implications of this change for the nature of angel investing. It goes on to argue that this transformation challenges both the ongoing relevance of prior research on business angels and current methodological practices, and raises a set of new research questions. Journal: Venture Capital Pages: 321-344 Issue: 4 Volume: 18 Year: 2016 Month: 10 X-DOI: 10.1080/13691066.2016.1229470 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1229470 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:4:p:321-344 Template-Type: ReDIF-Article 1.0 Author-Name: Thanh Huynh Author-X-Name-First: Thanh Author-X-Name-Last: Huynh Title: Early-stage fundraising of university spin-offs: a study through demand-site perspectives Abstract: University spin-offs have increasingly received attention from academia, governments and policy-makers. However, there are only a limited number of studies within the university spin-off context which fully understand the contribution made by the founding team to fundraising, specifically how they use their social networks and capabilities. Employing resource-based theory and social networks approach, this paper examines whether a founding team exploits its social networks and capabilities to signal the value of a university spin-off. Capabilities are analysed through a set of constructs – technology, strategy, human capital, organizational viability and commercial resource – that have been derived from previous literature. The contribution made by social networks is evaluated using three dimensions – structure, governance and content – which form the construct of relationships within a network. Based on data from 181 university spin-offs in Spain, this paper empirically demonstrates that by exploiting social networks a founding team can improve its capabilities which, in turn, enhance its fundraising ability. Journal: Venture Capital Pages: 345-367 Issue: 4 Volume: 18 Year: 2016 Month: 10 X-DOI: 10.1080/13691066.2016.1229772 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1229772 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:4:p:345-367 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board Journal: Venture Capital Pages: ebi-ebi Issue: 4 Volume: 18 Year: 2016 Month: 10 X-DOI: 10.1080/13691066.2016.1239865 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1239865 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:18:y:2016:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Anne-Laure Le Nadant Author-X-Name-First: Anne-Laure Author-X-Name-Last: Le Nadant Author-Name: Frédéric Perdreau Author-X-Name-First: Frédéric Author-X-Name-Last: Perdreau Author-Name: Hans Bruining Author-X-Name-First: Hans Author-X-Name-Last: Bruining Title: Industry specialization of private equity firms: a source of buy-out performance heterogeneity Abstract: This study sheds new light on the industry specialization of private equity (PE) firms as a source of buy-outs’ performance and on the conditions under which these firms can add value to the buy-outs in which they invest. Advantages to specialization are based on specific resources and capabilities that confer the PE funds advantages both in the pre- and post-transaction phases. We argue that the magnitude of the advantages to industry specialization will depend on the criticality of these specific resources for buy-outs’ performance improvements. Industry specialization will confer advantages when the target company is weakly or strongly performing before the buy-out because, in that context, performance improvements are more difficult to reach. The analysis is based on a sample of 217 PE-backed buy-outs completed in France between 2001 and 2007. The results show that relative specialization in the industry of the buy-out company results in profit increases of 7.5% greater than buy-outs backed by non-industry-specialized PE firms. Industry specialization also contributes to target company growth, especially when performance improvements are difficult to reach. Besides, the magnitude of the positive industry specialization effect varies between PE firms. This result emphasizes industry specialization as a strategic variable by illustrating heterogeneity in the ability to construct a competitive advantage. Journal: Venture Capital Pages: 237-259 Issue: 3 Volume: 20 Year: 2018 Month: 7 X-DOI: 10.1080/13691066.2017.1422424 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1422424 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:3:p:237-259 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Vroomen Author-X-Name-First: Paul Author-X-Name-Last: Vroomen Author-Name: Subhas Desa Author-X-Name-First: Subhas Author-X-Name-Last: Desa Title: Rates of return for crowdfunding portfolios: theoretical derivation and implications Abstract: Crowdfunding (CF) is emerging as a fast-growing new class of private equity investment. But research on the rates of return that CF investments should yield is sparse. In this paper, we analyse CF investments from the perspective of an investor that exhibits non-satiation behaviour (seeks the maximum return for a given investment risk). Using internal rate of return (IRR) as the return metric, we apply modern portfolio theory, efficient market theory, the Central Limit Theorem and historical returns data for three private equity asset classes – equity funds (1112 funds), venture capital funds (1,474 funds) and Angel investments (1137 exited investments) – to find the efficient frontier of the private equity market. Applying the efficient frontier to CF investments enables us to show with 99% confidence that the target IRR for an efficient CF portfolio is at least 28% if the CF asset class is 10% riskier than Angel investments. We further show that the set of companies that qualify for CF collapses to that small subset that can achieve the revenue growth, and/or can accept the capital structure required to achieve the target IRR. Journal: Venture Capital Pages: 261-283 Issue: 3 Volume: 20 Year: 2018 Month: 7 X-DOI: 10.1080/13691066.2018.1480265 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1480265 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:3:p:261-283 Template-Type: ReDIF-Article 1.0 Author-Name: C.S. Richard Chan Author-X-Name-First: C.S. Richard Author-X-Name-Last: Chan Author-Name: Haemin Dennis Park Author-X-Name-First: Haemin Dennis Author-X-Name-Last: Park Author-Name: Pankaj Patel Author-X-Name-First: Pankaj Author-X-Name-Last: Patel Author-Name: David Gomulya Author-X-Name-First: David Author-X-Name-Last: Gomulya Title: Reward-based crowdfunding success: decomposition of the project, product category, entrepreneur, and location effects Abstract: We assess the relative importance of project, product category, entrepreneur, and location effects on reward-based crowdfunding success. Applying variance decomposition analysis to a sample of 98,336 crowdfunding projects launched between May 2009 and May 2014 on the Kickstarter platform, we find that agency factors, specifically the project and entrepreneur effects, explain the highest relative variance (over 80% of total variance) across three crowdfunding success outcomes – pledge amount, number of backers, and funding success. Structural factors, specifically product category and location effects, have lower but still significant effects. Our study extends prior variance decomposition studies in strategy and entrepreneurship research by incorporating location effects and examining the nascent stage of firm formation. It also contributes to crowdfunding research by providing a systematic framework to compare key determinants of reward-based crowdfunding outcomes. The findings are of practical relevance to aspiring entrepreneurs seeking funding through reward-based crowdfunding platforms. Journal: Venture Capital Pages: 285-307 Issue: 3 Volume: 20 Year: 2018 Month: 7 X-DOI: 10.1080/13691066.2018.1480267 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1480267 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:3:p:285-307 Template-Type: ReDIF-Article 1.0 Author-Name: Jonas Löher Author-X-Name-First: Jonas Author-X-Name-Last: Löher Author-Name: Stefan Schneck Author-X-Name-First: Stefan Author-X-Name-Last: Schneck Author-Name: Arndt Werner Author-X-Name-First: Arndt Author-X-Name-Last: Werner Title: A research note on entrepreneurs’ financial commitment and crowdfunding success Abstract: Established early stage investors decide to invest in new ventures after evaluating the propensity of success and the risk of failure. Consequently, it is of considerable importance that the founders invest substantial own financial means and are thus highly committed to business success. Despite its key role in practice, the entrepreneurs’ own financial commitment has not yet been discussed in an equity crowdfunding context. Applying a signalling approach, our empirical findings show that entrepreneurs with comparatively more ex ante financial commitment in their venture achieve significantly higher funding success. Moreover, our results suggest that financial commitment is the single most important variable determining funding success. Journal: Venture Capital Pages: 309-322 Issue: 3 Volume: 20 Year: 2018 Month: 7 X-DOI: 10.1080/13691066.2018.1480864 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1480864 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:3:p:309-322 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Author-Name: Richard T Harrison Author-X-Name-First: Richard T Author-X-Name-Last: Harrison Author-Name: Colin M Mason Author-X-Name-First: Colin M Author-X-Name-Last: Mason Title: In memory: William E. Wetzel Jr. Journal: Venture Capital Pages: 233-235 Issue: 3 Volume: 20 Year: 2018 Month: 7 X-DOI: 10.1080/13691066.2018.1496591 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1496591 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:3:p:233-235 Template-Type: ReDIF-Article 1.0 Author-Name: K Ramachandran Author-X-Name-First: K Author-X-Name-Last: Ramachandran Title: How dotcoms can be winners: A customer dissatisfaction approach to analysis Abstract: The rise and fall of a number of dotcoms has also severely impacted the VC industry, but there does not seem to have been any in-depth study to understand the economic logic of dotcom businesses. Using the dotcom as a context, this paper argues that the attractiveness of an entrepreneurial opportunity depends on the extent to which it eliminates customer dissatisfaction with the existing alternatives. Building on this logic, the paper examines how dotcoms can work towards elimination of customer dissatisfaction. A close analysis of these businesses shows that many of them did not have a sound business model and that many of their assumptions were questionable. This paper attempts to provide an explanation of dotcom failures using newly developed concepts such as mature latent need, zero customer dissatisfaction and the customer dissatisfaction chain. It argues that many firms failed because they did not establish whether there existed any customer dissatisfaction and hence the opportunity for a dotcom firm to eliminate this dissatisfaction. Furthermore, when they focused on eliminating dissatisfaction at one point firms did not see their capabilities to provide overall positive value. The paper concludes that dotcoms and in turn VCs can be real winners if they apply the logic and concepts discussed here. Journal: Venture Capital: An International Journal of Entrepreneurial Finance Pages: 191-216 Issue: 3 Volume: 5 Year: 2003 X-DOI: 10.1080/1369106032000118162 File-URL: http://hdl.handle.net/10.1080/1369106032000118162 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:3:p:191-216 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: The Taylor & Francis Group plc Award for Excellence in venture capital research Journal: Pages: 217-230 Issue: 3 Volume: 5 Year: 2003 X-DOI: 10.1080/1369106032000116533 File-URL: http://hdl.handle.net/10.1080/1369106032000116533 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:3:p:217-230 Template-Type: ReDIF-Article 1.0 Author-Name: Frits Wijbenga Author-X-Name-First: Frits Author-X-Name-Last: Wijbenga Author-Name: Theo Postma Author-X-Name-First: Theo Author-X-Name-Last: Postma Author-Name: Arjen Van Witteloostuijn Author-X-Name-First: Arjen Author-X-Name-Last: Van Witteloostuijn Author-Name: Peter Zwart Author-X-Name-First: Peter Author-X-Name-Last: Zwart Title: Strategy and performance of new ventures: A contingency model of the role and influence of the venture capitalist Abstract: The strategic activities of venture capitalists are regarded as their major contributions to their portfolio companies' performance. However, apart from a general consensus as to the different supporting roles the VC provides, little is known about how the VC specifically adds value to the venture's strategy and performance. In our paper, we address the expected fit between the value-adding activities of the VC on the one hand and the venture's strategy on the other hand, showing that a multi-theoretical approach is instrumental to explore the value-adding contribution of the VC to the venture's strategy and performance. Journal: Venture Capital: An International Journal of Entrepreneurial Finance Pages: 231-250 Issue: 3 Volume: 5 Year: 2003 X-DOI: 10.1080/1369106032000118171 File-URL: http://hdl.handle.net/10.1080/1369106032000118171 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:3:p:231-250 Template-Type: ReDIF-Article 1.0 Author-Name: Malte Brettel Author-X-Name-First: Malte Author-X-Name-Last: Brettel Title: Business angels in Germany: A research note Abstract: This paper provides an introduction to the informal venture capital market in Germany. It is based on a survey of 48 business angels. The results show that business angels in Germany make investments that close the equity gap. German business angels also provide advice and support to their investee companies. Their investment behaviour is comparable to business angels in the UK and the USA. The biggest difference is that German business angels are richer and allocate a smaller portion of their wealth to informal investments. They are motivated by the desire to have fun and to help their investee companies, as well as seeking capital growth. Although the findings cannot claim to be representative for all German business angels, they are comparable with the results of other studies in Germany. Journal: Pages: 251-268 Issue: 3 Volume: 5 Year: 2003 X-DOI: 10.1080/1369106032000122095 File-URL: http://hdl.handle.net/10.1080/1369106032000122095 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:3:p:251-268 Template-Type: ReDIF-Article 1.0 Author-Name: Heinrich Stedler Author-X-Name-First: Heinrich Author-X-Name-Last: Stedler Author-Name: Hans Peters Author-X-Name-First: Hans Author-X-Name-Last: Peters Title: Business angels in Germany: An empirical study Abstract: Since the mid-1980s in the USA and since the start of the 1990s in Great Britain, the investment activities of business angels and their motives have been the subject of careful examination through empirical survey and analysis. These evaluations have not been undertaken in Germany. It was assumed that the results from the USA and Great Britain could be applied to the behaviour of German business angels. However, this ignores social and cultural differences between countries. The aim of this study is to close this information gap by providing some basic information on German business angels, notably their motivations and reasons for investing, with the practical objective of highlighting to students how to attract business angels to their own start-ups. The research is based on interviews with more than 230 business angels. Journal: Venture Capital: An International Journal of Entrepreneurial Finance Pages: 269-276 Issue: 3 Volume: 5 Year: 2003 X-DOI: 10.1080/1369106032000126596 File-URL: http://hdl.handle.net/10.1080/1369106032000126596 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:5:y:2003:i:3:p:269-276 Template-Type: ReDIF-Article 1.0 Author-Name: Geoff Gregson Author-X-Name-First: Geoff Author-X-Name-Last: Gregson Author-Name: Adam J. Bock Author-X-Name-First: Adam J. Author-X-Name-Last: Bock Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Title: A review and simulation of business angel investment returns Abstract: Business angels are widely recognized as a significant source of entrepreneurial finance, particularly for early-stage businesses. However, rigorous investigation on angel investment performance has been limited. This paper examines investment returns of business angels in addressing the question of whether angel investing generates attractive returns. We review the few published studies which report on more than 100 investment exits to establish baseline returns expectations and clarify returns measurement limitations. We then use data from one of the largest studies of angel returns to populate a Monte Carlo simulation of returns profiles to explore the link between portfolio size and the probability of the desired level of returns. The study reveals that angel deal returns are highly skewed; smaller portfolios have higher average returns but dramatically lower median returns. In contrast with prior studies, our study shows that portfolios with more than 50 investments are required to significantly minimize risk of poor returns and that similar scale is required to maximize returns potential, as smaller portfolios have a lower average internal rate of return (IRR). We show that reinvestment rate is a critical element in measuring angel returns, and we demonstrate the limitations of IRR as a returns metric through the simulation. Journal: Venture Capital Pages: 285-311 Issue: 4 Volume: 19 Year: 2017 Month: 10 X-DOI: 10.1080/13691066.2017.1332546 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1332546 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:4:p:285-311 Template-Type: ReDIF-Article 1.0 Author-Name: Rudra P. Pradhan Author-X-Name-First: Rudra P. Author-X-Name-Last: Pradhan Author-Name: Mak B. Arvin Author-X-Name-First: Mak B. Author-X-Name-Last: Arvin Author-Name: Mahendhiran Nair Author-X-Name-First: Mahendhiran Author-X-Name-Last: Nair Author-Name: Sara E. Bennett Author-X-Name-First: Sara E. Author-X-Name-Last: Bennett Title: Venture capital investment, financial development, and economic growth: the case of European single market countries Abstract: Venture capital (VC) is a key catalyst for nurturing start-up firms with high-growth potential to undertake innovative endeavors that contribute to national wealth. Existing literature concentrates on the impact of venture capital on firm-level performance. Unlike much of the earlier work, we conduct a macro study examining short-term and long-term relationships between VC investment, the state of the financial sector, and economic growth in 20 European single market countries between 1989 and 2015. We show that major transformations (political, economic, financial and institutional) over the sample period in the Eurozone region have resulted in the data series used in the study (economic growth, financial sector development, and VC investment) to be non-stationary. As such, the vector error-correction model (VECM) and Granger-Causality test are used to examine short-term and long-term relationships between VC investment, financial development, and economic growth for the sample countries. The findings suggest that economic growth strategies and financial sector reforms are critical for a vibrant venture capital industry. In the short term, there are bi-directional relationships between some of the variables. These results suggest that plans to create a vibrant venture capital industry will reinforce financial sector development and economic development, creating a more sustainable economic development model for countries in the Eurozone region. Journal: Venture Capital Pages: 313-333 Issue: 4 Volume: 19 Year: 2017 Month: 10 X-DOI: 10.1080/13691066.2017.1332802 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1332802 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:4:p:313-333 Template-Type: ReDIF-Article 1.0 Author-Name: Artie W. Ng Author-X-Name-First: Artie W. Author-X-Name-Last: Ng Author-Name: Douglas Macbeth Author-X-Name-First: Douglas Author-X-Name-Last: Macbeth Author-Name: Leslie S. C. Yip Author-X-Name-First: Leslie S. C. Author-X-Name-Last: Yip Title: Exploring performance drivers for technology-based ventures from early stage to expansion: perspectives of venture capitalists Abstract: This study aims to explore the performance drivers perceived by venture capitalists in monitoring the early-stage development and performance of technology-based ventures (TBVs). A framework is developed with a scorecard of intellectual capital as feed-forward performance drivers of outcomes to articulate the underlying performance management mechanism assumed by venture capitalists. Such mechanism facilitates monitoring performance of TBVs from the early stage to expansion by the venture capitalists as key equity stakeholders. A mixed research approach composed of a survey and supplementary interviews is adopted for this study. The findings through triangulation reveal the relevance of a dynamic scorecard for monitoring performance that needs to be reconfigured with differentiated significance in the course of a TBV’s development and growth. It suggests the pertinence of intellectual capital as performance drivers to enhance performance measurement and management of TBVs as well as the perspectives of venture capitalists in cultivating TBVs’ performance. Journal: Venture Capital Pages: 335-359 Issue: 4 Volume: 19 Year: 2017 Month: 10 X-DOI: 10.1080/13691066.2017.1334302 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1334302 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:4:p:335-359 Template-Type: ReDIF-Article 1.0 Author-Name: Marina Flamand Author-X-Name-First: Marina Author-X-Name-Last: Flamand Author-Name: Vincent Frigant Author-X-Name-First: Vincent Author-X-Name-Last: Frigant Title: The limited interest of carmakers in corporate venture capital: insights from a mature industry Abstract: A whole corpus of literature has evolved to discuss the motivation of industrial companies in creating corporate venture capital (CVC) funds. However, most studies have been limited to technology sectors that are particularly active in this domain. The present paper seeks to analyse a mature economic sector – automobiles – which should have good reason to take an interest in CVC. A panel comprising 13 of the world’s leading carmakers reveals that (1) few operate any CVC funds; (2) the ones that do tend not to be very active; and (3) investments basically correspond to strategic motivations of the kind that literature already envisions. These findings suggest that CVC studies in particular sectors should take a closer look at institutional isomorphism and consider how inter-firm relationships are organised. Journal: Venture Capital Pages: 263-283 Issue: 4 Volume: 19 Year: 2017 Month: 10 X-DOI: 10.1080/13691066.2017.1335959 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1335959 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:4:p:263-283 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Title: Executive Forum: the scale-up gap: and how to address it Abstract: There is academic unanimity concerning the fact that the equity market does not function at the lower end. Risks are too high and not rewarded by sufficient return. Hence, companies looking for small amounts of money in the seed or early stage phase do not find it. This paper argues that second- and third-round financing, even though less risky, has also become problematic, especially in Europe. While start-ups are confronted with the small equity gap at seed and early stage, scale-ups are also confronted with an equity gap at later stages. A holistic policy, not focused on a specific stage of investment, should therefore replace a targeted one. The paper shows that in this context a government-backed debt-financing instrument delivers better value for public money than a fund-of-funds approach and increases the efficiency of the latter. Journal: Venture Capital Pages: 361-372 Issue: 4 Volume: 19 Year: 2017 Month: 10 X-DOI: 10.1080/13691066.2017.1348724 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1348724 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:4:p:361-372 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Title: Signalling journal impact and prestige: Journal: Venture Capital Pages: 257-262 Issue: 4 Volume: 19 Year: 2017 Month: 10 X-DOI: 10.1080/13691066.2017.1349258 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1349258 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:4:p:257-262 Template-Type: ReDIF-Article 1.0 Author-Name: Chien-Sheng Richard Chan Author-X-Name-First: Chien-Sheng Richard Author-X-Name-Last: Chan Author-Name: Haemin Dennis Park Author-X-Name-First: Haemin Dennis Author-X-Name-Last: Park Author-Name: Pankaj Patel Author-X-Name-First: Pankaj Author-X-Name-Last: Patel Title: The effect of company name fluency on venture investment decisions and IPO underpricing Abstract: We explore the influence of company name on pre-venture and post-success financing outcomes of new ventures. A company name could be linguistically fluent, that is whether a name appears to be realistic and familiar, or phonetically fluent, that is whether a name is pronounceable. These variations could lead to varying financing outcomes. We argue that pre-venture investors favor ventures with low linguistically fluent names because of their preference in investing in unique ventures and with high phonetically fluent names as such names could automatically elicit favorable impressions. In contrast, post-success investors may still favor investing in ventures with high phonetically fluent names, but are less influenced by linguistic fluency because they are less concerned about a venture’s uniqueness. Our predictions are supported by two studies. Journal: Venture Capital Pages: 1-26 Issue: 1 Volume: 20 Year: 2018 Month: 1 X-DOI: 10.1080/13691066.2017.1334369 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1334369 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:1:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: Tevfik Aktekin Author-X-Name-First: Tevfik Author-X-Name-Last: Aktekin Author-Name: Dev K. Dutta Author-X-Name-First: Dev K. Author-X-Name-Last: Dutta Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Title: Entrepreneurial firms and financial attractiveness for securing debt capital: a Bayesian analysis Abstract: Using theoretical arguments grounded in venture financing literature and signaling theory, we examine the impact of both intended and unintended signals on the venture’s financial attractiveness perceived by external lenders. We develop two concepts, the venture’s (i) emergent volatility associated with operations and (ii) deliberate diversity of its financing portfolio, and assess their signaling impact on the firm’s overall financial attractiveness for securing debt. Using Bayesian inference on a large sample of growth-oriented entrepreneurial ventures in the United States, we obtain results that explain the ways in which emergent volatility and deliberate diversity act as unintended versus intended signals, respectively, thus affecting the venture’s financial attractiveness for securing debt capital from external lenders. Journal: Venture Capital Pages: 27-50 Issue: 1 Volume: 20 Year: 2018 Month: 1 X-DOI: 10.1080/13691066.2017.1336894 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1336894 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:1:p:27-50 Template-Type: ReDIF-Article 1.0 Author-Name: Magnus Henrekson Author-X-Name-First: Magnus Author-X-Name-Last: Henrekson Author-Name: Tino Sanandaji Author-X-Name-First: Tino Author-X-Name-Last: Sanandaji Title: Stock option taxation and venture capital activity: a cross-country study Abstract: The VC sector is interesting both in its own right and as a proxy for entrepreneurial finance more broadly. We highlight the tax treatment of stock options as an important factor for variations in the size of the VC sector. VC often relies on option-based contracts to mitigate incentive problems. Granting stock options to founders and key employees also allows credit-constrained start-ups to attract and retain top talent. Such compensation cannot be unambiguously classified as either capital or labor income. Some tax systems treat stock options in VC-funded firms as highly taxed employee compensation, whereas others treat them as capital gains with low flat tax rates. The effective rate depends on tax practices and is not readily indicated by statutory taxes. The tax consultancy firm PwC calculated the effective tax rate for a standardized entrepreneurial case in 22 countries, which is supplemented with our own calculations for 16 additional countries. For this sample, we find a negative cross-country relationship between the effective tax rate on employee stock options and the extent of VC activity. The negative effect is stronger for countries with high R&D investments and weaker in countries with low R&D spending. Journal: Venture Capital Pages: 51-71 Issue: 1 Volume: 20 Year: 2018 Month: 1 X-DOI: 10.1080/13691066.2017.1400159 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1400159 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:1:p:51-71 Template-Type: ReDIF-Article 1.0 Author-Name: Judit Karsai Author-X-Name-First: Judit Author-X-Name-Last: Karsai Title: Government venture capital in central and eastern Europe Abstract: The venture capital (VC) sector in central and eastern Europe (CEE) is characterised by the dominance of public resources. This is mainly due to a new type of equity scheme introduced in the European Union’s 2007–2013 programming period. The paper examines how successful the CEE EU member states, with a relatively less developed VC industry, were in using government equity schemes based on market cooperation between public and private market actors. It provides a general overview of the VC programmes launched in the CEE region viewed through the lens of academic design theories. The paper concludes that government VC programmes in the region are characterised by short time frames, administrative requirements which restricted investors, small fund sizes preventing efficient operation and limited participation of institutional investors. Compared to developed countries agency problems were much more pronounced. The limited number of business angels and incubator organisations, the high number of underfinanced promising start-ups and the misuse of government connections meant that the use of predominantly hybrid funds’ forms of government VC programmes were more challenging in the CEE region compared to western Europe. However, the greatest risk of public equity schemes – the crowding out effect on private investors – is absent in the CEE region because of the lack of private investors. Journal: Venture Capital Pages: 73-102 Issue: 1 Volume: 20 Year: 2018 Month: 1 X-DOI: 10.1080/13691066.2018.1411040 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1411040 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:1:p:73-102 Template-Type: ReDIF-Article 1.0 Author-Name: Ricardo A. Pasquini Author-X-Name-First: Ricardo A. Author-X-Name-Last: Pasquini Author-Name: Gabriela Robiolo Author-X-Name-First: Gabriela Author-X-Name-Last: Robiolo Author-Name: Virginia Sarria Allende Author-X-Name-First: Virginia Author-X-Name-Last: Sarria Allende Title: Matching in entrepreneurial finance networks Abstract: We empirically explore the importance of networks in the match formation of startups and investors. Using a massive network of connections from the entrepreneurial finance setting in California, we estimate a matching model introducing network distance as a key determinant of the value of a prospective match. We find that distance drives matching value and moderates preferences for experience and education in the matching process. While we corroborate that there is significant sorting along these preferences in realized matches, our results indicate that network distance can potentially outweigh their impact, emphasizing the role of networks in alleviating matching frictions. Journal: Venture Capital Pages: 195-221 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2018.1457474 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1457474 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:195-221 Template-Type: ReDIF-Article 1.0 Author-Name: Johannes Wallmeroth Author-X-Name-First: Johannes Author-X-Name-Last: Wallmeroth Title: Investor behavior in equity crowdfunding Abstract: Using a hand collected data-set, this paper analyzes the investment behavior of over 15,100 investors and over 42,200 investments on one of Germany’s largest equity crowdfunding portals. It shows that paramount contributions come from one subpopulation. Contributions of EUR 5000 and larger from the first 59 campaigns account for 50.6% of the raised capital while they make up a mere 3.2% of all investments. When these investments are linked to investor profiles, these individuals are found to invest less frequently, suggesting different investment behaviors among crowd-investors. This significantly advances the understanding of equity crowdfunding by showing that the crowd is not a homogenous community. Furthermore, it is found that for investors who make these investment sizes, men are not statistically more likely to be a part of this group. These findings provide numerous revelations for policy-makers, equity crowdfunding platforms, as well as entrepreneurs. Journal: Venture Capital Pages: 273-300 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2018.1457475 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1457475 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:273-300 Template-Type: ReDIF-Article 1.0 Author-Name: Stanislav Mamonov Author-X-Name-First: Stanislav Author-X-Name-Last: Mamonov Author-Name: Ross Malaga Author-X-Name-First: Ross Author-X-Name-Last: Malaga Title: Success factors in Title II equity crowdfunding in the United States Abstract: Title II of the JOBS Act has expanded the opportunities for entrepreneurial ventures to raise funds from accredited investors via online equity crowdfunding platforms in the United States. Over $1.4 billion in capital has been committed by the accredited investors in Title II platforms since 2013, yet little is known about how venture characteristics influence the success of raising funds from investors via online equity crowdfunding platforms. Further, it is not known whether online equity crowdfunding is supplementing or replacing traditional venture funding sources. To address these gaps in our knowledge, we draw on research in traditional offline risk capital investments and we evaluate the effects of market, execution and agency risks on equity crowdfunding success by examining 337 ventures that engaged in equity crowdfunding under Title II. We find evidence consistent with investors in online equity crowdfunding platforms giving consideration to all three types of risks. We also find that investors in equity crowdfunding platforms are particularly responsive to the venture ability to attract traditional venture capital funding prior to engaging in equity crowdfunding. These results suggest that online equity crowdfunding platforms are supplementing rather than replacing traditional venture funding sources. Journal: Venture Capital Pages: 223-241 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2018.1468471 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1468471 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:223-241 Template-Type: ReDIF-Article 1.0 Author-Name: Miwako Nitani Author-X-Name-First: Miwako Author-X-Name-Last: Nitani Author-Name: Allan Riding Author-X-Name-First: Allan Author-X-Name-Last: Riding Author-Name: Beichuan He Author-X-Name-First: Beichuan Author-X-Name-Last: He Title: On equity crowdfunding: investor rationality and success factors Abstract: Based on observations from four European equity crowdfunding platforms, this study assesses crowdinvestors’ ability to interpret signals associated with firm and owner attributes, financial statements, and social networking activity when selecting investment opportunities. It was found that crowdinvestors attempt to reduce risk by choosing larger firms managed by experienced and educated managements who maintain a relatively large equity stake post-offering, while maximizing returns by picking projects with better growth opportunities (for example, young firms with higher expected margins and reasonably high sales growth forecasts). These results suggest that participants in the crowdfunding market are rational, interpreting signals derived from firm attributes and financial statements in appropriate ways to minimize risk and maximize returns. The firm’s and entrepreneur’s social networks also has a strong influence on investment decisions, so much so that the inclusion of this variable weakens the impacts of firm size, expected sales growth and margin on campaign success. This suggests the possibility that social media provide investors with an opportunity to validate otherwise less credible information. Journal: Venture Capital Pages: 243-272 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2018.1468542 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1468542 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:243-272 Template-Type: ReDIF-Article 1.0 Author-Name: Stefano Bonini Author-X-Name-First: Stefano Author-X-Name-Last: Bonini Author-Name: Vincenzo Capizzi Author-X-Name-First: Vincenzo Author-X-Name-Last: Capizzi Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Title: Emerging trends in entrepreneurial finance Journal: Venture Capital Pages: 133-136 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2019.1607167 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1607167 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:133-136 Template-Type: ReDIF-Article 1.0 Author-Name: Stefano Bonini Author-X-Name-First: Stefano Author-X-Name-Last: Bonini Author-Name: Vincenzo Capizzi Author-X-Name-First: Vincenzo Author-X-Name-Last: Capizzi Title: The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities Abstract: The last decade has seen the emergence of alternative sources of early-stage finance, which are radically changing and reshaping the start-up eco-system. These include incubators, accelerators, science and technology parks, university-affiliated seed funds, corporate seed funds, business angels – including “super-angels”, angel groups, business angel networks and angel investment funds – and both equity- and debt-based crowdfunding platforms. In parallel with this development, large financial institutions that have traditionally invested in late-stage and mature companies, have increasingly diversified their investment portfolios to “get into the venture game”, in some cases, through the traditional closed-end funds model and, in other cases through direct investments and co-investments alongside the closed-end funds. This paper reviews the main features, investment policies and risk-return profiles of the institutional and informal investors operating in the very early stage of the life cycle of entrepreneurial firms. It concludes that traditional closed-end venture capital funds continue to play an important role in early stage finance because of their unique competences (e.g. screening, negotiating and monitoring) in what has become a wider and more complex financing ecosystem. Journal: Venture Capital Pages: 137-175 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2019.1608697 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1608697 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:137-175 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Author-Name: Tiago Botelho Author-X-Name-First: Tiago Author-X-Name-Last: Botelho Author-Name: Richard Harrison Author-X-Name-First: Richard Author-X-Name-Last: Harrison Title: The changing nature of angel investing: some research implications Abstract: The business angel market is changing. Business angels are increasingly investing as part of organised and managed angel groups alongside other angels rather than on their own. This development has significant implications for research, challenging the traditional definition of a business angel, changing the characteristics of investments made by business angels, and transforming the way in which the investment process occurs. It also challenges the ongoing relevance of the existing body of angel research that has been based on studies of individual angels investing on their own. The research community has been slow to react to this change. The paper identifies a number of methodological issues and research priorities. Journal: Venture Capital Pages: 177-194 Issue: 2-3 Volume: 21 Year: 2019 Month: 7 X-DOI: 10.1080/13691066.2019.1612921 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1612921 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:2-3:p:177-194 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Kenney Author-X-Name-First: Martin Author-X-Name-Last: Kenney Author-Name: John Zysman Author-X-Name-First: John Author-X-Name-Last: Zysman Title: Unicorns, Cheshire cats, and the new dilemmas of entrepreneurial finance Abstract: This essay examines the implications of the evolving environment for the formation and financing of new firms in the United States. After the dot.com crash of 2000, there was a regime change in new firm formation and the number of firms that exited through an initial public stock offering. This change was made possible by the decreased cost, increased speed, and ease of market entry due to availability of open source software, digital platforms, and cloud computing. This facilitated a proliferation of startups seeking to disrupt incumbent firms in a wide variety of business sectors. The contemporaneous growth in the number and size of private funding sources has resulted in a situation within which new firms can afford to run massive losses for long periods in an effort to dislodge incumbents or attempt to triumph over other lavishly funded startups. This has triggered remarkable turmoil in many formerly stable industrial sectors, as the new entrants fueled by capital investments undercut incumbents on price and service. The ultimate result is that new entrants with access to massive amounts of capital can survive losses for a sufficiently long period to displace existing firms and, thereby, transform earlier industrial ecosystems. Journal: Venture Capital Pages: 35-50 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2018.1517430 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1517430 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:35-50 Template-Type: ReDIF-Article 1.0 Author-Name: Mike Wright Author-X-Name-First: Mike Author-X-Name-Last: Wright Author-Name: Sarika Pruthi Author-X-Name-First: Sarika Author-X-Name-Last: Pruthi Author-Name: Kevin Amess Author-X-Name-First: Kevin Author-X-Name-Last: Amess Author-Name: Yan Alperovych Author-X-Name-First: Yan Author-X-Name-Last: Alperovych Title: Private equity: where we have been and the road ahead Abstract: We provide an overview of the systematic evidence relating to the impact of private equity (PE) backed buyouts over the last two decades. We focus on performance; employment and employee relations; innovation, investment and entrepreneurship; longevity and survival. We also explore a future research agenda in the context of a maturing PE industry. Journal: Venture Capital Pages: 51-64 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2018.1518665 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1518665 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:51-64 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas Cumming Author-X-Name-First: Douglas Author-X-Name-Last: Cumming Author-Name: Sofia Johan Author-X-Name-First: Sofia Author-X-Name-Last: Johan Title: Government venture capital research: fake science and bad public policy Abstract: We review statistical methods used to estimate the impact of crowding out of private venture capital (VC) by government VC. We review three types of failures that have plagued the VC literature and resulted in policy implications that are precisely the opposite of what the data actually indicate. The first failure involves the mistaken use of measures that give rise to country rankings where the best VC markets in the world are countries like Austria and Hungary, and the worst VC market in the world is the U.K. The second and more recent failure involves the use of data that do not predate the creation of government VC. The third type of failure involves not accounting for the nonrandom matching between entrepreneurs and government VC programs. We show that statistical inference in recent work that makes this latter mistake can give rise to remarkably incorrect conclusions; including, for example, a bizarre and clearly false inference that a market with more than 89% investment by government funds exhibits no evidence of displacement of private funds. In view of these issues, we offer suggestions for future research and raise some new questions that could guide policymakers in the future. Journal: Venture Capital Pages: 121-131 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2018.1558508 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1558508 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:121-131 Template-Type: ReDIF-Article 1.0 Author-Name: Armin Schwienbacher Author-X-Name-First: Armin Author-X-Name-Last: Schwienbacher Title: Equity crowdfunding: anything to celebrate? Abstract: The development of equity crowdfunding over the last 10 years has been accompanied by many successes and achievements, but also failures. At the same time, it still faces many challenges if it wants to become mainstream in entrepreneurial finance. These challenges are particularly severe in Continental Europe. This article reviews achievements made the last 10 years and discusses important challenges that remain to be solved such as delivering appropriate risk-adjusted returns to investors, enhancing platforms’ own profitability and enabling exit of investors from startups. Journal: Venture Capital Pages: 65-74 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2018.1559010 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1559010 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:65-74 Template-Type: ReDIF-Article 1.0 Author-Name: Hans Landström Author-X-Name-First: Hans Author-X-Name-Last: Landström Author-Name: Roger Sørheim Author-X-Name-First: Roger Author-X-Name-Last: Sørheim Title: The ivory tower of business angel research Abstract: As researchers we need to be relevant, not only to our peers, but also to external stakeholders. We need to make a societal impact. In this study we explore the extent and characteristics of the implications for external stakeholders identified in articles on Business Angels published in Venture Capital: An International Journal of Entrepreneurial Finance between 1999 and 2017. We identified 75 articles on Business Angels. The number of articles on Business Angels has declined over time. Many do not provide any implications for external stakeholders. When researchers provide implications for external stakeholders they are usually vague and in some cases fairly obvious to external stakeholders. We conclude that most of the implications provided will probably never have a large impact on external stakeholders. We suggest that there should be less focus on those scholars who do not have anything to say about policy and practice. Instead, scholars who possess the knowledge to write relevant and insightful implications should be encouraged to increase their contributions. Journal: Venture Capital Pages: 97-119 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2019.1559879 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1559879 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:97-119 Template-Type: ReDIF-Article 1.0 Author-Name: Othmar M. Lehner Author-X-Name-First: Othmar M. Author-X-Name-Last: Lehner Author-Name: Theresia Harrer Author-X-Name-First: Theresia Author-X-Name-Last: Harrer Title: Crowdfunding revisited: a neo-institutional field-perspective Abstract: Crowdfunding, which relies on the aggregated financial power of the many non-institutionalised individuals, who pledge small amounts is seen in the literature as a particularly well-suited form of entrepreneurial finance. A reason for this may be that the investment decisions are more based on the value propositions of a venture than on purely financial factors. Yet, the communication and translation of the value propositions of a venture into various cultural and regulatory contexts requires specialised services and joint efforts. These services are enabled by so-called Crowdfunding Platforms (CFPs) which provide the necessary tools and services. However, they also influence and potentially limit the field through their actions. Applying an institutional field-perspective in order to gain more holistic insights on the interplay between structure and agents, we revise the originally proposed model developed in our 2013 article in Venture Capital based on an extensive update of the literature and provide new insights from additional empirical cases to triangulate the recent scholarly contributions. We finally enhance theory on crowdfunding on an institutional field-level with a better conceptualization of the interconnectedness between actors and their activities, as well as their positions and links within the structure and crowdfunding platforms as powerful central actors. Journal: Venture Capital Pages: 75-96 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2019.1560884 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1560884 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:75-96 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Author-Name: Colin M. Mason Author-X-Name-First: Colin M. Author-X-Name-Last: Mason Title: Venture Capital 20 years on: reflections on the evolution of a field Abstract: This paper reviews the circumstances surrounding the launch of Venture Capital: An International Journal of Entrepreneurial Finance in 1999. It highlights a number of significant changes in the structure of the entrepreneurial finance market over the past 20 years, notably the decline of “classic” venture capital, the effective closure of the small-cap IPO market, the scale-up problem and the emergence of a second equity gap, the geographical dispersion of venture capital and the institutionalisation of the business angel market. A number of new players in the market – coinvestment schemes, equity crowdfunding platforms and blockchain technology-based Initial Coin Offerings – are discussed and the challenges and opportunities they pose for investors, entrepreneurs, policy makers, regulators and academic researchers are assessed. Against this background, a number of key features of the evolution of the content and focus of the Journal are discussed. The paper finishes with a summary of the papers included in this Special Issue. Journal: Venture Capital Pages: 1-34 Issue: 1 Volume: 21 Year: 2019 Month: 1 X-DOI: 10.1080/13691066.2019.1562627 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1562627 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:1-34 Template-Type: ReDIF-Article 1.0 Author-Name: Dorian Proksch Author-X-Name-First: Dorian Author-X-Name-Last: Proksch Author-Name: Wiebke Stranz Author-X-Name-First: Wiebke Author-X-Name-Last: Stranz Author-Name: Nino Röhr Author-X-Name-First: Nino Author-X-Name-Last: Röhr Author-Name: Cornelia Ernst Author-X-Name-First: Cornelia Author-X-Name-Last: Ernst Author-Name: Andreas Pinkwart Author-X-Name-First: Andreas Author-X-Name-Last: Pinkwart Author-Name: Michael Schefczyk Author-X-Name-First: Michael Author-X-Name-Last: Schefczyk Title: Value-adding activities of venture capital companies: a content analysis of investor’s original documents in Germany Abstract: As many studies have shown, venture capital companies pursue value-adding activities for their portfolio firms to achieve abnormal returns compared to the market. Value-adding activities are complex and highly diverse, but also are very relevant to practice. Hence, the topic has been considerably analyzed in academic literature. However, there continues to be a lack of in-depth knowledge because of the sensitivity and scarcity of publicly available data from venture capital companies. We provide in-depth insights into the practices of venture capital companies. Using a longitudinal data-set obtained from nine venture capital companies in Germany, we qualitatively analyzed their value-adding activities. Drawing on investors’ original documents, including business plans, investment committee papers, reports and annual statements of the investments, we created a typology of which value-adding services were performed. Results suggest that, consistent with prior studies, venture capital companies are highly engaged in supporting ventures with respect to financial and human capital issues as well as in establishing strong governance mechanisms to reduce information asymmetries between founders and investors. Venture capital companies also make moderate use of their network of relevant contacts. Support for operational issues is low. Journal: Venture Capital Pages: 129-146 Issue: 3 Volume: 19 Year: 2017 Month: 7 X-DOI: 10.1080/13691066.2016.1242573 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1242573 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:129-146 Template-Type: ReDIF-Article 1.0 Author-Name: Antonio Gledson De Carvalho Author-X-Name-First: Antonio Gledson Author-X-Name-Last: De Carvalho Author-Name: Humberto Gallucci-Netto Author-X-Name-First: Humberto Author-X-Name-Last: Gallucci-Netto Author-Name: Eduardo M. R. Siqueira Author-X-Name-First: Eduardo M. R. Author-X-Name-Last: Siqueira Title: Determinants of success in venture capital investments: evidence from Brazil Abstract: We investigate the determinants of the success of private equity/venture capital funds. We focus specially on a Brazilian idiosyncrasy: the participation of limited partners in the investment process through investment committees (ICs) staffed with their representatives. In principle, ICs could substitute for the ex post screening that creditors do in levered buyouts. We find that funds with ICs underperform other funds, suggesting that ICs are not a good alternative for creditors screening. We also find that funds managed by bank affiliates underperform those managed by independent organizations. Finally, retention of equity control on portfolio companies affects positively their success. Journal: Venture Capital Pages: 147-161 Issue: 3 Volume: 19 Year: 2017 Month: 7 X-DOI: 10.1080/13691066.2016.1247504 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1247504 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:147-161 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin C. Cox Author-X-Name-First: Kevin C. Author-X-Name-Last: Cox Author-Name: Jason Lortie Author-X-Name-First: Jason Author-X-Name-Last: Lortie Author-Name: Kimberly Gramm Author-X-Name-First: Kimberly Author-X-Name-Last: Gramm Title: The investment paradox: why attractive new ventures exhibit relatively poor investment potential Abstract: This paper provides insights into the way in which angel investors evaluate the investment potential of new ventures. Previous research has identified a broad array of different investment criteria that are thought to directly influence whether an investment opportunity is perceived as attractive by angel investors. This study contributes to this stream of research by identifying what is referred to as the investment paradox which occurs when the basic and fundamental investment criteria associated with a new venture are positively evaluated, yet the venture is simultaneously evaluated as exhibiting relatively poor investment potential. A model in which the relationship between fundamental investment criteria and overall investment potential is moderated by fit-based technology development criteria is proposed as an explanation for this apparent paradox. This model is tested with a large sample of investment proposals evaluated by angel investors using multi-level modeling. The results support the proposed moderated model of angel investor evaluation criteria. These results have clear and important implications for entrepreneurs, angel investors, public policy, and future research focused on angel investors’ evaluations of investment opportunities. Journal: Venture Capital Pages: 163-181 Issue: 3 Volume: 19 Year: 2017 Month: 7 X-DOI: 10.1080/13691066.2016.1247982 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1247982 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:163-181 Template-Type: ReDIF-Article 1.0 Author-Name: Brett A. White Author-X-Name-First: Brett A. Author-X-Name-Last: White Author-Name: John Dumay Author-X-Name-First: John Author-X-Name-Last: Dumay Title: Business angels: a research review and new agenda Abstract: This paper provides a structured literature review of 84 business angel articles published between 2000 and 2013, building on the 1999 review contacted by Mason and Harrison. The articles are classified according to the generational framework laid out by Mason and Harrison, which describes first and second generations of articles (prior to 1999) and calls for a third generation of research. We find that Mason and Harrison’s agenda has largely been met, with some notable gaps. We also find that the research is diverse, with many articles falling into what Mason and Harrison call first and second generations. Our paper outlines a new agenda for research focusing on six key areas. Finally, we conclude with a discussion of key implications for policy and practice. Journal: Venture Capital Pages: 183-216 Issue: 3 Volume: 19 Year: 2017 Month: 7 X-DOI: 10.1080/13691066.2017.1290889 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1290889 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:183-216 Template-Type: ReDIF-Article 1.0 Author-Name: David Gras Author-X-Name-First: David Author-X-Name-Last: Gras Author-Name: Robert S. Nason Author-X-Name-First: Robert S. Author-X-Name-Last: Nason Author-Name: Michael Lerman Author-X-Name-First: Michael Author-X-Name-Last: Lerman Author-Name: Meg Stellini Author-X-Name-First: Meg Author-X-Name-Last: Stellini Title: Going offline: broadening crowdfunding research beyond the online context Abstract: Crowdfunding is often touted as a recent innovation that unleashes entrepreneurial potential by connecting entrepreneurs to small amounts of money from a broad base of individuals. However, literature on the topic has largely neglected the rich history of crowdfunding and failed to make an interesting and salient distinction between online and offline crowdfunding. This paper explicates the historical roots and current practices of offline crowdfunding, compares and contrasts online and offline crowdfunding, develops theoretically grounded predictions linking each type of crowdfunding to entrepreneurship outcomes, and offers related future research opportunities. We hope to build a rich appreciation for offline crowdfunding, provide insight into how crowdfunding as a financing mechanism has evolved and persists in contemporary society, and lay a foundation for future scholarly work in the area. Journal: Venture Capital Pages: 217-237 Issue: 3 Volume: 19 Year: 2017 Month: 7 X-DOI: 10.1080/13691066.2017.1302061 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1302061 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:217-237 Template-Type: ReDIF-Article 1.0 Author-Name: Stanislav Mamonov Author-X-Name-First: Stanislav Author-X-Name-Last: Mamonov Author-Name: Ross Malaga Author-X-Name-First: Ross Author-X-Name-Last: Malaga Author-Name: Janet Rosenblum Author-X-Name-First: Janet Author-X-Name-Last: Rosenblum Title: An exploratory analysis of Title II equity crowdfunding success Abstract: The passage of the Jumpstart Our Business Startups Act (JOBS Act) ushered in a new wave of equity crowdfunding in the United States. Title II of the JOBS Act aims to make it easier for new ventures to raise funds from accredited investors. The number of Title II crowdfunded projects is growing rapidly. Based on data for US online 506(c) offerings across 17 leading platforms, more than $1.49 billion in capital was committed to Title II projects through May 2016. Our analysis of Title II offerings from these platforms reveals that real estate ventures are the single largest category with more than $383 million in committed capital, yet only ~50% of the crowdfunded real estate offerings reach the full amount of the requested capital. Text mining of the real estate project descriptions reveals the critical facilitation role played by the successful crowdfunding platforms in reducing the information asymmetry between the entrepreneurs and investors by performing due diligence on the potential Title II investment opportunities. Journal: Venture Capital Pages: 239-256 Issue: 3 Volume: 19 Year: 2017 Month: 7 X-DOI: 10.1080/13691066.2017.1302062 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1302062 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:3:p:239-256 Template-Type: ReDIF-Article 1.0 Author-Name: Douglas J. Cumming Author-X-Name-First: Douglas J. Author-X-Name-Last: Cumming Author-Name: Silvio Vismara Author-X-Name-First: Silvio Author-X-Name-Last: Vismara Title: De-segmenting research in entrepreneurial finance Abstract: Entrepreneurial finance literature is largely segmented. Different streams of the academic literature between entrepreneurship and finance have become segmented for reasons of theoretical tractability and data availability. In this paper, we discuss the origins and the effects of segmentation by source of financing, by data source, by field, and by country under investigation. We provide a number of examples, mainly from studies on Venture Capital, Initial Public Offerings, and Crowdfunding. We conclude with future research directions, with the hope to help de-segmenting research on entrepreneurial finance. Journal: Venture Capital Pages: 17-27 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2016.1225910 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1225910 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:17-27 Template-Type: ReDIF-Article 1.0 Author-Name: Jonas Löher Author-X-Name-First: Jonas Author-X-Name-Last: Löher Title: The interaction of equity crowdfunding platforms and ventures: an analysis of the preselection process Abstract: A growing number of young and emerging businesses obtain financial resources through open calls over the Internet. Such campaigns are often hosted on specialised platforms that serve as intermediaries between founders and potential funders. In recent years, equity crowdfunding platforms in particular have had remarkably high success rates in these published campaigns. Although they play a central role in the overall investment process, their behaviour is a black box in many ways. Based on semi-structured interviews with platform operators, funded start-ups and external experts, this study reveals how German portals preselect businesses for their audiences and thereby shows how capital-seeking ventures can successfully engage in this new form of financing. Thus, platforms’ preselection follows a structured process that is based on strong network relationships and active search. In addition to the conventional criteria used by established equity providers, these platforms’ decisions are driven by specific criteria related to the facilitation of later funding success. Once platforms make their decision, they support the venture in effectively reducing information asymmetries with investors. Hence, they possess rich knowledge about the information needs of their audiences, which they share with entrepreneurs. Journal: Venture Capital Pages: 51-74 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2016.1252510 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1252510 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:51-74 Template-Type: ReDIF-Article 1.0 Author-Name: Jeroen Neckebrouck Author-X-Name-First: Jeroen Author-X-Name-Last: Neckebrouck Author-Name: Sophie Manigart Author-X-Name-First: Sophie Author-X-Name-Last: Manigart Author-Name: Miguel Meuleman Author-X-Name-First: Miguel Author-X-Name-Last: Meuleman Title: Attitudes of family firms toward outside investors: the importance of organizational identification Abstract: More and more family firms open their capital for outside investors, yet existing studies mainly conclude that family firms are more reluctant than nonfamily firms to hand over control to outside investors. In this study, we build on an organizational identification perspective to explore why family firms differ in their attitudes toward outside investors. We hypothesize that family members who identify strongly with their firms are less willing to cede control to outside investors and, if they do cede control, have a stronger preference for investors who may readily identify with family firms, such as family offices or high net worth individuals, rather than investors who may not fit well with a familial identity, such as private equity sponsors or financial investors. We also hypothesize that social identification mediates the relationship between important family firm governance characteristics and preferences for outside investor. Exploratory evidence from a sample of Belgian family firms is supportive of most of our predictions. Journal: Venture Capital Pages: 29-50 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2016.1255414 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1255414 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:29-50 Template-Type: ReDIF-Article 1.0 Author-Name: Kaveh Moghaddam Author-X-Name-First: Kaveh Author-X-Name-Last: Moghaddam Author-Name: Alexandre Aidov Author-X-Name-First: Alexandre Author-X-Name-Last: Aidov Author-Name: Charles DuVal Author-X-Name-First: Charles Author-X-Name-Last: DuVal Author-Name: Sara Azarpanah Author-X-Name-First: Sara Author-X-Name-Last: Azarpanah Title: High-growth entrepreneurial firm funding: a qualitative study of native-born and immigrant entrepreneurs Abstract: This qualitative study explores the financing choices of high-growth entrepreneurial firms established by native-born and immigrant entrepreneurs. Native-born and immigrant entrepreneurs are shown to pursue different financing approaches and strategies. Native-born entrepreneurs pursue multiple sources of financing, while immigrant entrepreneurs tend to rely on a single source of funding. In contrast to immigrant entrepreneurs who suggest bootstrapping as their preferred choice of financing, native-born entrepreneurs recommend bootstrapping as an initial source of funding, to be supplemented later by other external financing sources (e.g. banks, VC funds, business angels). Furthermore, native-born entrepreneurs solicit loans from large banks, while immigrant entrepreneurs seek loans from small local (community) banks. Finally, native-born entrepreneurs actively seek equity-based financing such as venture capital and business angel financing, while immigrant entrepreneurs avoid equity financing. Journal: Venture Capital Pages: 75-94 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2016.1256295 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1256295 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:75-94 Template-Type: ReDIF-Article 1.0 Author-Name: Cristiano Bellavitis Author-X-Name-First: Cristiano Author-X-Name-Last: Bellavitis Author-Name: Igor Filatotchev Author-X-Name-First: Igor Author-X-Name-Last: Filatotchev Author-Name: Dzidziso Samuel Kamuriwo Author-X-Name-First: Dzidziso Samuel Author-X-Name-Last: Kamuriwo Author-Name: Tom Vanacker Author-X-Name-First: Tom Author-X-Name-Last: Vanacker Title: Entrepreneurial finance: new frontiers of research and practice Abstract: The proliferation of new sources of entrepreneurial finance potentially makes it easier for ventures to raise capital and grow. To date, entrepreneurial finance literature has developed a rich tradition of research on venture capital and angel finance. However, the emergence of “new” sources of finance, such as crowdfunding and the limited attention paid to “traditional” debt financing and financial bootstrapping, offers opportunities to explore, from different points of view and theoretical perspectives, the challenges that ventures face. The objective of this Special Issue is to explore these new and traditional sources of finance and suggest how these phenomena can extend entrepreneurial finance literature and guide new theory building. This paper outlines the new sources of entrepreneurial finance, and in comparing them with more traditional sources, we propose theoretical and empirical challenges that these new and traditional sources present to entrepreneurship scholars. We also provide a brief summary of papers in the Special Issue and outline promising avenues for future research. Journal: Venture Capital Pages: 1-16 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2016.1259733 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1259733 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:1-16 Template-Type: ReDIF-Article 1.0 Author-Name: Richard T. Harrison Author-X-Name-First: Richard T. Author-X-Name-Last: Harrison Title: The internationalisation of business angel investment activity: a review and research agenda Abstract: Prompted by the recent publication of two practitioner-led and -oriented books profiling the global expansion of the business angel investment phenomenon, this paper reviews the evidence for the internationalisation of this increasingly important source of entrepreneurial finance. As business angel activity grows in prominence in emerging markets in particular, challenges are identified in terms of the definition of the phenomenon, the importance of institutional voids in shaping the development of this activity and the role of cultural constraints in legitimising it. The paper identifies a tension between universalist and contextualist accounts of the emergence of this market which has implications for both future research and policy formation. Journal: Venture Capital Pages: 119-127 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2016.1260111 File-URL: http://hdl.handle.net/10.1080/13691066.2016.1260111 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:119-127 Template-Type: ReDIF-Article 1.0 Author-Name: Willem Hulsink Author-X-Name-First: Willem Author-X-Name-Last: Hulsink Author-Name: Victor Scholten Author-X-Name-First: Victor Author-X-Name-Last: Scholten Title: Dedicated funding for leasing and sharing research and test facilities and its impact on innovation, follow-on financing and growth of biotech start-ups: the Mibiton case Abstract: There is a wide gap between the need for science-based start-ups to purchase or gain access to test equipment and the willingness of investors to provide the necessary funding for that. Most science-based start-ups, and in particular young biotech firms, do not have the resources needed to buy or lease the expensive facilities they need to validate their research results. Investors are reluctant to provide additional capital to these high-tech start-ups in order to acquire state-of-the-art testing equipment. Without owning or having access to the research equipment, these start-ups cannot demonstrate their scientific results effectively and are unable to seize the claims and opportunities flowing from their disclosures. Because they often lack collateral, a track record, stable cash flow and/or operational profits, science-based start-ups have to find alternative sources and channels of finance. A new government-backed funding scheme to hire and purchase and/or share research equipment, called Mibiton, was developed for the Dutch biotechnology sector to address this problem. We examine the motivation to join and participate in the Mibiton scheme, look into its (dis)advantages and evaluate its additionalities through an exploratory study among its investees. The main findings are that an active investment fund providing relatively small investments, with competitive interest rates, makes start-ups more proactive, allowing them to accelerate product development and market testing in their time-to-market race. Mibiton’s investments make the start-up firms more professional, better prepared financially and, with their claims tested and validated, more future-proof. The affiliation with the Mibiton scheme also sends out a strong quality signal to the venture capital community, hereby increasing the likelihood that the start-ups will succeed in obtaining additional funding in the future. Journal: Venture Capital Pages: 95-118 Issue: 1-2 Volume: 19 Year: 2017 Month: 1 X-DOI: 10.1080/13691066.2017.1261454 File-URL: http://hdl.handle.net/10.1080/13691066.2017.1261454 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:19:y:2017:i:1-2:p:95-118 Template-Type: ReDIF-Article 1.0 Author-Name: Julius Tennert Author-X-Name-First: Julius Author-X-Name-Last: Tennert Author-Name: Marie Lambert Author-X-Name-First: Marie Author-X-Name-Last: Lambert Author-Name: Hans-Peter Burghof Author-X-Name-First: Hans-Peter Author-X-Name-Last: Burghof Title: Moral hazard in high-risk environments: optimal follow-on investing in venture capital finance Abstract: This paper examines the joint effect of environmental risk and moral hazard on staging activity in venture capital financing. We show theoretically and empirically that venture capitalists face a trade-off between (a) deferring and staging investments to engage in learning of the risky venture and avoid downside losses and (b) committing additional funds to update the incentive of the entrepreneur. We describe this trade-off through the timing of follow-on investments and show that highly qualified entrepreneurs demand greater compensation (a larger share) than do less-qualified entrepreneurs in situations of high risk. Journal: Venture Capital Pages: 323-338 Issue: 4 Volume: 20 Year: 2018 Month: 10 X-DOI: 10.1080/13691066.2018.1491095 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1491095 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:4:p:323-338 Template-Type: ReDIF-Article 1.0 Author-Name: Marco Bade Author-X-Name-First: Marco Author-X-Name-Last: Bade Author-Name: Daniel Krezdorn Author-X-Name-First: Daniel Author-X-Name-Last: Krezdorn Title: Cohesion among crowd investors in the presence of moral hazard Abstract: This article studies cohesion among crowd investors when investments in innovative start-ups are staged. The presented model determines both, optimal entrepreneurial effort and the equilibrium degree of cohesion among crowd investors taking into account that there is single-sided moral hazard. Cohesion measures the probability that a sufficiently large number of crowd investors decides to provide capital. Thus, cohesion also captures the probability of successful crowdfunding. The model demonstrates that entrepreneurial effort is strong when cost benefits are substantial. Thus, cost benefits related to crowdfunding help overcome moral hazard frictions. This translates into greater cohesion among crowd investors because they can force the entrepreneur to share profits. Greater profit share simply increases the crowd’s expected profits, thus encourages cohesion, and eventually facilitates crowdfunding success. However, it simultaneously weakens the entrepreneur’s incentive to exert effort, and exacerbates moral hazard, which reduces expected profits. We demonstrate that the net effect of profit sharing on cohesion is positive below a certain threshold, and turns negative when the crowd’s share of profits becomes too large. Journal: Venture Capital Pages: 339-353 Issue: 4 Volume: 20 Year: 2018 Month: 10 X-DOI: 10.1080/13691066.2018.1526863 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1526863 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:4:p:339-353 Template-Type: ReDIF-Article 1.0 Author-Name: Alexandra Dawson Author-X-Name-First: Alexandra Author-X-Name-Last: Dawson Author-Name: Céline Barrédy Author-X-Name-First: Céline Author-X-Name-Last: Barrédy Title: Private equity investment in family firms: the role of stake size and deal syndication Abstract: Private equity (PE) firms are increasingly investing in family firms, as these organizations look to grow and deal with ownership succession. In this study we contribute to the developing entrepreneurship literature on PE investment by addressing the heterogeneity of PE firms. We distinguish between private independent and captive PE firms to understand whether different types of PE firms select different (i.e. family vs. non-family) firms as their target. We also look at whether the relationship between the type of PE firm and likelihood of investing in a family firm (vs. a non-family firm) is moderated by two factors, which are related to risk reduction in PE deals, namely size of equity stake and deal syndication. Our analysis of all 902 PE deals that took place in Canada between 2009 and 2014 indicates that family firms are not the preferred investment choice for private independent PE firms, although taking a minority stake positively moderates this relationship. Journal: Venture Capital Pages: 355-376 Issue: 4 Volume: 20 Year: 2018 Month: 10 X-DOI: 10.1080/13691066.2018.1516358 File-URL: http://hdl.handle.net/10.1080/13691066.2018.1516358 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:20:y:2018:i:4:p:355-376 Template-Type: ReDIF-Article 1.0 Author-Name: Rudy Aernoudt Author-X-Name-First: Rudy Author-X-Name-Last: Aernoudt Author-Name: Amparo De San José Author-X-Name-First: Amparo Author-X-Name-Last: De San José Title: A gender financing gap: fake news or evidence? Abstract: Women-led businesses are less likely to raise venture capital than male-only businesses and the amounts that they raise are lower. Yet women-led businesses deliver better revenue performance and return on investment. So why are venture capitalists reluctant to invest in women-led businesses? One reason is that women entrepreneurs are over concentrated in sectors that are less attractive to investors and have a low presence in technology sectors. Another reason is the lower propensity of women entrepreneurs to seek venture capital. However, women who do approach venture capital funds are almost as likely as men to be successful in raising finance. Moreover, women-led businesses perform well in raising follow-on finance. And women business angels – a minority of all business angels – have a clear propensity to invest in women founders. Journal: Venture Capital Pages: 127-134 Issue: 2 Volume: 22 Year: 2020 Month: 6 X-DOI: 10.1080/13691066.2020.1747692 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1747692 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:2:p:127-134 Template-Type: ReDIF-Article 1.0 Author-Name: Véronique Bessière Author-X-Name-First: Véronique Author-X-Name-Last: Bessière Author-Name: Eric Stéphany Author-X-Name-First: Eric Author-X-Name-Last: Stéphany Author-Name: Peter Wirtz Author-X-Name-First: Peter Author-X-Name-Last: Wirtz Title: Crowdfunding, business angels, and venture capital: an exploratory study of the concept of the funding trajectory Abstract: The market for entrepreneurial finance has witnessed the arrival of new players – specifically, different types of crowdfunding platforms – which have joined the more traditional forms of entrepreneurial finance such as BAs and VCs over the last decade. Taking stock of this increasingly diverse landscape, the present study explores the concept of a complex funding trajectory and its impact on the dynamics of nascent venture governance. Using a processual case-study design, we explore the particular funding trajectory of a young technology venture, successively combining different actors: reward based crowdfunding (RBC) first, then equity based crowdfunding (ECF) combined with business angels (BAs), followed by ECF combined with BAs and VCs. Our contribution to the literature is two-fold. The case makes an empirical contribution by deepening insights from prior quantitative studies on the determinants of follow-on funding after initial crowdfunding campaigns. The present study also makes a theoretical contribution by demonstrating that, beyond particular determinants of fundraising from various sources linked to initial venture characteristics and individual campaign attributes, the specific shape and sequencing of the overall funding trajectory plays a central role for the success of follow-on funding and the nascent governance of the young venture. Journal: Venture Capital Pages: 135-160 Issue: 2 Volume: 22 Year: 2020 Month: 6 X-DOI: 10.1080/13691066.2019.1599188 File-URL: http://hdl.handle.net/10.1080/13691066.2019.1599188 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:2:p:135-160 Template-Type: ReDIF-Article 1.0 Author-Name: Peter Roosenboom Author-X-Name-First: Peter Author-X-Name-Last: Roosenboom Author-Name: Tom van der Kolk Author-X-Name-First: Tom Author-X-Name-Last: van der Kolk Author-Name: Abe de Jong Author-X-Name-First: Abe Author-X-Name-Last: de Jong Title: What determines success in initial coin offerings? Abstract: We analyse the determinants of success for 630 ICOs undertaken from August 2015 up until the end of December 2017, a period in which the market for ICOs grew to an unprecented level. We find evidence that ICOs are more successful in raising funding when they disclose more information to investors (i.e. have a higher profile rating), have a higher quality rating by cryptocurrency experts, have a pre-ICO GitHub repository, organise a presale, refrain from offering bonus schemes, have shorter planned token sale durations and have a larger project team. ICOs that disclose more information to investors and that have a higher quality rating at the time of the campaign show stronger ex-post performance. Longer-term project success is positively impacted by having a pre-ICO GitHub repository, a shorter planned token sale duration and having a larger project team at the time of the ICO, although these results depend on the ex-post success measure used. We conclude that for entrepreneurs it is important to make an ICO as transparent as possible and that profile and expert ratings are a valuable means to overcome the information asymmetry problems associated with token sales. Journal: Venture Capital Pages: 161-183 Issue: 2 Volume: 22 Year: 2020 Month: 6 X-DOI: 10.1080/13691066.2020.1741127 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1741127 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:2:p:161-183 Template-Type: ReDIF-Article 1.0 Author-Name: Ekaterina Murzacheva Author-X-Name-First: Ekaterina Author-X-Name-Last: Murzacheva Author-Name: Jonathan Levie Author-X-Name-First: Jonathan Author-X-Name-Last: Levie Title: Entrepreneurial finance journeys: embeddedness and the finance escalator Abstract: This paper re-visits the traditional model of the finance escalator, which outlines alternative financial pathways for entrepreneurs depending on their aspirations and stage of development. Building on social, spatial and institutional embeddedness perspectives, the dynamic and interactional challenges of financial decisions are captured through an exploratory interpretivist approach. Ten early funding journeys of entrepreneurs in Scotland, all of whom sought external funding, were scrutinized with the objective of revealing motivations, reasoning, and patterns behind funding decisions. Surprisingly, these entrepreneurs all initially sought value-added financial capital, but issues including control (perceived as ownership), speed of access, and external environmental pressures caused them to accept offers (often unsolicited) from familiar sources. As a result, a revised finance escalator is proposed. The extent to which these findings are context specific is discussed. Journal: Venture Capital Pages: 185-214 Issue: 2 Volume: 22 Year: 2020 Month: 6 X-DOI: 10.1080/13691066.2020.1767756 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1767756 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:2:p:185-214 Template-Type: ReDIF-Article 1.0 Author-Name: Jeffrey E. Sohl Author-X-Name-First: Jeffrey E. Author-X-Name-Last: Sohl Title: Crafting the next generation of angels: a promising model in experiential learning Abstract: In an academic environment there are various pedagogies for learning about angel investing, all with various levels of engagement, cases, academic research, and lectures. This paper provides one model of a successful pedagogy that is grounded in experiential learning modalities, the student angel investment fund. It outlines the opportunities, challenges, and key determinants of success, based on the experiences of an existing student angel fund. The Rines Student Angel Investment Fund (the Fund) is a cross-disciplinary, undergraduate, student-managed angel investment fund that allows students to learn angel investment strategies through the first-hand experience of investing in start-up companies that are external to the university. The infrastructure needed to launch the initiative was an established presence in the angel market, a willing donor, a university amenable to having students run a high risk investment fund, and required developing and facilitating relationships with angel groups and demonstrating to the angel partners the value-add the Rines students could provide. The investment and due diligence process include multiple student presentations to the class, various levels of student participation, interaction with entrepreneurs and the Fund mentors (external practitioners), presentations to the angel partners and to an investment committee of professional investors. Journal: Venture Capital Pages: 315-329 Issue: 4 Volume: 22 Year: 2020 Month: 10 X-DOI: 10.1080/13691066.2020.1847411 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1847411 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:4:p:315-329 Template-Type: ReDIF-Article 1.0 Author-Name: Sarah Glücksman Author-X-Name-First: Sarah Author-X-Name-Last: Glücksman Title: Entrepreneurial experiences from venture capital funding: exploring two-sided information asymmetry Abstract: Information between entrepreneurs and venture capitalists (VCs) is often shared unequally. VCs are experienced and professional dealmakers, while entrepreneurs have great knowledge about their venture but usually limited knowledge about VCs’ financing process and requirements. For entrepreneurs, VCs’ asymmetric information advantage can lead to difficulties in receiving funding, unfavorable terms, or negative startup experiences. Based on in-depth interviews with 20 Swedish entrepreneurs, this study investigates entrepreneurial experiences of mitigating the problems arising from information asymmetry in a VC–entrepreneur relationship. Four themes emerged from these interviews: (1) choosing the optimal time to raise the initial external capital, (2) ensuring that the VC fits the startup, (3) studying and understanding the venture capital process beforehand, and (4) building an open and honest relationship with the VC. Although entrepreneurs have not developed any formal tools similar to what VCs employ to mitigate information asymmetry risks, our study shows that entrepreneurs use informal tools based on their own and others’ experiences. This indicates that the entrepreneur might play a more active role in the VC–entrepreneur relationship than most previous studies have assumed. Journal: Venture Capital Pages: 331-354 Issue: 4 Volume: 22 Year: 2020 Month: 10 X-DOI: 10.1080/13691066.2020.1827502 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1827502 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:4:p:331-354 Template-Type: ReDIF-Article 1.0 Author-Name: Keith Arundale Author-X-Name-First: Keith Author-X-Name-Last: Arundale Title: Syndication and cross-border collaboration by venture capital firms in Europe and the USA: a comparative study Abstract: Syndication occurs when two or more venture capital (VC) firms invest in the same deal in order to pool resources, information and knowledge and to share financial risk amongst syndicate members. The extent to which US VC firms syndicate with UK/European VCs on UK/European deals (and vice versa) has received little empirical study. This study reviews syndication amongst UK/European and US VCs in order to ascertain their rationales for syndication: themes that are explored include risk sharing, additional finance, and/or value add from the different expertise of syndicate members. The study considers if there are issues with the alignment of interests of syndicate members internationally across borders. The research reveals that whilst European VCs appear willing to syndicate with US VCs, some US VCs have historically been reluctant to syndicate with European VCs. The reasons for this reluctance are addressed and suggestions for greater co-operation between European and US VCs proposed. Funding from US VCs, through collaborative syndicates with European VCs, is necessary to supplement the lack of patient capital in Europe which is required in order to scale up potential high-growth companies. Journal: Venture Capital Pages: 355-376 Issue: 4 Volume: 22 Year: 2020 Month: 10 X-DOI: 10.1080/13691066.2020.1847414 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1847414 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:4:p:355-376 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Title: Crowdasset: crowdfunding for policymakers Journal: Venture Capital Pages: 377-381 Issue: 4 Volume: 22 Year: 2020 Month: 10 X-DOI: 10.1080/13691066.2020.1826637 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1826637 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:22:y:2020:i:4:p:377-381 Template-Type: ReDIF-Article 1.0 Author-Name: Vincenzo Capizzi Author-X-Name-First: Vincenzo Author-X-Name-Last: Capizzi Author-Name: Cristiano Bellavitis Author-X-Name-First: Cristiano Author-X-Name-Last: Bellavitis Author-Name: Sofia Johan Author-X-Name-First: Sofia Author-X-Name-Last: Johan Title: The evolution of Venture Capital: from the early days to recent successes Journal: Venture Capital Pages: 1-3 Issue: 1 Volume: 23 Year: 2021 Month: 01 X-DOI: 10.1080/13691066.2021.1886660 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1886660 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:1:p:1-3 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Granz Author-X-Name-First: Christian Author-X-Name-Last: Granz Author-Name: Eva Lutz Author-X-Name-First: Eva Author-X-Name-Last: Lutz Author-Name: Marisa Henn Author-X-Name-First: Marisa Author-X-Name-Last: Henn Title: Scout or coach? Value-added services as selection criteria in entrepreneurs’ venture capitalist selection Abstract: In this paper, we draw upon resource dependence theory to investigate the impact of different types of value-added services on entrepreneurs’ venture capitalist selection. We use a mixed method research design based on a choice experiment with 3,172 decisions of 122 entrepreneurs in Germany, Austria, and Switzerland and semi-structured interviews with the participating entrepreneurs. Our results indicate that entrepreneurs focus on selecting venture capitalists that act as scouts rather than as coaches. In particular, scouting activities such as the extension of the operational network and exit support are important for entrepreneurs in their selection process, whereas coaching activities such as strategic advice and help in internal business development are less relevant. Furthermore, entrepreneurs perceive value-added services as an active resource management tool to take advantage of interdependencies between their own and the venture capitalist’s resources, rather than as primarily filling their own resource gaps. Journal: Venture Capital Pages: 5-40 Issue: 1 Volume: 23 Year: 2021 Month: 01 X-DOI: 10.1080/13691066.2020.1824603 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1824603 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:1:p:5-40 Template-Type: ReDIF-Article 1.0 Author-Name: John P. Berns Author-X-Name-First: John P. Author-X-Name-Last: Berns Author-Name: Jing Zhang Author-X-Name-First: Jing Author-X-Name-Last: Zhang Author-Name: Robert E. White Author-X-Name-First: Robert E. Author-X-Name-Last: White Title: Geographic distance, firm affiliations, and IPO performance: evidence from China Abstract: Firms going through an initial public offering (IPO) face many uncertainties. Geographic distance between the firm headquarters and the major financial centers, where most investors are located, is another concern. Using a sample of 688 Chinese initial public offerings between 2005 and 2012, we find that remote firms leave investors informationally disadvantaged leading firms to underprice their offering to a greater extent. Furthermore, we find that business affiliations (prestigious lead underwriters and government), which signal firm quality, lessen and the effect of geographic distance on underpricing. Thus, in an IPO context, signals have increasing value for more geographically isolated firms wishing to maximize initial public offering performance. Our study has implications for both academics and practitioners by offering new insights on how geographic distance and signals impact IPO performance. Journal: Venture Capital Pages: 41-66 Issue: 1 Volume: 23 Year: 2021 Month: 01 X-DOI: 10.1080/13691066.2020.1859060 File-URL: http://hdl.handle.net/10.1080/13691066.2020.1859060 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:1:p:41-66 Template-Type: ReDIF-Article 1.0 Author-Name: Gerwin Fels Author-X-Name-First: Gerwin Author-X-Name-Last: Fels Author-Name: Markus Kronberger Author-X-Name-First: Markus Author-X-Name-Last: Kronberger Author-Name: Tobias Gutmann Author-X-Name-First: Tobias Author-X-Name-Last: Gutmann Title: Revealing the underlying drivers of CVC performance— a literature review and research agenda Abstract: What are the underlying performance drivers of corporate venture capital (CVC)? This paper provides a holistic overview and a synthesis of past studies of CVC performance for both scholars and practitioners compiling relevant empirical research on factors influencing the performance of CVC. Based on a sample of 36 publications published between 1986 and 2018, we illustrate that the performance of CVC is influenced by a complex setting due to the heterogeneity of the stakeholders involved. Our study identifies four factors directly related to the performance of CVC – portfolio composition, corporate knowledge, organizational relationship, and managerial influence and focus – and provides a comprehensive review and systematic assessment of the theoretical considerations regarding these factors. Beyond that, it reveals that current research is still limited in terms of the number of published articles about the questions at hand, and only scratches at the surface of the determinants of CVC performance. Concluding, we provide guidance for future research on CVC performance along the four identified factors. Journal: Venture Capital Pages: 67-109 Issue: 1 Volume: 23 Year: 2021 Month: 01 X-DOI: 10.1080/13691066.2021.1873210 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1873210 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:1:p:67-109 Template-Type: ReDIF-Article 1.0 Author-Name: Jay J Janney Author-X-Name-First: Jay J Author-X-Name-Last: Janney Author-Name: Naga Lakshmi Damaraju Author-X-Name-First: Naga Author-X-Name-Last: Lakshmi Damaraju Author-Name: Gregory G. Dess Author-X-Name-First: Gregory G. Author-X-Name-Last: Dess Title: The role of corporate venture capital on returns to acquiring firms: evidence from the biotechnology industry Abstract: Corporate venture capital (CVC) firms face considerable uncertainty while investing time, capital, and other resources in their portfolio firms, typically entrepreneurial ventures. The absence of unambiguous measures of performance about the portfolio firm’s prospects for success and longevity typically is at the root of such uncertainty. Prior research, based on the literature on inter-organizational endorsements grounded in the institutional theory, focused on returns to the portfolio firms under such conditions of uncertainty. We, on the other hand, test the hypotheses that the “prominence” of a CVC firm and the presence of a “prior investment” in the portfolio firm serve as endorsements and the acquiring firms, as endorsers, earn positive financial returns. Results from a sample of biotechnology acquisitions, using an event study methodology for capturing the cumulative abnormal returns (CARs) to acquisition announcements and ordinary least squares regressions (OLS) to study the determinants of the CARs, support the hypotheses. Journal: Venture Capital Pages: 111-127 Issue: 2 Volume: 23 Year: 2021 Month: 04 X-DOI: 10.1080/13691066.2021.1882722 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1882722 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:2:p:111-127 Template-Type: ReDIF-Article 1.0 Author-Name: Hyunsung D. Kang Author-X-Name-First: Hyunsung D. Author-X-Name-Last: Kang Author-Name: Vikram K. Nanda Author-X-Name-First: Vikram K. Author-X-Name-Last: Nanda Author-Name: Haemin D. Park Author-X-Name-First: Haemin D. Author-X-Name-Last: Park Title: Technology spillovers and capital gains in corporate venture capital investments: evidence from the biopharmaceutical industry Abstract: Using a framework combining the real option perspective and appropriation concerns raised in the entrepreneurial finance literature, we find that technology spillovers and capital gains created by corporate venture capital (CVC) investments are positively related with each other in the biopharmaceutical industry. However, this positive relationship is significantly decreased or becomes negative when CVC investments are made with solely financial objectives or in early-stage startups. This study provides evidence that the nature of the relationship between technology spillovers and capital gains that constitute the corporate investors’ total returns created by CVC investments. Journal: Venture Capital Pages: 129-155 Issue: 2 Volume: 23 Year: 2021 Month: 04 X-DOI: 10.1080/13691066.2021.1894749 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1894749 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:2:p:129-155 Template-Type: ReDIF-Article 1.0 Author-Name: Francesco Ferrati Author-X-Name-First: Francesco Author-X-Name-Last: Ferrati Author-Name: Moreno Muffatto Author-X-Name-First: Moreno Author-X-Name-Last: Muffatto Title: Reviewing equity investors’ funding criteria: a comprehensive classification and research agenda Abstract: Venture capitalists and angel investors usually apply a set of assessment criteria to evaluate the key elements of entrepreneurial projects. However, since each investor considers different criteria, previous researchers who analysed investors’ decision making, ended up analysing a variety of divergent aspects. In this paper, a systematic literature review on the assessment criteria applied by equity investors was carried out. The purpose of this study was to identify and classify all the criteria considered by previous researchers to determine whether some aspects were investigated more extensively than others and to understand the reasons for this type of approach. After screening the abstracts of 894 journal publications, 53 articles were selected for a detailed analysis. In total, 208 unique criteria were identified and were subsequently classified into 35 specific categories, 11 generic classes and 4 main domains of analysis. The high level of detail and granularity of this work is one of its added values and can provide a knowledge base for future researchers who intend to apply new methodologies for the analysis of investors’ decision-making. Starting from the results obtained so far, a new agenda for future research is suggested to encourage a more data-driven approach leveraging data science techniques. Journal: Venture Capital Pages: 157-178 Issue: 2 Volume: 23 Year: 2021 Month: 04 X-DOI: 10.1080/13691066.2021.1883211 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1883211 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:2:p:157-178 Template-Type: ReDIF-Article 1.0 Author-Name: Ji Youn (Rose) Kim Author-X-Name-First: Ji Youn (Rose) Author-X-Name-Last: Kim Author-Name: Haemin Dennis Park Author-X-Name-First: Haemin Dennis Author-X-Name-Last: Park Title: The influence of venture capital syndicate size on venture performance Abstract: Venture capital (VC) syndicates pool diverse resources from their members to accomplish the common goal of nurturing new ventures for a successful exit. Although the size of syndicate is a fundamental attribute impacting performance, the influence of syndicate size is less understood in prior studies with mixed findings. To address the gap, we suggest that there is an inverted U relationship between a syndicate size and venture performance. As the number of partners in a VC syndicate increases, a syndicate can provide more heterogeneous resources that can help its portfolio company succeed, but coordination costs increase as well. We thus predict that the net effect combining these two countervailing effects yields an inverse-U relationship between syndicate size and performance. We further examine two boundary conditions under which the nonlinear relationship is likely to manifest. Analyzing 407 investment syndicates formed by 1,106 VC firms for new ventures in the U.S. information and communications technology sector between 1990 and 2006, we find that the relationship between syndicate size and performance is an inverse-U shape. We further find that geographic distance among syndicate partners flattens the inverse-U curve, whereas a strong reputation of the lead VC firms shifts the inverse-U curve to the right. Journal: Venture Capital Pages: 179-203 Issue: 2 Volume: 23 Year: 2021 Month: 04 X-DOI: 10.1080/13691066.2021.1893933 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1893933 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:2:p:179-203 Template-Type: ReDIF-Article 1.0 Author-Name: Gordon Murray Author-X-Name-First: Gordon Author-X-Name-Last: Murray Title: Ten meditations on government venture capital Abstract: This paper reflects on the policy formation process in the burgeoning area of government’s involvement in venture capital finance (VC) over the two decades 2000–2020. It looks at both why and how government VC funds (GVC) have evolved. The increasingly common vehicle of “hybrid” co-investment funds, which include both public and private VC investors, is analysed. The evolution of public intervention in VC markets over time is acknowledged while noting that significant operational challenges remain. The rubric of Ten Meditations is employed as a device to communicate both problem and prescription across the academic/policy maker divide. Journal: Venture Capital Pages: 205-227 Issue: 3 Volume: 23 Year: 2021 Month: 07 X-DOI: 10.1080/13691066.2021.1903677 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1903677 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:3:p:205-227 Template-Type: ReDIF-Article 1.0 Author-Name: Jan Jacob Vogelaar Author-X-Name-First: Jan Jacob Author-X-Name-Last: Vogelaar Author-Name: Erik Stam Author-X-Name-First: Erik Author-X-Name-Last: Stam Title: Beyond market failure: rationales for regional governmental venture capital Abstract: Why do regional governments establish venture capital funds? Government intervention in venture capital markets is traditionally legitimised by market failure rationales. In this paper, we analyse the supply of public and private venture capital in Dutch regions, which reveals a multiplicity of rationales for government intervention in the regional economy. We ground this in the policy diffusion literature and distinguish four rationales for government intervention: economic competition, coercion, imitation and learning. The findings enrich the analysis of regional government interventions and challenge the rhetoric that regional policies seeking to foster venture capital markets are solely implemented to address market failures. Journal: Venture Capital Pages: 257-290 Issue: 3 Volume: 23 Year: 2021 Month: 07 X-DOI: 10.1080/13691066.2021.1927341 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1927341 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:3:p:257-290 Template-Type: ReDIF-Article 1.0 Author-Name: Lei Wang Author-X-Name-First: Lei Author-X-Name-Last: Wang Author-Name: Huanhuan Huang Author-X-Name-First: Huanhuan Author-X-Name-Last: Huang Author-Name: Yunbi An Author-X-Name-First: Yunbi Author-X-Name-Last: An Title: Technological fit, control rights allocation, and innovation performance of corporate venture capital-backed enterprises Abstract: Based on 351 sample observations of companies listed on the Growth Enterprise Market (GEM) and Small & Medium Enterprise (SME) Board in China, this paper analyzes how the technological fit between corporate venture capital (CVC) parent companies and CVC-backed start-ups is related to CVC-backed start-ups’ innovation performance, as well as the mediating role of the allocation of control rights within CVC-backed start-ups in explaining the relationship. We find that technological fit has a positive effect on CVC-backed start-ups’ innovation inputs, while it has an inverted U-shaped relationship with start-ups’ innovation outputs. Technological fit also has a positive effect on the control rights acquired by CVCs, while the control rights allocation has no significant effect on innovation inputs, but significantly promotes innovation outputs. This suggests that the impact of technological fit on CVC-backed start-ups’ innovation performance arises from both the direct effect of technological fit and the mediating effect of the control rights acquired by CVCs. Journal: Venture Capital Pages: 229-255 Issue: 3 Volume: 23 Year: 2021 Month: 07 X-DOI: 10.1080/13691066.2021.1905931 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1905931 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:3:p:229-255 Template-Type: ReDIF-Article 1.0 Author-Name: Colin Mason Author-X-Name-First: Colin Author-X-Name-Last: Mason Author-Name: Tiago Botelho Author-X-Name-First: Tiago Author-X-Name-Last: Botelho Title: Business angel investing during the covid-19 economic crisis: evidence from Scotland Abstract: The onset of the coronavirus pandemic in early 2020 quickly gave rise to a concern that the resulting economic uncertainty would produce a collapse in angel investing. In view of the critical role that business angels play in financing the start of the entrepreneurial pipeline, a decline in their investment activity would have a negative effect on the ability of entrepreneurs to start and commence the scaling process which, in turn, would compromise an entrepreneur-led economic recovery from the coronavirus pandemic. This paper draws on two unique data sources on investments made by business angels in Scotland before and since the onset of the pandemic. It shows that business angels continued to invest since the onset of the crisis although their investment activity declined sharply between Q2 and Q3 2020. Investment activity stabilising in Q4 and has significantly increased during 2021 and is now above pre-Covid levels. Angels have increased their emphasis on follow-on investments and in businesses that have raised one or more previous rounds of funding. This highlights a potential problem for entrepreneurs seeking to raise their first round of angel funding that policy-makers need to address. Journal: Venture Capital Pages: 321-343 Issue: 4 Volume: 23 Year: 2021 Month: 10 X-DOI: 10.1080/13691066.2021.2019564 File-URL: http://hdl.handle.net/10.1080/13691066.2021.2019564 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:4:p:321-343 Template-Type: ReDIF-Article 1.0 Author-Name: Priscilla Serwaah Author-X-Name-First: Priscilla Author-X-Name-Last: Serwaah Author-Name: Rotem Shneor Author-X-Name-First: Rotem Author-X-Name-Last: Shneor Title: Women and entrepreneurial finance: a systematic review Abstract: The intersection of gender and entrepreneurship has received growing attention in recent years from academics, practitioners, and policy makers. The current paper reviews research on what influences women’s demand for- and supply of entrepreneurial finance, while suggesting a conceptual approach untangling contradictory findings in earlier studies. This is achieved through a systematic literature review of 113 carefully selected papers, published between 1989 and 2019. Specifically, the review includes 77 studies dedicated to female access to finance, 32 studies on female investment behaviour, and 4 studies addressing both. We find that inconsistent findings can be traced to a combination of wide theoretical plurality in one-half of the studies and an absence of theoretical anchoring in the other half, calling for conceptual integration of existing theories with feminist critiques. Accordingly, we propose integrative conceptual frameworks highlighting the roles of explicit and symbolic factors impacting women’s access to- and investment of- financial resources. This approach led us to suggest that refocusing research on symbolic and intangible factors may help uncover new associations, otherwise obscured in earlier research. Furthermore, the inclusion of interaction terms with gender-related variables may also help untangle existing inconsistencies. Journal: Venture Capital Pages: 291-319 Issue: 4 Volume: 23 Year: 2021 Month: 10 X-DOI: 10.1080/13691066.2021.2010507 File-URL: http://hdl.handle.net/10.1080/13691066.2021.2010507 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:4:p:291-319 Template-Type: ReDIF-Article 1.0 Author-Name: Annalisa Croce Author-X-Name-First: Annalisa Author-X-Name-Last: Croce Author-Name: Elisa Ughetto Author-X-Name-First: Elisa Author-X-Name-Last: Ughetto Author-Name: Giuseppe Scellato Author-X-Name-First: Giuseppe Author-X-Name-Last: Scellato Author-Name: Francesco Fontana Author-X-Name-First: Francesco Author-X-Name-Last: Fontana Title: Social impact venture capital investing: an explorative study Abstract: In this paper, we look at venture capital funds that invest in enterprises striving to achieve a positive societal impact (SIVCs). We observe that SIVCs are likely to pursue two different investment strategies. On the one hand, they select companies with negative profitability results but interesting growth patterns. On the other hand, they do not disregard more established companies with profits but a reduced prospect of growth at the time of the investment. We then assess the impact that these SIVCs have generated on invested firms: while we do not observe significant improvements in the sales figures, all the models show that total assets have been positively affected by the new equity raised. However, when we disentangle between short- and long-term effects, our analysis reveals that the effect of SIVCs on total assets is concentrated on the first years after the receipt of capital, while it disappears in the following years. A positive and significant effect of SIVCs on sales is instead found in the long run. The overall evidence seems to support the view that SIVCs favor the growth and transformation of target firms towards more capital intensive and scalable businesses. Journal: Venture Capital Pages: 345-369 Issue: 4 Volume: 23 Year: 2021 Month: 10 X-DOI: 10.1080/13691066.2021.1982069 File-URL: http://hdl.handle.net/10.1080/13691066.2021.1982069 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:4:p:345-369 Template-Type: ReDIF-Article 1.0 Author-Name: Vivien Lefebvre Author-X-Name-First: Vivien Author-X-Name-Last: Lefebvre Title: Zero-debt capital structure and the firm life cycle: empirical evidence from privately held SMEs Abstract: Recent research on firms’ capital structure highlights that up to 25% of publicly listed firms are zero-debt firms, a stylized fact that challenges financial theory. In this paper, we study privately held zero-debt small and medium-sized enterprises (SMEs) and identify that approximately 20% of our observations correspond to zero-debt firms. This result is especially surprising in the context of a bank-oriented economy, France. We show that the likelihood of being a zero-debt firm is higher when firms are new-born, which is not surprising, but also when they grow older. In other words, we observe a U-shaped relationship between age and the likelihood of being a zero-debt firm. Our results are consistent with the idea that new-born firms cannot access debt-financing because of a lack of reputation and high informational opacity. When firms grow older, they decide to become debt-free to preserve their financial flexibility and to reduce their dependency toward banks. Overall, this paper suggests that SMEs depend less on bank financing than currently assumed. Journal: Venture Capital Pages: 371-387 Issue: 4 Volume: 23 Year: 2021 Month: 10 X-DOI: 10.1080/13691066.2021.2001700 File-URL: http://hdl.handle.net/10.1080/13691066.2021.2001700 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:23:y:2021:i:4:p:371-387 Template-Type: ReDIF-Article 1.0 Author-Name: Lukas Koenig Author-X-Name-First: Lukas Author-X-Name-Last: Koenig Author-Name: Julius Tennert Author-X-Name-First: Julius Author-X-Name-Last: Tennert Title: Tell me something new: startup valuations, information asymmetry, and the mitigating effect of informational updates Abstract: A high level of information asymmetry is characterizing for venture capital investments making new information about entrepreneurial companies especially valuable for a venture capitalist’s valuation process. This paper uses text classification and text mining methodology to extract structured data about capital allocation plans in a unique sample of 1,550 European funding rounds that serves as proxy for the private informational updates shared with investors by entrepreneurs. We show that venture capitalists incorporate the content and specificity of information into their valuation process. Further, results confirm that the value of new information is dependent on the prevailing level of information asymmetry. Journal: Venture Capital Pages: 47-69 Issue: 1 Volume: 24 Year: 2022 Month: 01 X-DOI: 10.1080/13691066.2022.2026744 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2026744 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:1:p:47-69 Template-Type: ReDIF-Article 1.0 Author-Name: Habib Ahmed Author-X-Name-First: Habib Author-X-Name-Last: Ahmed Author-Name: Dalal Aassouli Author-X-Name-First: Dalal Author-X-Name-Last: Aassouli Title: Entrepreneurial finance, agency problems and Islamic ethics: complementarities and constraints Abstract: This paper examines the interactions between Islamic ethics related to entrepreneurs and finance and discusses their implications on entrepreneurial finance. The practice of Islamic entrepreneurial ethics creates trust that helps to mitigate agency problems. In such cases, investors can use contracts involving Islamic financial ethics. However, in the absence of the practice of normative entrepreneurial ethics, agency problems arise that need to be resolved contractually. This paper argues that Islamic legal and ethical principles impose constraints on contractual forms which reduce the flexibility of mitigating agency problems arising in entrepreneurial finance. When entrepreneurial ethics are not practiced, investors can finance entrepreneurs by diluting Islamic financial ethical principles to alleviate agency problems. Journal: Venture Capital Pages: 25-46 Issue: 1 Volume: 24 Year: 2022 Month: 01 X-DOI: 10.1080/13691066.2022.2067017 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2067017 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:1:p:25-46 Template-Type: ReDIF-Article 1.0 Author-Name: Mojca Svetek Author-X-Name-First: Mojca Author-X-Name-Last: Svetek Title: Signaling in the context of early-stage equity financing: review and directions Abstract: Access to early-stage equity financing is vital to the growth of high-potential new ventures. To understand how entrepreneurs obtain external financing, researchers have studied the effectiveness of different signals that entrepreneurs send to investors. In this paper, we provide an overview of current research that uses signaling theory to study the likelihood and success of obtaining funding from angel investors and venture capitalists. The content analysis reveals that empirical research has well explored the signaling value of grants, prior investments, and the human and social capital of the firm to early-stage equity investors. However, we find that the literature on signaling effects on early-stage equity investors is fragmented and undertheorized. We note that while there has been an increase in the number of studies using signaling theory to explain success in obtaining early-stage equity financing, the theory remains underutilized, despite its suitability for this particular area of research. We describe the core ideas of signaling theory and how researchers have applied them in the context of venture capital and angel investing. We discuss how this stream of research can build on and extend signaling theory and highlight promising avenues for future research. Journal: Venture Capital Pages: 71-104 Issue: 1 Volume: 24 Year: 2022 Month: 01 X-DOI: 10.1080/13691066.2022.2063092 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2063092 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:1:p:71-104 Template-Type: ReDIF-Article 1.0 Author-Name: Vincenzo Capizzi Author-X-Name-First: Vincenzo Author-X-Name-Last: Capizzi Author-Name: Andrea Paltrinieri Author-X-Name-First: Andrea Author-X-Name-Last: Paltrinieri Author-Name: Debidutta Pattnaik Author-X-Name-First: Debidutta Author-X-Name-Last: Pattnaik Author-Name: Satish Kumar Author-X-Name-First: Satish Author-X-Name-Last: Kumar Title: Retrospective overview of the journal venture capital using bibliometric approach Abstract: The journal Venture Capital (VC) is a well-established highly reputed academic outlet specializing in research on entrepreneurial finance conducted from various methodological standpoints, on a global basis. This study uses bibliometrics to analyze the journal’s impact, prominent topics, most frequent authors, and their affiliated institutions. Between 1999 and 2021, VC published 385 documents receiving 9,892 citations. About 62% of VC papers have more than 10 citations each. Some of the notable themes which may offer future scope for publications include crowdfunding platforms, equity crowdfunding, government venture capital, private equity firm and investment, entrepreneurial finance, market failure, and female entrepreneurship. Journal: Venture Capital Pages: 1-23 Issue: 1 Volume: 24 Year: 2022 Month: 01 X-DOI: 10.1080/13691066.2022.2051769 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2051769 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:1:p:1-23 Template-Type: ReDIF-Article 1.0 # input file: catalog-resolver7903066088418648765.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220713T202513 git hash: 99d3863004 Author-Name: Simon Nieschke Author-X-Name-First: Simon Author-X-Name-Last: Nieschke Author-Name: René Mauer Author-X-Name-First: René Author-X-Name-Last: Mauer Title: “Let’s have a chat!”: a field study on relational governance in the evolution of new venture-accelerator relationships Abstract: Cooperative behavior can facilitate successful relationships between new ventures and investors after investment but also during partner selection. This view may apply especially to accelerators, which differ from other investors by investments at the earliest venture-development stages, significant collaboration between new ventures and investors, and fast decision-making. However, prior research is insufficient to describe the role of relational governance between new ventures and accelerators. We conduct ethnographic research and twenty interviews to determine how relational governance is built into and influences how the new venture-accelerator relationship emerges. Our findings reveal that process-based trust and relational norms are developed earlier in this relationship than research from other investment contexts suggests. We derive a framework that indicates that actors include in their partner-selection processes elements that allow them to build these relational governance mechanisms, such as interacting (e.g., having a chat) and aligning future behavior, early on. We theorize that they do so because they cannot rely on ventures’ track records and seek partners with whom transactions can be defined in the short term and with whom significant collaboration is possible. Our work contributes to relational governance theory in new venture-investor relationships and recent efforts to understand accelerators. Journal: Venture Capital Pages: 137-171 Issue: 2 Volume: 24 Year: 2022 Month: 04 X-DOI: 10.1080/13691066.2022.2091493 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2091493 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:2:p:137-171 Template-Type: ReDIF-Article 1.0 # input file: catalog-resolver2077576318301636614.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220713T202513 git hash: 99d3863004 Author-Name: María Nela Seijas-Giménez Author-X-Name-First: María Nela Author-X-Name-Last: Seijas-Giménez Author-Name: Milagros Vivel-Búa Author-X-Name-First: Milagros Author-X-Name-Last: Vivel-Búa Author-Name: Rubén Lado-Sestayo Author-X-Name-First: Rubén Author-X-Name-Last: Lado-Sestayo Author-Name: Sara Fernández-López Author-X-Name-First: Sara Author-X-Name-Last: Fernández-López Title: Financing entrepreneurial activity in Uruguay: time to default in a public microcredit institution Abstract: This paper develops a tool to predict the percentage of compliance in the repayment of microloans granted by non-profit microfinance institutions (MFI) of the Uruguayan government. The database consists of 1,357 microloans granted by the Program for the Strengthening of Productive Entrepreneurs (PFEP) of the Uruguayan Ministry of Social Development (MIDES) during the period 2012–2016. The paper uses Cox (1972) proportional risk model, employing four penalty modes: ENET, LASSO, AENET and ALASSO. The analysis shows that with a reduced set of variables that are easy for the MFI to obtain, it is possible to obtain high predictive power. Journal: Venture Capital Pages: 173-201 Issue: 2 Volume: 24 Year: 2022 Month: 04 X-DOI: 10.1080/13691066.2022.2085070 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2085070 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:2:p:173-201 Template-Type: ReDIF-Article 1.0 # input file: catalog-resolver5869846130393963219.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220713T202513 git hash: 99d3863004 Author-Name: Dimitris Christopoulos Author-X-Name-First: Dimitris Author-X-Name-Last: Christopoulos Author-Name: Stefan Koeppl Author-X-Name-First: Stefan Author-X-Name-Last: Koeppl Author-Name: Monika Köppl-Turyna Author-X-Name-First: Monika Author-X-Name-Last: Köppl-Turyna Title: Syndication networks and company survival: evidence from European venture capital deals Abstract: This study investigates the phenomenon of syndication in the venture capital industry. Investments conducted by syndicates are believed to have a better chance of being successful, which can be measured by the survival probability of portfolio companies or by successful exits. Using a novel and large dataset covering several countries, our analysis shows that investors’ strong network ties are associated with the success of portfolio companies in Europe. We also demonstrate differences in the association of network centrality with survival between different financing rounds, with the former being more important in early-stage investments and in the first round of financing. Furthermore, we show a strong association of investors’ network ties with the sales growth of portfolio companies before and after the deal, which is consistent in both selection and value-added channels. Finally, we explicitly account for the endogeneity of syndicate formation and show that the results hold if we instrument for venture firms’ network properties, as indicated by significant and correspondingly larger coefficients. Journal: Venture Capital Pages: 105-135 Issue: 2 Volume: 24 Year: 2022 Month: 04 X-DOI: 10.1080/13691066.2022.2101158 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2101158 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:2:p:105-135 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2128932_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Mari-Liis Kukk Author-X-Name-First: Mari-Liis Author-X-Name-Last: Kukk Title: The debt-equity choice in crowdfunding: a two-method approach Abstract: Securities-based crowdfunding has evolved into an important source of financing for small and medium-sized enterprises (SME), but little is known about how crowdfunding campaigns fit into the capital structure decisions of SMEs. Combining insights from SME capital structure and crowdfunding literatures results in high ambiguity, as crowdfunding seems to change SME financing dynamics, but in an uncertain direction. We construct variables based on previous work on SME capital structure literature to empirically test which characteristics help explain the choice to seek either equity or debt funding among firms using crowdfunding. We use 713 equity and 403 debt campaign announcements registered with the U.S. Securities and Exchange Commission under Regulation Crowdfunding. Our empirical procedure includes both the traditionally used logistic regression method as well as a random forest classifier. We find that less-established firms with smaller funding needs are more likely to issue equity, whereas firms with strong growth momentum and larger funding needs prefer debt. Journal: Venture Capital Pages: 287-308 Issue: 3-4 Volume: 24 Year: 2022 Month: 10 X-DOI: 10.1080/13691066.2022.2128932 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2128932 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:287-308 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2117669_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Peter M. Krysta Author-X-Name-First: Peter M. Author-X-Name-Last: Krysta Author-Name: Dominik K. Kanbach Author-X-Name-First: Dominik K. Author-X-Name-Last: Kanbach Title: Value creation in private equity portfolio companies: a structured review of evidence and proposed framework Abstract: Value creation of private equity (PE) firms in portfolio companies has received much attention in research. This systematic literature study aims to review, evaluate, and organize the empirical studies conducted in this field during the last four decades. Our findings from an in-depth analysis of 110 empirical papers reveal that the current understanding is incomplete, inconsistent, and unbalanced. Currently no consensus exists regarding a taxonomy or framework that encompasses all relevant dimensions and structures in the field. To guide future research, the study proposes a framework for value creation inputs, outcomes, and context factors. Constructed on a theoretical basis of agency and resource-based theory, we define distinct roles PE firms take in portfolio companies and specify an underlying typology of value creation levers that are applied. Additionally, we discuss the current research on outcomes of PE value creation efforts, and we identify and structure currently underrepresented context factors that influence value creation. Finally, we highlight potential avenues for future research, focusing on influential context factors and levers that catalyze growth in portfolio companies. Journal: Venture Capital Pages: 203-286 Issue: 3-4 Volume: 24 Year: 2022 Month: 10 X-DOI: 10.1080/13691066.2022.2117669 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2117669 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:203-286 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2134834_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Xiaowei Lin Author-X-Name-First: Xiaowei Author-X-Name-Last: Lin Author-Name: Jixuan Liu Author-X-Name-First: Jixuan Author-X-Name-Last: Liu Author-Name: Jianping Pan Author-X-Name-First: Jianping Author-X-Name-Last: Pan Author-Name: Yuxiang Xie Author-X-Name-First: Yuxiang Author-X-Name-Last: Xie Title: The dark side of initial coin offering: the case of corporate misconduct Abstract: Initial Coin Offering (ICO) is an emerging form of venture capital for startups. But little is known about how ICO affects firms’ tendency to engage in misconducts. Using a hand-collected sample of Chinese startups between 2016 and 2019, we find that ICO-backed firms engage in more corporate misconducts compared with VC-backed firms. Our baseline results are robust after adopting the extent of openness to western countries forced by unequal treaty as an instrument variable. Furthermore, our findings suggest that weak monitoring channel and resource independence channel are the underlying channels for the association between ICO and corporate misconducts. We also find that ICO-backed firms are more likely to go bankrupt compared with VC-backed firms in the future. Overall, our findings shed more lights on the dark side of ICO and indicate that the government should exercise stronger oversight on ICO in emerging countries. Journal: Venture Capital Pages: 335-358 Issue: 3-4 Volume: 24 Year: 2022 Month: 10 X-DOI: 10.1080/13691066.2022.2134834 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2134834 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:335-358 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2128933_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Hossein Dastkhan Author-X-Name-First: Hossein Author-X-Name-Last: Dastkhan Title: A framework to assess the valuation techniques for new technology-based firms: a case in an emerging market Abstract: Valuation of new technology-based firms and startups is one of the main concerns of these Firms. The need to expand financial resources and evaluate the potential income of these firms increases the importance of the valuation of these firms for entrepreneurs and investors. In this paper, we represent a comprehensive framework to assess the strengths and the weaknesses of the valuation methods in NTBFs with a focus on the factors in the emerging markets. For this purpose, different valuation methods and their related criteria for NTBFs are extracted and evaluated by experts in terms of applicability and Sufficiency. We categorized the existing valuation methods to 4 different groups: “asset valuation methods”, “intellectual property valuation methods”, “technology valuation methods”, and “startups valuation methods”. Then, the importance of each criterion is determined using the analytical hierarchical process method. Finally, we used fuzzy TOPSIS to prioritize each category of valuation methods and identify their strengths and weaknesses. The results indicate which sets of valuation methods are the more preferred method for Iranian entrepreneurs and investors to evaluate different kinds of NTBFs. Besides, the results of the model on different criteria proposed different suggestions to improve the existing valuation methods. Journal: Venture Capital Pages: 309-334 Issue: 3-4 Volume: 24 Year: 2022 Month: 10 X-DOI: 10.1080/13691066.2022.2128933 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2128933 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:309-334 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2139205_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Helene Müller Author-X-Name-First: Helene Author-X-Name-Last: Müller Author-Name: Julia Wöhler Author-X-Name-First: Julia Author-X-Name-Last: Wöhler Title: Married at first sight: the process of trust formation throughout the venture capital process during the time of the COVID-19 crisis Abstract: A high level of uncertainty accompanies investment decisions, hence, VCs attempt to reduce their risk through a thorough examination of potential investment cases. Especially during the seed and start-up phases of a new venture, when detailed reports and historical track records are still lacking, the investment manager’s trust in the entrepreneurial team has a major impact on investment decisions. To explore the process of trust formation, we conducted 11 semi-structured in-depth expert interviews with VC investment managers. Thereby, the COVID-19 crisis provided unique circumstances of exclusively digital communication and allowed us to develop a fine-grained understanding of trust within the VC context. Building on previous research about organizational trust and 674 interview minutes, we found that trustworthiness develops to trust over time as the vulnerability of both parties increases. Furthermore, our results reveal that the VCs’ perception of the founders’ trustworthiness is mainly influenced by examining the founders’ work environment, a founders’ reputation in the VCs’ network, and face-to-face communication. Such personal meetings allow VCs to assess founders, shape the investor’s gut feeling, and develop an interpersonal relationship as they allow for more room talking about personal information rather than business talk. Journal: Venture Capital Pages: 1-29 Issue: 1 Volume: 25 Year: 2023 Month: 01 X-DOI: 10.1080/13691066.2022.2139205 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2139205 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:1:p:1-29 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2132891_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Anoosheh Rostamkalaei Author-X-Name-First: Anoosheh Author-X-Name-Last: Rostamkalaei Author-Name: Mark Freel Author-X-Name-First: Mark Author-X-Name-Last: Freel Title: Some initial observations on the geography of the supply of equity crowdfunding Abstract: Enthusiasm for crowdfunding’s ability to fill gaps in the provision of entrepreneurial finance continues among academics, policymakers and practitioners. In this, increasing attention has been paid to the geography of crowdfunding. This work has provided important evidence on various spatial influences on the location of platforms and campaigns and on their eventual success. In this paper, we take a rare look at the geography of the supply of crowdfunds. Specifically, our concern is with equity crowdfunding. Drawing on a hand collected data set, combining data on investments and on investors’ locations, we explore spatial influences on the extent of crowdfunding investment beyond commonly explored issues of distance. Journal: Venture Capital Pages: 65-90 Issue: 1 Volume: 25 Year: 2023 Month: 01 X-DOI: 10.1080/13691066.2022.2132891 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2132891 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:1:p:65-90 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2135468_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Robyn Owen Author-X-Name-First: Robyn Author-X-Name-Last: Owen Author-Name: Tiago Botelho Author-X-Name-First: Tiago Author-X-Name-Last: Botelho Author-Name: Javed Hussain Author-X-Name-First: Javed Author-X-Name-Last: Hussain Author-Name: Osman Anwar Author-X-Name-First: Osman Author-X-Name-Last: Anwar Title: Solving the SME finance puzzle: an examination of demand and supply failure in the UK Abstract: Following economic instability after the Global Financial Crisis, the financing of small and medium-sized enterprise (SME) growth and productivity has become central to UK government policy for sustainable economic development, evidenced by the establishment of the British Business Bank and Regional Investment Funds. This paper considers demand-side and supply-side failures in the contemporary UK SME finance market. Adopting mixed methods, binary logit regression analysis of the 2015 UK Small Business Survey of 15,502 SMEs is sense-checked using qualitative participatory findings from 6 SME finance support advisors. Findings confirm the importance of SME size, age, management capability and use of appropriate, timely external advice. They support the resource-based view of SME access to finance, contributing to borrower discouragement and under investment, suggesting the need for improved support to upskill entrepreneurs’ financial management and investment readiness and the concept of an ‘holistic entrepreneurial finance ecosystem’ approach to assist UK SME finance. Journal: Venture Capital Pages: 31-63 Issue: 1 Volume: 25 Year: 2023 Month: 01 X-DOI: 10.1080/13691066.2022.2135468 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2135468 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:1:p:31-63 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2129510_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Carmen Mendoza Author-X-Name-First: Carmen Author-X-Name-Last: Mendoza Author-Name: Isabel María Parra Oller Author-X-Name-First: Isabel María Author-X-Name-Last: Parra Oller Author-Name: Álvaro Rezola Author-X-Name-First: Álvaro Author-X-Name-Last: Rezola Author-Name: Nuria Suárez Author-X-Name-First: Nuria Author-X-Name-Last: Suárez Title: Investment crowdfunding has little faith in sustainability! At least for the moment Abstract: We analyze the influence of sustainability on the probability of achieving successful investment crowdfunding offerings. We use a sample of 1,741 investment crowdfunding offerings launched by 1,569 firms in the US during the period May 2016–September 2019 under the Form-C requirements of the JOBS Act. After accounting for potential endogeneity concerns affecting the degree of sustainability of each offering, results show that sustainability-related factors do not boost the chances of successful investment crowdfunding offerings. This result is not homogeneous across firms, operations, or financial environments. We obtain evidence on the influence of firm characteristics and on how offering affects the extent to which sustainability impacts success. Moreover, alternative funding sources and the market structure for funding portals also shape the influence of sustainability on offering success. Results are robust to considering both firm- and offering-level factors traditionally linked with success, as well as to different specifications of the econometric model, and to additional robustness tests. Journal: Venture Capital Pages: 91-115 Issue: 1 Volume: 25 Year: 2023 Month: 01 X-DOI: 10.1080/13691066.2022.2129510 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2129510 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:1:p:91-115 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2178365_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Cristiano Bellavitis Author-X-Name-First: Cristiano Author-X-Name-Last: Bellavitis Author-Name: Marc Deloof Author-X-Name-First: Marc Author-X-Name-Last: Deloof Author-Name: Igor Filatotchev Author-X-Name-First: Igor Author-X-Name-Last: Filatotchev Author-Name: Niels Hermes Author-X-Name-First: Niels Author-X-Name-Last: Hermes Author-Name: Ine Paeleman Author-X-Name-First: Ine Author-X-Name-Last: Paeleman Title: Do old theories fit new contexts? New perspectives on corporate governance in entrepreneurial firms Journal: Venture Capital Pages: 117-133 Issue: 2 Volume: 25 Year: 2023 Month: 04 X-DOI: 10.1080/13691066.2023.2178365 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2178365 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:2:p:117-133 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2116797_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Cristiano Bellavitis Author-X-Name-First: Cristiano Author-X-Name-Last: Bellavitis Author-Name: Christian Fisch Author-X-Name-First: Christian Author-X-Name-Last: Fisch Author-Name: Paul P. Momtaz Author-X-Name-First: Paul P. Author-X-Name-Last: Momtaz Title: The rise of decentralized autonomous organizations (DAOs): a first empirical glimpse Abstract: Blockchain technology and smart contracts are catalysts for decentralization and disintermediation. These new technologies reduce transaction costs, agency costs, and offer a basis for trustless social and economic interactions. They are fueling new business models for decentralized platforms and have revolutionized crowdfunding. A recent trend, Decentralized Autonomous Organizations (DAOs), stands to fundamentally transform organizing and governance. DAOs are blockchain-native, decentralized organizations that are collectively owned and managed by their members via smart contracts. In this note, we assess the promises and challenges of DAOs, with a focus on decentralized governance and disintermediation, and offer a first empirical glimpse at the rise and functioning of DAOs. Overall, DAOs may introduce a new era in organizational economics, transforming the global corporate landscape from hierarchical organizations to democratic and distributed organizations powered by organizational entrepreneurship and innovations. Journal: Venture Capital Pages: 187-203 Issue: 2 Volume: 25 Year: 2023 Month: 04 X-DOI: 10.1080/13691066.2022.2116797 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2116797 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:2:p:187-203 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2109224_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Luc Wynant Author-X-Name-First: Luc Author-X-Name-Last: Wynant Author-Name: Sophie Manigart Author-X-Name-First: Sophie Author-X-Name-Last: Manigart Author-Name: Veroniek Collewaert Author-X-Name-First: Veroniek Author-X-Name-Last: Collewaert Title: How private equity-backed buyout contracts shape corporate governance Abstract: This paper explores how contracts in private equity-backed buyouts shape corporate governance in portfolio companies. Drawing upon agency theory and incomplete contracting theory, 50 actual contracts are analyzed in detail. Contracts focus on reducing adverse selection risks through limiting pre-investment information asymmetries and aligning the goals of investors and sellers. Moral hazard risks vis-à-vis management are limited through limiting post-investment information asymmetries and limiting shirking behavior through limiting free cash flows. Goal alignment is achieved through high-powered incentive structures combined with shifting risk of underperformance to management. Managerial hold-up problems are addressed through restricting share transactions and limiting managerial actions. Residual powers and contingencies are mainly used to deal with incomplete contract designs due to uncertainties. Few clauses are used to address the reverse agency problem in which management is protected against moral hazard problems created by the private equity investor. PE contracts have transparent and very strong outcome-based cash flow rights, both limiting downside risk and rewarding upside potential. This contrasts with VC contracts which are especially contingency-based given the high levels of uncertainty of the portfolio companies. Journal: Venture Capital Pages: 135-160 Issue: 2 Volume: 25 Year: 2023 Month: 04 X-DOI: 10.1080/13691066.2022.2109224 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2109224 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:2:p:135-160 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2177208_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Kaveh Moghaddam Author-X-Name-First: Kaveh Author-X-Name-Last: Moghaddam Author-Name: William Q. Judge Author-X-Name-First: William Q. Author-X-Name-Last: Judge Author-Name: Krista B. Lewellyn Author-X-Name-First: Krista B. Author-X-Name-Last: Lewellyn Author-Name: Fatemeh Askarzadeh Author-X-Name-First: Fatemeh Author-X-Name-Last: Askarzadeh Title: Corporate governance in immigrant-founded entrepreneurial firms: ownership heterogeneity and firm performance Abstract: Drawing from resource dependence theory and the faultlines perspective, this study examines how ownership heterogeneity affects firm performance in the understudied context of entrepreneurial firms founded by immigrants. We find that investment by venture capitalists (VCs) is associated with immigrant-founded entrepreneurial firms being less profitable during their infancy stage. Our results also reveal that the presence of a native-born co-owner has a negative effect on performance for these entrepreneurial firms. This study suggests that immigrant entrepreneurs be more cautious about the costs and benefits of seeking resources from VCs and partnering with native co-owners. Further, seeking capital from alternative sources and employing native talent and expertise in terms of business advisers or executive managers may be effective alternative approaches for immigrant entrepreneurs. Journal: Venture Capital Pages: 161-185 Issue: 2 Volume: 25 Year: 2023 Month: 04 X-DOI: 10.1080/13691066.2023.2177208 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2177208 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:2:p:161-185 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2163001_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Nina Magomedova Author-X-Name-First: Nina Author-X-Name-Last: Magomedova Author-Name: Nuria Villaescusa Author-X-Name-First: Nuria Author-X-Name-Last: Villaescusa Author-Name: Alba Manresa Author-X-Name-First: Alba Author-X-Name-Last: Manresa Title: Exploring the landscape of University-affiliated venture funds: an archetype approach Abstract: In the last few decades, universities have engaged in the creation of university-affiliated venture capital (UVC) funds to solve the funding gap of new ventures that emerge from academic research. Little is known about their specific characteristics and typology in terms of their role, investment rationale and governance. This study undertakes an attempt to explore the diversity of UVC funds through the lens of an archetype approach. The analysis of 11 European UVC funds suggests that similarities and differences in such issues as governance system, industry focus and the stage of a venture development are the possible elements that define three distinct archetypes of UVC funding. The study contributes to academic research by proposing a categorisation of UVC funds, and demonstrating their uniqueness in terms of institutional hybridity, and dual organisational schemes and structures. It also suggests that UVC archetypes are not isolated and tend to borrow elements from each other, which contributes to creating a more fluid and flexible entrepreneurial university ecosystem. Journal: Venture Capital Pages: 317-349 Issue: 3 Volume: 25 Year: 2023 Month: 07 X-DOI: 10.1080/13691066.2022.2163001 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2163001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:317-349 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2184287_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Henry Etzkowitz Author-X-Name-First: Henry Author-X-Name-Last: Etzkowitz Author-Name: Miranda Weston-Smith Author-X-Name-First: Miranda Author-X-Name-Last: Weston-Smith Author-Name: Jim Beddows Author-X-Name-First: Jim Author-X-Name-Last: Beddows Author-Name: Ekaterina Albats Author-X-Name-First: Ekaterina Author-X-Name-Last: Albats Author-Name: Helen Lawton Smith Author-X-Name-First: Helen Author-X-Name-Last: Lawton Smith Author-Name: Jim Wilkinson Author-X-Name-First: Jim Author-X-Name-Last: Wilkinson Author-Name: Jialei Yang Author-X-Name-First: Jialei Author-X-Name-Last: Yang Author-Name: Joe Miller Author-X-Name-First: Joe Author-X-Name-Last: Miller Author-Name: Cannon Gardner Author-X-Name-First: Cannon Author-X-Name-Last: Gardner Author-Name: Emma Palmer Foster Author-X-Name-First: Emma Author-X-Name-Last: Palmer Foster Author-Name: Chunyan Zhou Author-X-Name-First: Chunyan Author-X-Name-Last: Zhou Title: University venture capital in big data, regional and historical perspective: where and why has it arisen? Abstract: This article contributes to the international comparative analysis of university venture capital (UVC), providing a quasi-experimental design for follow-up research and practice. The US venture capital industry, with its unicorn focused high-growth format opened up a venture capital gap. UVC transmutes academic innovation into high-tech firms, industries and regional renewal, filling interstitial funding gaps among angel, public and private venture capital offers. It is a knowledge-based industrial policy by Another Name, with direct/explicit and indirect/implicit versions, on a continuum with variation depending upon shifting ideological and competitive concerns. Beyond as of right “womb” provision, UVC capstones an academic innovation ecosystem of technology transfer, incubation and acceleration, translational research, proof of concept funds and entrepreneurship education. Venture capital, exemplified by Sand Hill Road, de-emphasizes classic regional development objectives, neglecting appropriability conditions such as academic and regional circumstances that UK and China prioritize. More modest firm formation outcomes are dismissed as failures, with entrepreneurs encouraged to return to the entrepreneurial churn. We examine the origin and development of UVC from macro, meso and micro, historical and comparative perspectives. Multi-method/multi-sample, comparative case study, and big data analytics show the constraint, variety, and early affinity of UVC to academic icons with significant untapped potential to inspire widespread economic and social advance. Journal: Venture Capital Pages: 219-254 Issue: 3 Volume: 25 Year: 2023 Month: 07 X-DOI: 10.1080/13691066.2023.2184287 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2184287 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:219-254 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2225753_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Yannis Pierrakis Author-X-Name-First: Yannis Author-X-Name-Last: Pierrakis Author-Name: Jasmina Berbegal-Mirabent Author-X-Name-First: Jasmina Author-X-Name-Last: Berbegal-Mirabent Author-Name: Dolors Gil-Doménech Author-X-Name-First: Dolors Author-X-Name-Last: Gil-Doménech Author-Name: Massimo G Colombo Author-X-Name-First: Massimo G Author-X-Name-Last: Colombo Title: Academic institutions and the changing entrepreneurial finance landscape Abstract: Universities have emerged as central players in the fast-changing entrepreneurial finance landscape. This editorial introduces and describes the recent changes in academia and the entrepreneurial finance landscape. It then investigates the particular role of universities in supporting start-ups, as investors or facilitators of investments. Following this, it discusses the role of universities in democratising venture capital investments, the different archetypes of university investment vehicles, the importance of institutional context and entrepreneurship learning and finally the patterns of internationalisation and funding in academic spin-offs. The editorial also provides some practical recommendations for practitioners and gives food for thought for future research. Journal: Venture Capital Pages: 205-217 Issue: 3 Volume: 25 Year: 2023 Month: 07 X-DOI: 10.1080/13691066.2023.2225753 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2225753 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:205-217 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2171318_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Juan C. Leiva Author-X-Name-First: Juan C. Author-X-Name-Last: Leiva Author-Name: Ronald Mora-Esquivel Author-X-Name-First: Ronald Author-X-Name-Last: Mora-Esquivel Author-Name: Martín Solís Author-X-Name-First: Martín Author-X-Name-Last: Solís Title: Nascent entrepreneurship in university students: the role of the context Abstract: This paper offers evidence that the context might influence a university student’s start-up process differently, depending on the category of activities and regions. Specifically, it explores the influence of university and national contexts while considering the different categories of the start-up process. Our approach divides the start-up process into three categories (Business planning, Interaction with the external environment, and Financing), four context definitions (University, Industry-technological, Institutional-policy, and Cultural), and three regions (European Union, Latin America, and Asian-African). We drew on the primary dataset of the Global University Entrepreneurial Spirit Students’ Survey (GUESSS) project that contains 7,628 nascent entrepreneurs from 21 countries, which we complemented with a set of international indexes from the World Economic Forum’s Global Competitiveness Index, the Global Entrepreneurship Index, and the Global Leadership and Organizational Behavior Effectiveness project. Generally speaking, the University context positively influences the start-up activities of students in Europe and Asia-Africa. The Industry and technological context and the Institutional and policy context play a relevant role (sometimes positive or negative) depending on the activity and region. Finally, the Cultural context presents mixed results too, and its influence varies (positively and negatively) depending on the kind of start-up activities and the region. Journal: Venture Capital Pages: 255-284 Issue: 3 Volume: 25 Year: 2023 Month: 07 X-DOI: 10.1080/13691066.2023.2171318 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2171318 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:255-284 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2139651_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: M. L. Fernández-Alles Author-X-Name-First: M. L. Author-X-Name-Last: Fernández-Alles Author-Name: C. Camelo-Ordaz Author-X-Name-First: C. Author-X-Name-Last: Camelo-Ordaz Author-Name: J. P. Diánez-González Author-X-Name-First: J. P. Author-X-Name-Last: Diánez-González Author-Name: E. C. Castillo-Rodríguez Author-X-Name-First: E. C. Author-X-Name-Last: Castillo-Rodríguez Title: Linear and non-linear patterns of internationalisation and funding in academic spin-offs Abstract: Academic spin-offs (ASOs) are typically technologically driven, and their expansion into foreign markets has become a priority for the generation of revenue, thereby recuperating the initial R&D and patent costs over a shorter time frame. However, the literature of how these firms internationalise and what sources they can rely on to obtain the financial resources remains very limited. Two main objectives are proposed in this paper: first, the analysis of whether those relationships that ASOs maintain with various agents to provide financial resources for internationalisation differ between ASOs that have internationalised and those that have not; and second, the study into whether those ASOs that internationalise by following different internationalisation patterns present differences in their agents that provide them with financial resources. From a sample of 173 Spanish ASOs, results of cluster analysis and post-hoc tests indicate that internationalised ASOs rely on financial agents different to those of domestic ASOs. We firstly conclude, that the most representative internationalisation pattern in ASOs is Born Global (BG), through the True Born Global (TBG) and Sporadic Born Global (SBG) sub-patterns. Second, the internationalisation patterns are supported by different financial agents, although governmental institutions and Venture Capital (VC) firms constitute the most relevant agents. Journal: Venture Capital Pages: 285-315 Issue: 3 Volume: 25 Year: 2023 Month: 07 X-DOI: 10.1080/13691066.2022.2139651 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2139651 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:285-315 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2147876_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Elisabete Gomes Santana Félix Author-X-Name-First: Elisabete Gomes Santana Author-X-Name-Last: Félix Author-Name: José Carlos Nunes Author-X-Name-First: José Carlos Author-X-Name-Last: Nunes Author-Name: Cesaltina Pacheco Pires Author-X-Name-First: Cesaltina Pacheco Author-X-Name-Last: Pires Title: The impact of concentration among venture capitalists: revisiting the determinants of venture capital Abstract: This article analyzes the impact of the level of concentration among Venture Capitalists (VCs) on the supply of venture capital (VC), through the reduced form model for the equilibrium amount of VC (using a simultaneous equation model on aggregated data from 15 European countries). It is shown that the level of concentration among VCs has a positive effect on VC supply, so creating conditions to increase the level of concentration can stimulate VC supply. The findings reveal the importance of unemployment and personal income rate on VC demand and the positive impact of stock market capitalization on VC supply. Journal: Venture Capital Pages: 457-486 Issue: 4 Volume: 25 Year: 2023 Month: 10 X-DOI: 10.1080/13691066.2022.2147876 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2147876 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:4:p:457-486 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2082898_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Henrik Wesemann Author-X-Name-First: Henrik Author-X-Name-Last: Wesemann Author-Name: Torben Antretter Author-X-Name-First: Torben Author-X-Name-Last: Antretter Title: The internationalization of business angel networks: do syndicates increase cross-border investment returns? Abstract: This paper investigates the performance effects of cross-border business angel investments. Examining 815 investments on a business angel investment platform, we find an inverted U-shaped relationship between (geographic and cultural) distance and investment returns. We further show that business angels in large syndicates are less sensitive to the costs of both geographic and cultural distance and earn consistently higher returns. Our study contributes to the literature on business angel internationalization and highlights the role of co-investment networks: network resources allow business angels to mitigate transaction costs associated with cross-border investments and improve their investment returns. Journal: Venture Capital Pages: 487-514 Issue: 4 Volume: 25 Year: 2023 Month: 10 X-DOI: 10.1080/13691066.2022.2082898 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2082898 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:4:p:487-514 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2086502_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Max Berre Author-X-Name-First: Max Author-X-Name-Last: Berre Author-Name: Benjamin Le Pendeven Author-X-Name-First: Benjamin Author-X-Name-Last: Le Pendeven Title: What do we know about startup-valuation drivers? A systematic literature review Abstract: Startup-valuation is a critical area of research within entrepreneurial finance, but research on this topic is less consistent and thorough than overall valuation research. Peer-reviewed studies express a range of divergent views and approaches, and the focus varies widely. To bring clarity to this fragmented field, we conduct a systematic literature review, examining 87 peer-reviewed studies published between 1985 and 2020. We analyze these publications in detail and identify 36 startup-valuation drivers and cluster them into five macro-themes: Entrepreneur Characteristics; Firm Characteristics; Investor Characteristics; Market Conditions; and Deal Conditions. We then describe the valuation-impact of these drivers on startups. The range of drivers identified in the literature gives rise to construction of an integrative meta-model based on the macro-themes, placed into appropriate chronological position in the valuation process Our study also identifies key research-gaps and highlights promising directions for exploring the startup-valuation field. Journal: Venture Capital Pages: 385-429 Issue: 4 Volume: 25 Year: 2023 Month: 10 X-DOI: 10.1080/13691066.2022.2086502 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2086502 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:4:p:385-429 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2139206_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Johannes M. Lehner Author-X-Name-First: Johannes M. Author-X-Name-Last: Lehner Title: Looking for complementarities. Within-industry diversification and geographic diversification of Venture Capital Firms Abstract: Research on Venture Capitalists' (VCs) industrial diversification is supplemented with the notion of diversification along an industry’s value chain. VCs are hypothesized to create a portfolio of complementary investments along the value chain, accompanied by low geographic diversification. Further, VCs specializing in an industry with network externalities are predicted to devote relatively more investments to this industry, followed by an increased propensity for diversification along the value chain. This, subsequently, will result in less geographic diversification. The hypotheses are supported through a study on VCs in the US and Europe. Contributions to the literature on VCs, diversification, geographic agglomeration and network effects are discussed. Journal: Venture Capital Pages: 431-456 Issue: 4 Volume: 25 Year: 2023 Month: 10 X-DOI: 10.1080/13691066.2022.2139206 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2139206 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:4:p:431-456 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2150909_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Florian Brinkmann Author-X-Name-First: Florian Author-X-Name-Last: Brinkmann Author-Name: Dominik K. Kanbach Author-X-Name-First: Dominik K. Author-X-Name-Last: Kanbach Title: Lifespans of corporate and independent venture capitalists: a systematic review Abstract: Corporate venture capitalists (CVCs) have shorter lifespans than independent venture capitalists (IVCs), but the reasons for this are not well understood. This paper identifies influencing factors affecting lifespans of CVCs and IVCs. Based on a sample of 190 articles, this systematic review identifies 41 factors that influence VC performance across four dimensions: decisions about strategies, the exploitation of venture capital resources and characteristics, active involvement in the venture capital environment, and limited underlying room for maneuvering. These dimensions show differences in the decision-making of IVCs and CVCs and impact lifespan. CVCs yield greater financial performance than IVCs. However, our results suggest that five CVC-specific factors are significant influencing factors which can explain lifespan differences: investment objectives, organizational autonomy and structure, interorganizational relationships, commitment of corporate parent, and parent company size. Overall, the longevity of CVCs is largely determined by a number of internal decisions made between the CVC and its parent company. Limiting the influence of corporate parents is suggested to enhance the success and lifespan of CVCs. Journal: Venture Capital Pages: 351-383 Issue: 4 Volume: 25 Year: 2023 Month: 10 X-DOI: 10.1080/13691066.2022.2150909 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2150909 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:25:y:2023:i:4:p:351-383 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2161969_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Gresa Latifi Author-X-Name-First: Gresa Author-X-Name-Last: Latifi Author-Name: Luca Grilli Author-X-Name-First: Luca Author-X-Name-Last: Grilli Author-Name: Andrea M. Herrmann Author-X-Name-First: Andrea M. Author-X-Name-Last: Herrmann Title: Does writing a business plan still matter for searching and obtaining external equity finance? Abstract: This study analyses the importance of business plans for founders and professional equity investors in the process of acquiring venture capital. How do the founders’ efforts spent on writing a business plan relate to obtaining the equity funding asked for? Based on a sample of 301 nascent ventures, we first ran a two-step selection model. This quantitative analysis shows that, while a founder’s effort to write a business plan positively correlates with the likelihood of the founding team seeking external financing, business plans are no longer a determining factor for actually obtaining external equity funding. Through additional qualitative analysis, we shed light on this finding and point to other tools venture capitalists increasingly use to forecast venture performance, thereby substituting business plans as core documents of venture assessment. Our study thus contributes to a better understanding of new matching tools between entrepreneurs and investors, thereby adding new knowledge to entrepreneurship scholars and policy-makers alike. Journal: Venture Capital Pages: 47-73 Issue: 1 Volume: 26 Year: 2024 Month: 01 X-DOI: 10.1080/13691066.2022.2161969 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2161969 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:1:p:47-73 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2178348_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Pinghua Chen Author-X-Name-First: Pinghua Author-X-Name-Last: Chen Author-Name: Minye Rao Author-X-Name-First: Minye Author-X-Name-Last: Rao Author-Name: Syed Ali Raza Author-X-Name-First: Syed Ali Author-X-Name-Last: Raza Author-Name: Xiaohui Zhan Author-X-Name-First: Xiaohui Author-X-Name-Last: Zhan Author-Name: Xin Zhao Author-X-Name-First: Xin Author-X-Name-Last: Zhao Title: The impact of sudden public events and fiscal policy relief on the financing constraints of small and medium enterprises: a quasi-natural experiment during COVID-19 Abstract: Using data on Chinese GEM-listed companies from the first quarter of 2018 to the second quarter of 2022, we examine the impact of COVID-19 on SMEs’ financing constraints and the moderating effect of fiscal and tax incentives using the difference-in-differences method (DID). The results indicate that the COVID-19 shock severely affected SMEs’ financing constraints, and this effect is more pronounced among firms in industries particularly sensitive to COVID-19, such as transportation, catering, accommodation, culture, and entertainment. A further analysis shows that tax incentives and fiscal subsidies have differing moderating effects, with the former alleviating SMEs’ financing constraints and the latter having only a relatively limited effect. This finding provides direct micro-level evidence for understanding the impact of COVID-19 on financing constraints and provides insights for promoting the optimization of fiscal support policies for SMEs. Journal: Venture Capital Pages: 31-46 Issue: 1 Volume: 26 Year: 2024 Month: 01 X-DOI: 10.1080/13691066.2023.2178348 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2178348 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:1:p:31-46 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2161968_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Monika Dhochak Author-X-Name-First: Monika Author-X-Name-Last: Dhochak Author-Name: Sudesh Pahal Author-X-Name-First: Sudesh Author-X-Name-Last: Pahal Author-Name: Prince Doliya Author-X-Name-First: Prince Author-X-Name-Last: Doliya Title: Predicting the Startup Valuation: A deep learning approach Abstract: The investment and funding decisions of a new venture are based on the startup valuation, which remains an inconclusive and disputable subject matter. For this purpose, well-established strategic management theories such as resource-based view (RBV), industrial structure effect, and network-based theory have been leveraged as inputs. This study uses 757 Indian startup deals dataset during the period from January 2012 to December 2019 to develop a predictive model based on the Artificial Neural Network (ANN) technique, which is a deep learning approach to predict the startup valuation. The ANN-based model predicts the startup pre-money valuation, and we also compares the ANN model to a linear classifier, linear regression, in this study. The result shows that the application of the ANN model can be used as a supplementary method to predict the pre-money valuation, if not an alternative to the traditional valuation models depending on its adaptability and accuracy. This model provides a competitive advantage by building a strong foundation during the negotiation between VCs and entrepreneurs. This study provides managerial and theoretical implications to VCs, entrepreneurs, and policy-makers for upgrading the startup ecosystem. Journal: Venture Capital Pages: 75-99 Issue: 1 Volume: 26 Year: 2024 Month: 01 X-DOI: 10.1080/13691066.2022.2161968 File-URL: http://hdl.handle.net/10.1080/13691066.2022.2161968 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:1:p:75-99 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2178349_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Sophie Manigart Author-X-Name-First: Sophie Author-X-Name-Last: Manigart Author-Name: Sara Khosravi Author-X-Name-First: Sara Author-X-Name-Last: Khosravi Title: Unanswered questions in entrepreneurial finance Abstract: While the academic literature on entrepreneurial finance has expanded exponentially, many gaps in our knowledge remain. This is driven by digitalization impacting the development of new investment types such as crowdfunding and ICO, the emergence of new investors based upon digital technologies, and the functioning of existing investors. Next, the supply of entrepreneurial finance has become more diverse and new types of investors developed, like incubators and accelerators, family funds, impact investors, or sovereign wealth funds. This increases the sources and type of funding new ventures can get access to. Third, investors pay increasingly attention to non-financial goals like providing solutions to environmental or societal challenges. This paper explores these trends and suggests avenues for future research. Journal: Venture Capital Pages: 1-29 Issue: 1 Volume: 26 Year: 2024 Month: 01 X-DOI: 10.1080/13691066.2023.2178349 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2178349 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:1:p:1-29 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2319359_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Anita Quas Author-X-Name-First: Anita Author-X-Name-Last: Quas Author-Name: Yan Alperovych Author-X-Name-First: Yan Author-X-Name-Last: Alperovych Author-Name: Benjamin Le Pendeven Author-X-Name-First: Benjamin Author-X-Name-Last: Le Pendeven Title: The role of personality traits in entrepreneurial finance Journal: Venture Capital Pages: 101-107 Issue: 2 Volume: 26 Year: 2024 Month: 04 X-DOI: 10.1080/13691066.2024.2319359 File-URL: http://hdl.handle.net/10.1080/13691066.2024.2319359 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:101-107 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2216876_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Francesca Di Pietro Author-X-Name-First: Francesca Author-X-Name-Last: Di Pietro Author-Name: Francesca Tenca Author-X-Name-First: Francesca Author-X-Name-Last: Tenca Title: The role of entrepreneur’s experience and company control in influencing the credibility of passion as a signal in equity crowdfunding Abstract: In this study, we focus on entrepreneurs’ passion as a signal in influencing fundraising success via equity crowdfunding. Moreover, we look at the role of entrepreneurs’ task-specific experience – industry and startup experience- and company control in influencing the credibility of passion as a signal.Through a text analysis of 606 equity crowdfunding campaigns in the UK, we found that entrepreneurs’ displayed passion positively influences funding success and that entrepreneurs’ startup experience reinforces the credibility of this signal, i.e., the impact of passion on fundraising success. Additionally, we found that when entrepreneurs retain more shares of the company, the influence of displayed passion on funding success is greater. Our study contributes to the crowdfunding literature highlighting the importance of entrepreneurs’ passion in influencing fundraising success via crowdfunding, and what influences the credibility of passion as a signal. Journal: Venture Capital Pages: 109-130 Issue: 2 Volume: 26 Year: 2024 Month: 04 X-DOI: 10.1080/13691066.2023.2216876 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2216876 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:109-130 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2303663_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Andrew Isaak Author-X-Name-First: Andrew Author-X-Name-Last: Isaak Author-Name: Julia Neuhaus Author-X-Name-First: Julia Author-X-Name-Last: Neuhaus Author-Name: Denefa Bostandzic Author-X-Name-First: Denefa Author-X-Name-Last: Bostandzic Title: When personality pays: observer rating of personality and financial success of equity crowdfunded startups Abstract: This study investigates the value of third-party ratings of personality in investor pitches for predicting the investment intention and successful equity crowdfunding of U.S.-based startups. Based on 1175 ratings of 100 randomly selected investor pitch videos, we find that not only do investors’ impressions of entrepreneurs Big Five personality traits predict investment intention but that several of these also predict entrepreneurs’ actual crowdfunding success (particularly: openness, conscientiousness and extraversion). The study contributes to our knowledge of the links between (perceived) individual-level traits of the entrepreneur and their ability to finance a venture, a key challenge in the early stages of startups. Journal: Venture Capital Pages: 131-161 Issue: 2 Volume: 26 Year: 2024 Month: 04 X-DOI: 10.1080/13691066.2024.2303663 File-URL: http://hdl.handle.net/10.1080/13691066.2024.2303663 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:131-161 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2257887_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Jinyun Sun Author-X-Name-First: Jinyun Author-X-Name-Last: Sun Author-Name: Tianyi Zheng Author-X-Name-First: Tianyi Author-X-Name-Last: Zheng Title: How intuition works in venture investment: the holistic effect on decision making Abstract: To investigate into the cognitive perspective of venture investment, we performed a field experiment to explore the features and the effectiveness of the intuitive and analytic cognitive modes in the investment decision process. The results showed that intuitive investors care more about the business plan and benefit from the balanced and integrated consideration of both business plan and the entrepreneurial team to make more effective investment decision. The study’s contributions to multiple topics and future directions are discussed. Journal: Venture Capital Pages: 191-218 Issue: 2 Volume: 26 Year: 2024 Month: 04 X-DOI: 10.1080/13691066.2023.2257887 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2257887 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:191-218 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2234085_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Job J. Andreoli Author-X-Name-First: Job J. Author-X-Name-Last: Andreoli Author-Name: Johannes A. ten Rouwelaar Author-X-Name-First: Johannes A. Author-X-Name-Last: ten Rouwelaar Title: Venture capital investment selection: an exploratory assessment of the role of entrepreneur personality traits Abstract: The objective of this study is to investigate which entrepreneur traits are preferred by venture capitalists (VCs) in their investment selection for funds with financial and impact goals. This explorative study draws on the Big-Five framework in management, connects these with VCs’ investment selections and assesses VCs’ biases using newly gathered empirical data from VCs in the Netherlands. Our results reveal that financial and impact VCs portfolios seem to confirm the importance of education and experience and seek distinct entrepreneur personality traits. This study shows that, in addition to considering the traditional hard traits, entrepreneur soft traits influence the selection process and are impacted by a VC fund’s purpose. The findings on the entrepreneur personality traits may help to give substance to the often alluded to “gut feeling” of VCs in investment decisions. Journal: Venture Capital Pages: 163-189 Issue: 2 Volume: 26 Year: 2024 Month: 04 X-DOI: 10.1080/13691066.2023.2234085 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2234085 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:163-189 Template-Type: ReDIF-Article 1.0 # input file: TVEC_A_2254002_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Elodie Maureau Author-X-Name-First: Elodie Author-X-Name-Last: Maureau Author-Name: Caroline Tarillon Author-X-Name-First: Caroline Author-X-Name-Last: Tarillon Title: Shared mental models: a new approach to understanding entrepreneurs’ and investors’ representations Abstract: The literature on venture-capital investment and entrepreneurship has demonstrated the important role played by mental representations in the entrepreneur – investor relationship. This research draws on shared mental model (SMM) theory to structure a comparative analysis of investor and entrepreneur representations regarding success and the factors that influence it. Through 16 interviews conducted with four entrepreneur – investor pairs, we highlight the need to study representations in greater depth in order to identify potential misalignments. We demonstrate the relevance of SMMs and the use of cognitive maps in capturing and comparing actors’ representations through multi-level and multi-approach analysis. Journal: Venture Capital Pages: 219-246 Issue: 2 Volume: 26 Year: 2024 Month: 04 X-DOI: 10.1080/13691066.2023.2254002 File-URL: http://hdl.handle.net/10.1080/13691066.2023.2254002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:219-246