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:
<title/> 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Handle: RePEc:taf:veecee:v:5:y:2003:i:2:p:117-134
Template-Type: ReDIF-Article 1.0
Author-Name: Enrique DÃaz De Leó
Author-X-Name-First: Enrique DÃaz
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
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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
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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
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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
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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
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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
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Handle: RePEc:taf:veecee:v:5:y:2003:i:4:p:313-335
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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
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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
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Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:1-22
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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
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Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:23-45
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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
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Handle: RePEc:taf:veecee:v:6:y:2003:i:1:p:47-71
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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
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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
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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
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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
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Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:125-145
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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
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Handle: RePEc:taf:veecee:v:6:y:2004:i:2-3:p:147-172
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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</title> 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 <italic>ratification</italic>.
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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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
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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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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 <italic>et
al</italic>., 1995; Haines <italic>et al</italic>., 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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—<italic>financial subsidiary, industrial subsidiary,
independent</italic> and <italic>associate</italic>companies. This leads
to an introduction of the four paths most commonly cited by Taiwanese VCs
as roads to future growth: <italic>new industries, new markets, the bridge
proposition</italic> and <italic>the real VC</italic>. 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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 <italic>et
al</italic>., 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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:
<title>Abstract</title> 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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 <italic>half-open</italic>
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<italic>: life changing opportunity, enslavement, no
marriage</italic> and <italic>illusive alignment</italic>. 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
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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
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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
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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
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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
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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
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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
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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
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Handle: RePEc:taf:veecee:v:11:y:2008:i:1:p:23-54
Template-Type: ReDIF-Article 1.0
Author-Name: G. RomanÃ
Author-X-Name-First: G.
Author-X-Name-Last: RomanÃ
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
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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
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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
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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 <italic>at</italic> 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Handle: RePEc:taf:veecee:v:12:y:2009:i:4:p:267-283
Template-Type: ReDIF-Article 1.0
Author-Name: Pedro OrtÃn-Ángel
Author-X-Name-First: Pedro
Author-X-Name-Last: OrtÃn-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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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. <italic>Informal venture capital: Investors,
investments and policy in Finland</italic>. 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
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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
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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 <italic>lower</italic> 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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:
<title/> 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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. HechavarrÃa
Author-X-Name-First: Diana M.
Author-X-Name-Last: HechavarrÃa
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
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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
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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
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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
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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
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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
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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
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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
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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 templatesâ€, 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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-angelsâ€, 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 gameâ€, 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:1:p:1-23
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# 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!â€: 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:2:p:137-171
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# input file: catalog-resolver2077576318301636614.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220713T202513 git hash: 99d3863004
Author-Name: MarÃa Nela Seijas-Giménez
Author-X-Name-First: MarÃa 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:2:p:173-201
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# 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:2:p:105-135
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# 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:287-308
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# 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:203-286
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# 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:335-358
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# 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 methodsâ€, “intellectual property valuation methodsâ€, “technology valuation methodsâ€, and “startups valuation methodsâ€. 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
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Handle: RePEc:taf:veecee:v:24:y:2022:i:3-4:p:309-334
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# 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
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# 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
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Handle: RePEc:taf:veecee:v:25:y:2023:i:1:p:65-90
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# 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
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# 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 MarÃa Parra Oller
Author-X-Name-First: Isabel MarÃa
Author-X-Name-Last: Parra Oller
Author-Name: Ãlvaro Rezola
Author-X-Name-First: Ãlvaro
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
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# 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
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# 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
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# 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-Ã -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
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Handle: RePEc:taf:veecee:v:25:y:2023:i:2:p:135-160
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# 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
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# 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
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# 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
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Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:219-254
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# 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
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Handle: RePEc:taf:veecee:v:25:y:2023:i:3:p:205-217
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# 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: MartÃn SolÃs
Author-X-Name-First: MartÃn
Author-X-Name-Last: SolÃs
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
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# 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-RodrÃguez
Author-X-Name-First: E. C.
Author-X-Name-Last: Castillo-RodrÃguez
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
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# 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
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Handle: RePEc:taf:veecee:v:25:y:2023:i:4:p:457-486
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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# 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
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Handle: RePEc:taf:veecee:v:26:y:2024:i:2:p:191-218
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# 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
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# 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
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# input file: TVEC_A_2196032_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a
Author-Name: Yuanqing Li
Author-X-Name-First: Yuanqing
Author-X-Name-Last: Li
Author-Name: Sibin Wu
Author-X-Name-First: Sibin
Author-X-Name-Last: Wu
Author-Name: Wencang Zhou
Author-X-Name-First: Wencang
Author-X-Name-Last: Zhou
Title: The effect of syntax simplicity on crowdfunding performance
Abstract:
Using elaboration of likelihood model, this study examines how syntactic structure (structural and lexical simplicity) and nonverbal cues (smiling and professional attire) interact to influence crowdfunding performance. By studying 209 crowdfunding projects, we show that both structural simplicity and lexical simplicity are positively related to crowdfunding performance. Further, professional attire strengthens the simplicity and performance relationship. However, smiling shows mixed effects.
Journal: Venture Capital
Pages: 303-326
Issue: 3
Volume: 26
Year: 2024
Month: 07
X-DOI: 10.1080/13691066.2023.2196032
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2196032
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# input file: TVEC_A_2185168_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a
Author-Name: Pankaj C. Patel
Author-X-Name-First: Pankaj C.
Author-X-Name-Last: Patel
Author-Name: C. S. Richard Chan
Author-X-Name-First: C. S. Richard
Author-X-Name-Last: Chan
Title: The influence of differences between venture studios on differences in venture outcomes
Abstract:
Venture studios present an intriguing proposition for entrepreneurship theory – a shift from venturing as an entrepreneur-driven activity to venturing as an “assembly line†serialization in an organization. We ask the question whether between-venture studio differences explain the differences in outcomes among the ventures they create. We hypothesize that venture studios explain meaningful variance in explaining venture outcomes. Our empirical study is based on a sample of 350 venture studios from 34 countries, 257 industries, and startup-founding years, ranging from 1994 to 2022. We focus on the sales, employees, and whether the venture was acquired or went IPO. Using variance decomposition analysis, we find that differences in venture studios explain most of the variance in differences in venture outcomes (~30%), with low teens to single-digit variances explained by studio-founding year, venture founding year, country, and industry effects. To our knowledge, this is the largest and most comprehensive empirical study of venture studios to date, and variance decomposition analysis presents an important first step to assessing whether the unique resources and the transaction cost benefits afforded by venture studios explain differences in performance between ventures.
Journal: Venture Capital
Pages: 283-301
Issue: 3
Volume: 26
Year: 2024
Month: 07
X-DOI: 10.1080/13691066.2023.2185168
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2185168
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# input file: TVEC_A_2218993_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a
Author-Name: Haixia Hao
Author-X-Name-First: Haixia
Author-X-Name-Last: Hao
Author-Name: Lihong Guo
Author-X-Name-First: Lihong
Author-X-Name-Last: Guo
Author-Name: Jianwei Dong
Author-X-Name-First: Jianwei
Author-X-Name-Last: Dong
Title: Do foreign and domestic venture capital firms differ in replacing CEOs of portfolio companies?
Abstract:
Using a sample of 5,383 investment events of venture capital firms (VCs) investing in Chinese companies between 1997 and 2017, we investigate how levels of human capital of chief executive officers (CEOs) of portfolio companies affect tendencies of foreign and domestic VCs to replace CEOs. We find that domestic and foreign VCs are similar in that they are both less likely to replace CEOs of their portfolio companies if CEOs have higher levels of human capital. Furthermore, we find that domestic and foreign VCs exhibit significant differences in CEO replacement when not considering CEO human capital or when CEOs have lower levels of human capital. Results are consistent with our hypotheses that foreign VCs rely on CEO human capital as a stronger quality signal than domestic VCs, because they have more difficulty monitoring CEOs’ post-investment performance. On the contrary, the geographical and cultural proximity of domestic VCs enables them to obtain information other than CEO human capital, such as CEOs’ social skills, potential, entrepreneurial passion, and charisma, to make replacement decisions. The study advances our understanding of the behavioral differences between domestic and foreign VCs in the post-investment management process.
Journal: Venture Capital
Pages: 327-349
Issue: 3
Volume: 26
Year: 2024
Month: 07
X-DOI: 10.1080/13691066.2023.2218993
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2218993
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# input file: TVEC_A_2210757_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a
Author-Name: Purnima Rao
Author-X-Name-First: Purnima
Author-X-Name-Last: Rao
Author-Name: Satish Kumar
Author-X-Name-First: Satish
Author-X-Name-Last: Kumar
Author-Name: Shubhangi Verma
Author-X-Name-First: Shubhangi
Author-X-Name-Last: Verma
Title: Evolution and trends in entrepreneurial finance: reflections and insights from COVID-19
Abstract:
Entrepreneurship contributes substantially to the modernization and commercial development of an economy. Access to financial resources is key to the successful operation of new ventures which is arrested by COVID-19. Therefore, the present study aims to address the architecture of entrepreneurial finance since the inception of COVID-19. The research adopts a Systematic literature review approach to study the 127 articles chosen for analysis. The findings reveal the usage of novel sources of finance such as crowdfunding, and Initial Coin Offerings during COVID-19. Apart from this, the research also encapsulates the contributions of the articles on venture capital, P2P lending, and angel finance. Also, the study highlights promising avenues for future research focusing on different financing options and drivers of financing choices.
Journal: Venture Capital
Pages: 247-282
Issue: 3
Volume: 26
Year: 2024
Month: 07
X-DOI: 10.1080/13691066.2023.2210757
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2210757
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# input file: TVEC_A_2205606_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a
Author-Name: Robyn Owen
Author-X-Name-First: Robyn
Author-X-Name-Last: Owen
Author-Name: Lakshmi Narasimhan Vedanthachari
Author-X-Name-First: Lakshmi Narasimhan
Author-X-Name-Last: Vedanthachari
Author-Name: Javed Hussain
Author-X-Name-First: Javed
Author-X-Name-Last: Hussain
Title: The role of the university entrepreneurial ecosystem in entrepreneurial finance: case studies of UK innovation knowledge centres
Abstract:
How to commercialize university research and create positive socio-economic impact is a fundamental research question that is under explored. Considerable public funds are invested in universities globally to create knowledge and then to explore its viability to exploit commercial value through supporting entrepreneurship. We explore how publicly funded research and commercialization of projects promote university’s science and technology (S&T) initiatives. Qualitative case studies, involving 45 interviews, examine three UK government-funded Innovation Knowledge Centres’ (IKCs) roles in commercializing three different emerging disruptive technologies: cyber security, digital construction and synthetic biology. An improved entrepreneurial finance (“entfinâ€) ecosystem is the catalyst to promote innovation, through public funds to empower industry and deliver an effective finance escalator. A “WHO†policy analysis framework examines: the “Why†rationale for public investment; “How†process of translation; and “Outcomesâ€. This identified how Entrepreneurial Finance combined with Intermediaries, Infrastructure, Training and Leadership impacts scientific research commercialization. We reveal several inter connectors that link maturity of projects, their locality and outcome horizons. Universities play an important intermediary role, regionally and globally to connect the wider entfin ecosystems. The conclusions suggest that government needs to improve the policy mix across university ecosystem actors to improve long horizon investment.
Journal: Venture Capital
Pages: 351-375
Issue: 3
Volume: 26
Year: 2024
Month: 07
X-DOI: 10.1080/13691066.2023.2205606
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2205606
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# input file: TVEC_A_2195127_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024
Author-Name: Ali Abdallah Alalwan
Author-X-Name-First: Ali Abdallah
Author-X-Name-Last: Alalwan
Author-Name: Abdullah M. Baabdullah
Author-X-Name-First: Abdullah M.
Author-X-Name-Last: Baabdullah
Author-Name: Abdulla Hamad M. A. Fetais
Author-X-Name-First: Abdulla Hamad M. A.
Author-X-Name-Last: Fetais
Author-Name: Raed S. Algharabat
Author-X-Name-First: Raed S.
Author-X-Name-Last: Algharabat
Author-Name: Ramakrishnan Raman
Author-X-Name-First: Ramakrishnan
Author-X-Name-Last: Raman
Author-Name: Yogesh K. Dwivedi
Author-X-Name-First: Yogesh K.
Author-X-Name-Last: Dwivedi
Title: SMEs entrepreneurial finance-based digital transformation: towards innovative entrepreneurial finance and entrepreneurial performance
Abstract:
The antecedents and determinants of entrepreneurial capabilities and competencies remain one of the incontestable questions that drive the exploitation and discovery of effective financial and digital opportunities. In the present paper, we propose a conceptual model based on Kirzner’s alertness theory [entrepreneurial alertness] and rely on two factors [entrepreneurial orientation and marketing orientation] as key accelerators of entrepreneurial financial alertness. We assume that entrepreneurial financial alertness (EFA) might have a direct impact on entrepreneurial finance-based digital transformation (EFDT), which in turn, is expected to predict both innovation entrepreneurial finance (IEF) and SMEs’ entrepreneurial performance (SMEEP). Structural equation modeling (SEM) was employed using data collected from a purposive sample size of 214 Jordanian entrepreneurs. Our findings largely support the impact of EFA on EFDT. EFDT was also supported having a significant impact on both IEF and SMEEP. Our study has many implications for both researchers and practitioners in the area of entrepreneurial finance-based digital transformation. The study has great added-value by proposing and examining a solid theoretical foundation covering the most influential factors that drive digital entrepreneurial transformation as such transformation stands as an emerging and pressing issue, not fully tackled by prior studies.
Journal: Venture Capital
Pages: 401-429
Issue: 4
Volume: 26
Year: 2024
Month: 10
X-DOI: 10.1080/13691066.2023.2195127
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2195127
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# input file: TVEC_A_2221392_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024
Author-Name: Colin Donaldson
Author-X-Name-First: Colin
Author-X-Name-Last: Donaldson
Author-Name: Jorge Villagrasa
Author-X-Name-First: Jorge
Author-X-Name-Last: Villagrasa
Author-Name: Heidi Neck
Author-X-Name-First: Heidi
Author-X-Name-Last: Neck
Title: The impact of an entrepreneurial ecosystem on student entrepreneurship financing: a signaling perspective
Abstract:
Extant research in entrepreneurship reveals that financial resource acquisition for student entrepreneurs is constrained by several factors including a lack of experience, domain expertise and underdeveloped social networks. What follows are accentuated risks of failure that can discourage students from entering the entrepreneurial career pathway. To attenuate resource shortcomings and information asymmetries, student entrepreneurs can signal their underlying qualities to other entrepreneurial actors through informational cues. These signals are embedded in the norms and rules of a specific context; however, much of the research related to signals has been devoid of contextual understanding. Building on the notion that signals do not operate in a vacuum, our attention in the present work is directed from an entrepreneurial ecosystem perspective and the impact this specific context can have on signal generation and interpretation. We build our contribution by extending signaling theory via a multiple case study of eight student entrepreneurs operating in an emerging privately governed entrepreneurial ecosystem located in Valencia, Spain. We contextualize four pathways that students followed towards entrepreneurial financing, creating four student entrepreneur profiles. Several useful contributions to the study of student entrepreneurship, signaling theory, and entrepreneurial ecosystem theory are made.
Journal: Venture Capital
Pages: 431-466
Issue: 4
Volume: 26
Year: 2024
Month: 10
X-DOI: 10.1080/13691066.2023.2221392
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2221392
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# input file: TVEC_A_2234078_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024
Author-Name: Yan Alperovych
Author-X-Name-First: Yan
Author-X-Name-Last: Alperovych
Author-Name: Riccardo Calcagno
Author-X-Name-First: Riccardo
Author-X-Name-Last: Calcagno
Author-Name: Martijn Lentz
Author-X-Name-First: Martijn
Author-X-Name-Last: Lentz
Title: Entrepreneurs on their financial literacy: evidence from the Netherlands
Abstract:
Using a representative survey of Dutch entrepreneurs and self-employed individuals, (i) we measure their subjective financial knowledge and the extent to which they ask for advice when managing their companies, and (ii) we examine whether subjective financial knowledge and the demand for advice are related to the firm economic performance. We find that the respondents feel more comfortable with accounting subjects than they do with strategic ones, of which they feel that they know the least. Entrepreneurs with a greater extent of financial knowledge are more likely to report a higher gross margin and higher revenue growth for their firm. These entrepreneurs are also less likely to seek advice and to delegate financial decisions. Seeking professional advice does not increase the likelihood of an entrepreneur having better performance. Our results suggest that entrepreneurs’ degree of financial knowledge is related to the success of their businesses, while seeking advice is not significantly correlated with better firm performance.
Journal: Venture Capital
Pages: 377-400
Issue: 4
Volume: 26
Year: 2024
Month: 10
X-DOI: 10.1080/13691066.2023.2234078
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2234078
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# input file: TVEC_A_2238901_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024
Author-Name: Wan Jiang
Author-X-Name-First: Wan
Author-X-Name-Last: Jiang
Author-Name: Hongyu Zhang
Author-X-Name-First: Hongyu
Author-X-Name-Last: Zhang
Author-Name: Joanna Nakonieczny
Author-X-Name-First: Joanna
Author-X-Name-Last: Nakonieczny
Author-Name: Fouad Jamaani
Author-X-Name-First: Fouad
Author-X-Name-Last: Jamaani
Title: Social capital, financial intelligence, and entrepreneurial financial performance: evidence from the post-pandemic challenges
Abstract:
The convergence of social capital and financial intelligence becomes a dynamic catalyst in the realm of post-pandemic challenges, promoting entrepreneurial financial performance to unforeseen levels as businesses use networks, knowledge, and financial expertise to overcome challenges and grasp new opportunities. Hence, the study explores the factors that influence entrepreneurial financial performance of employees in Pakistan’s corporate sector. Using two theoretical frameworks, Regulatory Focus Theory and Rubicon Four-Phase Action Model in Entrepreneurship, study identifies essential traits for entrepreneurship and their direct correlation with financial success. The study utilized a survey questionnaire to gather responses from 276 employees of the corporate sector involved in entrepreneurial activities. The findings suggest that financial literacy, financial risk tolerance, entrepreneurial competency, and social capital positively impact an entrepreneur’s locus of control and financial intelligence. Financial literacy equips entrepreneurs with necessary skills and knowledge to manage finances effectively, identify potential financial risks, and increase profitability. Financial risk tolerance enables entrepreneurs to understand financial markets better and make sound financial decisions. Entrepreneurial competency leads to sound financial decision-making and control of financial outcomes. Social capital provides valuable resources, information, and support to improve financial decision-making skills.
Journal: Venture Capital
Pages: 467-495
Issue: 4
Volume: 26
Year: 2024
Month: 10
X-DOI: 10.1080/13691066.2023.2238901
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2238901
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# input file: TVEC_A_2240019_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Dolores Botella-Carrubi
Author-X-Name-First: Dolores
Author-X-Name-Last: Botella-Carrubi
Author-Name: Klaus Ulrich-Berenguer
Author-X-Name-First: Klaus
Author-X-Name-Last: Ulrich-Berenguer
Author-Name: Domingo E. Ribeiro Soriano
Author-X-Name-First: Domingo E.
Author-X-Name-Last: Ribeiro Soriano
Title: What entrepreneurial skills are the key to startup finance performance?
Abstract:
Startups play an important role in the development of the economy, as they help improve technological and innovative capacity. The competitive advantage of startups depends to a large extent on their human resources, since their uncertain operations require a team with an adequate skill profile to manage uncertainty. Previous studies have shown that entrepreneurial skills can contribute to business performance and growth. Accordingly, this research aims to analyze how entrepreneurial skills influence the organizational performance of startups. For this purpose, we have carried out an empirical research in 70 Spanish startups to study the following skills: development of opportunities, creativity, problem solving, leadership, professional relationships, use of new technologies and cloud storage. To measure business growth, two variables are measured: company profits and sales. This research has been conducted through fuzzy set qualitative comparative analysis (fsQCA) and the result shows that there is an increase in sales when the skills of develop opportunities in products, services or markets; creativity; problem solving; use of technology and trust on cloud storage are present. Regarding company profits, in most configurations it is clear that the conditions that lead to increased them are the ability to solve problems and the application of new technologies.
Journal: Venture Capital
Pages: 21-41
Issue: 1
Volume: 27
Year: 2025
Month: 01
X-DOI: 10.1080/13691066.2023.2240019
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2240019
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# input file: TVEC_A_2249231_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Belen Ribeiro-Navarrete
Author-X-Name-First: Belen
Author-X-Name-Last: Ribeiro-Navarrete
Author-Name: M. Ãngeles López-Cabarcos
Author-X-Name-First: M. Ãngeles
Author-X-Name-Last: López-Cabarcos
Author-Name: Juan Piñeiro-Chousa
Author-X-Name-First: Juan
Author-X-Name-Last: Piñeiro-Chousa
Author-Name: Virginia Simón-Moya
Author-X-Name-First: Virginia
Author-X-Name-Last: Simón-Moya
Title: The moment is now! From digital transformation to environmental performance
Abstract:
Technological development has experienced exponential growth in recent years, giving rise to important digital transformation processes at the company level. In order to ensure that these digital transformation processes achieve the desired results, it is essential to draw a strategic roadmap of the processes from vision to implementation. This implies combining design and management activities with thought and action abilities. Digital transformation, always complex, becomes less certain and more interesting when considering results related to environmental issues. This study aims to analyze how the combined effect of five variables (digital vision, digital orientation, digital strategy, transformation management intensity, digital management and departmental agility) – related to digital transformation and categorized as design, management, thought and action – lead to environmental performance. The study uses a sample of agro-industrial cooperatives and fuzzy-set qualitative comparative analysis. The results of the necessity and sufficiency analysis indicate that some of the design variables (especially digital vision and digital strategy) need to be present to lead to environmental performance. Likewise, the absence of the two management variables (especially digital management transformation) leads to the absence of environmental performance. The paper demonstrates the need to combine design and management activities and thought and action abilities to lead to the presence of environmental performance.
Journal: Venture Capital
Pages: 43-78
Issue: 1
Volume: 27
Year: 2025
Month: 01
X-DOI: 10.1080/13691066.2023.2249231
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2249231
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# input file: TVEC_A_2240024_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Guillaume Andrieu
Author-X-Name-First: Guillaume
Author-X-Name-Last: Andrieu
Author-Name: Aurélie Sannajust
Author-X-Name-First: Aurélie
Author-X-Name-Last: Sannajust
Title: ICOs after the decline: a literature review and recommendations for a sustainable development
Abstract:
Initial coin offerings (ICOs) are an alternative financing source for startups. Based on blockchain technology, they allow entrepreneurs to raise funds digitally, ensuring speed and low costs. ICOs increased significantly in number and size until the first quarter of 2018, and then the market declined. Mismanagement and fraud are suspected to be the cause. In this respect, our paper analyzes the literature on ICO benefits and challenges and provides recommendations for sustainable ICO activity.
Journal: Venture Capital
Pages: 1-19
Issue: 1
Volume: 27
Year: 2025
Month: 01
X-DOI: 10.1080/13691066.2023.2240024
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2240024
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# input file: TVEC_A_2260101_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Meike Siefkes
Author-X-Name-First: Meike
Author-X-Name-Last: Siefkes
Author-Name: Øyvind Bjørgum
Author-X-Name-First: Øyvind
Author-X-Name-Last: Bjørgum
Author-Name: Roger Sørheim
Author-X-Name-First: Roger
Author-X-Name-Last: Sørheim
Title: Business angels investing in green ventures: how do they add value to their start-ups?
Abstract:
This study investigates how business angels (BAs) add sustainability value to green ventures and how these value-adding activities are dependent on the BAs’ sustainability characteristics, i.e., motivation to invest, sustainability competence, and sustainability investor activity. This explorative qualitative study is based on interviews with 14 BAs from Germany and the Nordics. A cross-case analysis of the interview data reveals that different groups of BAs invest in green start-ups: green angels and light green angels. These BAs differ in their motivation for investing in green start-ups, with some wanting to contribute to the sustainability transition and others investing to be a part of the shift of capital and talent toward green ventures. The BAs offer different sustainability-value-adding activities to their start-ups. Green angels provide activities that are aimed at enhancing the sustainability performance of their investees. Light green BAs add value very similar to conventional BAs. This study contributes to the green entrepreneurial finance literature by exploring the specificity of green angels. By shedding light on how BAs add sustainability value as investors for green ventures, the study places green angels more distinctly in the ecosystem of early-stage financing for green start-ups.
Journal: Venture Capital
Pages: 79-108
Issue: 1
Volume: 27
Year: 2025
Month: 01
X-DOI: 10.1080/13691066.2023.2260101
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2260101
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# input file: TVEC_A_2285997_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Thomas Boryniec
Author-X-Name-First: Thomas
Author-X-Name-Last: Boryniec
Author-Name: Chenxi Li
Author-X-Name-First: Chenxi
Author-X-Name-Last: Li
Author-Name: Yi Tan
Author-X-Name-First: Yi
Author-X-Name-Last: Tan
Title: A survey of cross-border venture capital research
Abstract:
Cross-border venture capital (CBVC) research is becoming increasingly important due to globalisation and its role as a key economic driver of development. As a result, the interest in the domain has been steadily growing in recent years and attracted much attention from top scholars worldwide. Our research provides a comprehensive overview of the growing body of academic research regarding cross-border venture capital. Based on a thorough screening and selection process of literature and an in-depth analysis, we review, summarise, compare, and evaluate the literature on a wide array of topics related to CBVC and identify existing general and theoretical trends over the past three decades. At last, we discuss research gaps and propose avenues for future research.
Journal: Venture Capital
Pages: 109-170
Issue: 2
Volume: 27
Year: 2025
Month: 04
X-DOI: 10.1080/13691066.2023.2285997
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2285997
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# input file: TVEC_A_2282542_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Kris Irwin
Author-X-Name-First: Kris
Author-X-Name-Last: Irwin
Author-Name: William McDowell
Author-X-Name-First: William
Author-X-Name-Last: McDowell
Author-Name: Samuel Ribeiro-Navarrete
Author-X-Name-First: Samuel
Author-X-Name-Last: Ribeiro-Navarrete
Title: How can women entrepreneurs overcome funding challenges: the role of digitalization and innovation
Abstract:
Entrepreneurs must overcome various hurdles that pose a threat to starting or growing their businesses. For example, women entrepreneurs face challenges including gender differences, entrepreneurial financing, innovation processes, and commercialization of technology. One avenue to enhance the accessibility of financial support and promote entrepreneurship via digitalization is to counteract or diminish the biases seen in traditional sources of funding for entrepreneurs belonging to ethnic or gender minority groups, including women-owned small and medium-sized enterprises. We propose that additional research is needed to account for the context of the Fourth Industrial Revolution and multi-level factors that may influence a women entrepreneur’s decision to obtain financing including digital skills and women-focused resource groups. We outline a typology of attributes and subsequent impacts for how to obtain financing and extend the discussion of how the evolving entrepreneurial ecosystem include a multitude of financing alternatives. Future research and policies should incorporate the evolving and expansive investment opportunities within the context of the digital entrepreneurial environment to help the advancement of women-led businesses.
Journal: Venture Capital
Pages: 225-247
Issue: 2
Volume: 27
Year: 2025
Month: 04
X-DOI: 10.1080/13691066.2023.2282542
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2282542
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# input file: TVEC_A_2265565_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Ammara Mahmood
Author-X-Name-First: Ammara
Author-X-Name-Last: Mahmood
Author-Name: Sepideh Yeganegi
Author-X-Name-First: Sepideh
Author-X-Name-Last: Yeganegi
Title: Lexical sophistication and crowdfunding outcomes
Abstract:
It is advised that entrepreneurs should keep the language of venture descriptions short and simple. However, knowledge about the conditions under which language in crowdfunding communications impacts investment behavior is limited. We propose that the use of sophisticated language in crowdfunding venture descriptions creates perceptions of venture distinctiveness that, in turn, increase the amount invested. We test this proposed mechanism across a controlled experiment and present evidence from 886 crowdfunding campaigns that increasing the linguistic sophistication of campaign descriptions can result in a 20% increase in the amount raised by a campaign and greater campaign success. Furthermore, we show that the impact of lexical sophistication on the amount raised is moderated by investor experience whereby experienced investors invest more in ventures with sophisticated language compared to inexperienced investors. Our work contributes to research on communication in crowdfunding by highlighting the significance of lexical sophistication in influencing funding behaviour.
Journal: Venture Capital
Pages: 171-202
Issue: 2
Volume: 27
Year: 2025
Month: 04
X-DOI: 10.1080/13691066.2023.2265565
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2265565
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# input file: TVEC_A_2270162_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Seyfettin ErdoÄŸan
Author-X-Name-First: Seyfettin
Author-X-Name-Last: ErdoÄŸan
Author-Name: Tuğba Kantarcı
Author-X-Name-First: TuÄŸba
Author-X-Name-Last: Kantarcı
Author-Name: Durmuş Çağrı Yıldırım
Author-X-Name-First: Durmuş Çağrı
Author-X-Name-Last: Yıldırım
Title: Does economic policy uncertainty affect venture capital investments for OECD countries?
Abstract:
Economic policy uncertainty (EPU) has significant effects on the real economy. Therefore, this study aims to investigate the effects of economic policy uncertainty on venture capital, a special financing form. In this study, the effects of economic uncertainty on venture capital for 14 OECD countries are investigated between 2007 and 2020 years. The results show that the increase in economic uncertainty in the long term increases venture capital investments in developed countries. The contributions of the study are demonstrating how venture capital reacts to economic policy uncertainty and using up-to-date methods that allow soft transitions to studying long-term relations between series.
Journal: Venture Capital
Pages: 203-223
Issue: 2
Volume: 27
Year: 2025
Month: 04
X-DOI: 10.1080/13691066.2023.2270162
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2270162
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# input file: TVEC_A_2285998_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462
Author-Name: Francisco Bastida
Author-X-Name-First: Francisco
Author-X-Name-Last: Bastida
Author-Name: Mohammad Nurunnabi
Author-X-Name-First: Mohammad
Author-X-Name-Last: Nurunnabi
Author-Name: Vaughan Scott
Author-X-Name-First: Vaughan
Author-X-Name-Last: Scott
Title: Micro, Small & Medium Enterprises’ need for digitization to counteract COVID-19: From “nice-to-have†to “must-have�
Abstract:
The impact of COVID-19 on Micro, Small & Medium Enterprises (MSMEs) has been devastating. Digitization has been one of the core strategies to cushion the impact of the pandemic. Based upon a questionnaire distributed in October 2020 to a sample of 345 US, 100 UK and 100 Indian MSMEs, we empirically investigate the determinants of MSMEs’ digitization as a strategy to confront the pandemic. Prior digital experience and company size seem to be predictive of the ability to implement new digital strategies during the pandemic. Our data also show that digital MSMEs expected lower sales drop caused by COVID-19. As policy implications, governments should target non-digital, smaller MSMEs to help them engage in digital transformation.
Journal: Venture Capital
Pages: 249-269
Issue: 2
Volume: 27
Year: 2025
Month: 04
X-DOI: 10.1080/13691066.2023.2285998
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2285998
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# input file: TVEC_A_2300144_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115
Author-Name: Samela Kivilo
Author-X-Name-First: Samela
Author-X-Name-Last: Kivilo
Author-Name: Antons Tesliuks
Author-X-Name-First: Antons
Author-X-Name-Last: Tesliuks
Author-Name: Ãgnes Lublóy
Author-X-Name-First: Ãgnes
Author-X-Name-Last: Lublóy
Title: Factors influencing US equity-crowdfunded companies’ ability to survive
Abstract:
This study investigates the factors being associated with equity-crowdfunded companies’ likelihood of survival in the US. We focus on factors observable to crowdinvestors, either being set by entrepreneurs (signals) or being non-alterable (determinants), at least in the short run. Such observable factors at the time of crowdinvesting include company and campaign characteristics, growth potential, and company riskiness. Cox proportional hazards model is used on a sample of 429 US equity-crowdfunded companies. We find that 89% of the companies survived for a minimum of three years after a successfully funded initial equity offering. This survival rate is around ten percentage points higher than in Europe. We document that equity retention, funding goal, and current year revenue estimate are associated with the likelihood of building an enduring business. Higher proportion of equity offered to crowdinvestors signals lower investment quality and thus lower probability of survival. In contrast, companies with higher funding target and current year revenue have better prospects for survival after a successful equity offering. The funding goal affects the probability of survival through the capital intensity channel; if a company in a capital intense industry has been successfully funded, the threat from the competitors is lower given the high entry barriers.
Journal: Venture Capital
Pages: 375-402
Issue: 3
Volume: 27
Year: 2025
Month: 07
X-DOI: 10.1080/13691066.2023.2300144
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2300144
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# input file: TVEC_A_2297753_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115
Author-Name: Qianlong Yu
Author-X-Name-First: Qianlong
Author-X-Name-Last: Yu
Author-Name: Ziwen Li
Author-X-Name-First: Ziwen
Author-X-Name-Last: Li
Author-Name: Guihan Wang
Author-X-Name-First: Guihan
Author-X-Name-Last: Wang
Author-Name: Dandan Chen
Author-X-Name-First: Dandan
Author-X-Name-Last: Chen
Title: Have credit risk mitigation warrants eased the difficulty and the cost of financing for private enterprises?
Abstract:
The Credit Risk Mitigation Warrants (CRMW), as the primary tools for supporting bond financing for Chinese private enterprises, have the capacity to guide the market in reducing risk concerns associated with private enterprises and alleviating their financing challenges. Consequently, CRMW has garnered sustained attention and support within the bond market. Few empirical studies have analyzed the effects of CRMW on private enterprise bonds in the Chinese market. Using a sample of 1,171 bonds issued by 210 private firms between 2018 and 2020, we conducted an empirical analysis to examine CRMW’s effect on the enthusiasm for private enterprise bond subscriptions and issuance costs. We find that private enterprises issuing bonds with CRMW can significantly increase the enthusiasm for bond subscriptions. CRMW’s effects in expanding such enthusiasm are more evident among high-rated private enterprises. The CRMW is more effective in non-listed, smaller-asset enterprises, while the effects of reducing bond issuance costs are more significant in lower-rated private enterprises. This study provides precise empirical evidence for lowering the difficulty of private corporate bond financing for CRMW. The study also addresses the debate in existing literature regarding whether CRMW reduces the cost of debt financing for private enterprises, and provides references for policy improvements related to CRMW.
Journal: Venture Capital
Pages: 345-373
Issue: 3
Volume: 27
Year: 2025
Month: 07
X-DOI: 10.1080/13691066.2023.2297753
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2297753
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# input file: TVEC_A_2295252_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115
Author-Name: Yucheng Zhang
Author-X-Name-First: Yucheng
Author-X-Name-Last: Zhang
Author-Name: Dan Wang
Author-X-Name-First: Dan
Author-X-Name-Last: Wang
Author-Name: Miles M. Yang
Author-X-Name-First: Miles M.
Author-X-Name-Last: Yang
Author-Name: Jing Li
Author-X-Name-First: Jing
Author-X-Name-Last: Li
Author-Name: Siqi Liu
Author-X-Name-First: Siqi
Author-X-Name-Last: Liu
Title: A bibliometric review of early-stage entrepreneurial equity financing: an overview and future research agenda
Abstract:
Rich research on the sources of entrepreneurial capital has gradually been developed in the field of entrepreneurial equity financing. However, diverse and segmented research approaches hinder our understanding of the overall development of early-stage entrepreneurial equity financing in this context. Supplementing the previous methods for conducting research reviews and exploiting visual networks, this study uses a combination of bibliometrics and textual analysis to review the scope and evolution of early-stage entrepreneurial equity financing-related research. Our primary sample of 3,713 studies includes 108,385 secondary documents; these documents comprise the references cited by our primary sample records. We visually describe the field distribution, conceptual structure, and network connections of early-stage entrepreneurial equity financing-related publications over the 36-year period from 1987 to 2022. This paper also maps out hot topics and burgeoning trends through an analysis of the evolution of keywords in relevant publications. Our study contributes to the early-stage entrepreneurial equity financing literature by systematically reviewing the knowledge landscape in this field and identifying and articulating promising new research directions.
Journal: Venture Capital
Pages: 299-344
Issue: 3
Volume: 27
Year: 2025
Month: 07
X-DOI: 10.1080/13691066.2023.2295252
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2295252
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# input file: TVEC_A_2286000_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115
Author-Name: Jonathan Taglialatela
Author-X-Name-First: Jonathan
Author-X-Name-Last: Taglialatela
Author-Name: Roberto Barontini
Author-X-Name-First: Roberto
Author-X-Name-Last: Barontini
Title: Prior co-investments and exits: a study on European venture capital syndicates
Abstract:
Building on recent developments in the literature, we investigated whether the practice of repeatedly investing with the same partners impacts outcomes for venture capital syndicates. Research shows that European venture capitalists have different attitudes to their American counterparts, which might result in a different ability in benefiting from prior co-investing activities. Hence, we analysed how successful prior collaborations and the concentration of prior ties in an investment syndicate affects the probability of successfully exiting an investment. We also examined the role of prior ties as a determinant of the time to successful exit. From an analysis of 922 first-ever syndicated rounds in Europe between 2000 and 2009, we find that prior ties are not a significant determinant of successful exits. However, prior successful collaborations do play a significant role, as does the concentration of prior ties. We also find that a U-shaped relationship links prior co-investments with the to time to exit. These results should be helpful for managers involved in inter-organisational investment collaborations and to policymakers looking for ways to spur the European venture capital ecosystem.
Journal: Venture Capital
Pages: 271-298
Issue: 3
Volume: 27
Year: 2025
Month: 07
X-DOI: 10.1080/13691066.2023.2286000
File-URL: http://hdl.handle.net/10.1080/13691066.2023.2286000
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# input file: TVEC_A_2510722_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115
Author-Name: The Editors
Title: Correction
Journal: Venture Capital
Pages: I-I
Issue: 3
Volume: 27
Year: 2025
Month: 07
X-DOI: 10.1080/13691066.2025.2510722
File-URL: http://hdl.handle.net/10.1080/13691066.2025.2510722
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Handle: RePEc:taf:veecee:v:27:y:2025:i:3:p:I-I