Search

Startup accelerators, which aim to improve the set of choices representing a startup's entry strategy, have become increasingly influential in both regional development and the strategies of individual startups. This article explores an accelerator's impact on startup performance and whether that impact varies substantially by features of the startup's founding environment. Leveraging data from a leading startup accelerator, I use a regression discontinuity framework to hold startup quality constant so that I can compare the performance of admitted startups to those that do not make the cut, and I examine whether any observed performance differentials are driven by accelerator admission and by characteristics of the startup's earlier environment. I find evidence that startups from better pre-accelerator environments experience stronger gains from accelerator admission. I also find evidence of home bias, as local startups have a stronger treatment effect. These results provide evidence of ecosystem effects whereby the impact of one organizational sponsor in an ecosystem is strongly moderated by other features in the ecosystem. The findings help to explain the concentration of accelerator programs in already successful entrepreneurial ecosystems and reveal how such programs may interact with founding environments to complement resource abundance or magnify prior resource inequalities. [ABSTRACT FROM AUTHOR]

We exploit the staggered introduction of liability waivers when investors hold stakes in conflicting business opportunities as a shock to venture capital (VC) investment and director networks. After the law changes, we find increases in within-industry VC investment and common directors serving on startup boards. Despite the potential for rent extraction, same-industry startups inside VC portfolios benefit by raising more capital, failing less, and exiting more successfully. VC directors serving on other startup boards are the primary mechanism associated with positive outcomes, consistent with common VC investment facilitating informational exchanges in VC portfolios. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]

Abstract: Research Summary: We use a novel longitudinal dataset, constructed from 16 downloads of VentureXpert records collected over 20 years, to characterize the international migration of venture‐capital‐backed startups. We find that: (i) 1078 firms in our sample (1.4%) migrate; (ii) countries with high levels of in‐migration also have high levels of out‐migration; (iii) migrating firms move to places with more investors; (iv) pre‐move investors and their connections most strongly predict migration patterns; and (v) movers raise more money than non‐movers, primarily from investors at their destinations. Overall, these patterns appear inconsistent with those expected if startups move primarily in search of talent or customers. Instead, the flows across countries look more like international trade, with startups seeking capital, and social connections between investors defining the shipping lanes. Managerial Summary: Although many high‐profile startups have relocated their headquarters from one country to another, systematic information on this phenomenon has been scarce. How frequently do these moves happen? Why do startups move? Over 20 years, we have built a database that can begin to answer these questions. International moves appear rare. When startups do move, they tend to move to places with more venture capital, particularly when their existing investors have connections in those places. Movers, moreover, raise more money than non‐movers, mostly from investors in their destination countries. Capital availability, rather than access to talent or proximity to customers, appears to be the strongest predictor of startup migration.

This study adopts a signaling theory perspective to examine whether and how crowdfunding (relative to angel financing) influences subsequent venture capital (VC) investments in startups. We used a bivariate probit model with propensity score matching to address the potential endogeneity of the initial funding choice. Subsequently, we found that crowdfunded startups have a lower chance of receiving VC funding than angel-financed startups and that the effect is more negative for startups located outside of startup cluster cities. We show that corporate VCs, unlike independent VCs comprising the majority of VCs, favor crowdfunded startups. Our study contributes to the literature on crowdfunding, startup finance, and the transformative effects of IT-enabled platforms. This study further discusses the practical implications of crowdfunding in startup finance ecosystems. [ABSTRACT FROM AUTHOR]

The success of newly established companies holds significant implications for community development and economic growth. However, startups often grapple with heightened vulnerability to market volatility, which can lead to early-stage failures. This study aims to predict startup success by addressing biases in existing predictive models. Previous research has examined external factors such as market dynamics and internal elements like founder characteristics.While such efforts have contributed to understanding success mechanisms, challenges persist, including predictor and learning data biases. This study proposes a novel approach by constructing independent variables using early-stage information, incorporating founder attributes, and mitigating class imbalance through generative adversarial networks (GAN). Our proposed model aims to enhance investment decision-making efficiency and effectiveness, offering a valuable decision support system for various venture capital funds. [ABSTRACT FROM AUTHOR]

This study proposes a hybrid model of initial trust formation that highlights the role of social categorization and its interplay with both institutional trust and the individuating information about the party. Using data on 1,474 corporate venture capital (CVC) investments in European ventures and a case-control research design, we find that ventures more likely form initial CVC ties with investors whose parent companies are located in countries considered more trustworthy. This effect is weaker but does not disappear when social defenses safeguard ventures from misplacing trust and when there are social ties between CVC investors and ventures' independent VC investors. [ABSTRACT FROM AUTHOR]

The agri-food tech sector is touted for its potential to disrupt established industry. Yet research reveals that incumbent agribusinesses are buying their way into the sector through startup investments and acquisitions. Drawing from extensive qualitative research, we show that incumbent influence also shapes agri-food tech in more subtle and pervasive ways. Startups rely on incumbents' social and material infrastructure to achieve the rapid growth demanded by their venture capital funders. Incumbent influence, we argue, is ambient, continuous, and frequently indirect. It saturates the spaces where malleable startups take shape, influencing even those with whom incumbents have no direct contact. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Small Business & Entrepreneurship is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study revisits the female underperformance hypothesis by investigating the influence of CEO gender on key performance factors for VC funded firms from 2011–2016. We used a matched case-control sample approach to reduce the confounding influence of industry sector on gender differences for four key performance outcomes – total capital, raised total rounds of funding, successful exit or business failure. Results show gender does not predict funding raised or firm performance, and that key legitimacy markers, including elite education, external endorsement and high-status investors, offset potential gender discounts for women-led firms. Implications are that the female underperformance hypothesis should not be perpetuated as a legitimizing myth or stereotype predicting performance of women entrepreneurs in management studies. In practice, VCs should not rule out investments or expect poor performance based on CEO gender. [ABSTRACT FROM AUTHOR]

Due to the emergence of the digital economy, traditional corporate entrepreneurship (CE) forms (i.e. corporate incubators, corporate venture capital, and corporate accelerators) have become too heavy and resource-consuming. As such, large corporations need to adopt a lightweight and flexible approach to access startups’ knowledge. Many of them have started outsourcing the CE service, demanding it from specialised service providers. In this study, we document the rise of this new form of CE, i.e. corporate service providers. Building from 25 interviews with managers of Plug and Play and GELLIFY, we analyze how these two types of service providers work concretely. Moreover, we discuss how they differ from traditional CE forms. Drawing on additional 17 interviews with large corporations and startups that have interacted through these service providers, we discuss how corporate service providers differ from previous traditional CE forms in facilitating the adoption of lightweight initiatives among large corporations to access startups’ knowledge. Accordingly, we provide theoretical contributions to the CE literature. [ABSTRACT FROM AUTHOR]

Existing studies have explored the impact of venture capital shareholding on the GEM-listed companies before and after listing from multiple perspectives. However, there has been limited research on the influence of venture capital shareholding on these companies' mergers and acquisitions(M&A) activities and performance. Additionally, two conflicting research findings have been presented in limited relevant studies. In order to clarify the mechanism by which venture capital shareholding affects M&A activities and performance of GEM-listed companies and verify existing research conclusions, this paper takes 468 M&A events completed by the acquirer of China's GEM-listed companies between 2014 and 2016 as samples to explore venture capital shareholding's effects on the M&A performance of GEM-listed enterprises. The empirical findings demonstrate that GEM-listed enterprises with venture capital shareholding perform significantly better in terms of short-term and long-term M&A performance than those without; with the increase in venture capital shareholding ratio, the short-term M&A performance of GEM-listed enterprises has remarkably improved, but the long-term M&A performance does not show obvious correlation; joint investment of venture capital can significantly improve the short-term M&A performance of GEM-listed enterprises, but it has no substantial influence on long-term M&A performance. Based on further analysis of the empirical study, it is concluded that the common one-share ownership structure of GEM-listed enterprises is not conducive to the play of the monitoring function of venture capital, and the insufficient incentives and free-riding thinking also weaken the motivation and input of some venture capital shareholders to provide value-added services. This study systematically elucidates the mechanism and impact of venture capital shareholding on the M&A performance of GEM-listed companies, addressing the shortcomings in existing research. It is conducive for GEM-listed companies to gain a rational understanding and effectively leverage the active role of venture capital shareholders in M&A activities. [ABSTRACT FROM AUTHOR]

This study examines the possible emergence of a Middle Technology Trap (MTT) in U.S.-China strategic competition through the lens of the Global Financial Network (GFN) and the Global Innovation Network (GIN). By conducting doctrinal analysis, theoretically informed case studies, and in-depth interviews, we offer a granular study into how the U.S. has been weaponizing its leading position in the GFN to affect China's level of participation in the GIN. Our findings reveal three U.S. tactics to induce the MTT with China: first, leveraging U.S. private equity and venture capital (PEVC) to enhance its technology advantage over China; second, pushing U.S. investors to withdraw from China's PEVC market, thereby restricting Chinese access to American capital; and third, inducing Advanced Business Services (ABS) supporting innovation and global business to cease or reduce their operations in China, thereby increasing intermediation costs for innovation. Although Chinese government-guided funds (GGFs) have managed to partially mitigate the "funding gap" from the departure of American PEVCs, they have yet to assume the brokerage role previously played by American PEVCs in both the GIF and the GIN. As such, our study contributes to a better understanding and theoretical advancements of the MTT by linking up the scholarship of innovation and finance with financial statecraft. [ABSTRACT FROM AUTHOR]

Medical start-ups (MedTech) significantly contribute to the development and commercialization of innovative healthcare solutions, driving advancements in technology, enhancing treatment effectiveness, and supporting public health. This study explores the main themes and concepts related to MedTech start-ups, examines the research methods used, and identifies major gaps in the literature. A scoping literature review was performed by searching the Scopus, PubMed, and Web of Science databases for publications from 2012 to 2023, focusing on MedTech start-ups in titles, abstracts, and keywords. References were analyzed using the Bibliometrix package in R, and a coupling network analysis was conducted, visualizing results on a Coupling Map to identify key research themes and gaps. The research identified 480 unique articles on MedTech start-ups. After removing duplicates and following a PRISMA-based assessment, 79 articles were included in the review. The studies predominantly focused on organizations, including start-ups and Venture Capital funds (46%). Most articles (60%) used qualitative methods, 25% employed mixed methods, and 15% used quantitative methods. Geographically, 63% of articles focused on a single country, primarily the USA (35%), followed by Iran, Sweden, Switzerland, China, and Japan (2–4% each). Coupling analysis identified five topic clusters: crowdfunding for medical research, innovation in medical technology, new product development, digital start-ups, and the venture capital industry. This review highlights the significant role of MedTech start-ups in advancing healthcare innovations despite challenges like regulatory hurdles and high capital requirements. The literature emphasizes the importance of collaboration among universities, industry, and government for successful commercialization. The geographic concentration in the USA indicates a need for more inclusive research. Crowdfunding and venture capital emerge as crucial funding sources, suggesting strategies to mitigate risks and enhance innovation success. [ABSTRACT FROM AUTHOR]

An entrepreneur's digital identity matters for resource acquisition and venture development. However, we know little about the factors that influence or change entrepreneurs' digital identities. This study explores how entrepreneurs' digital identities change after a venture capital (VC) funding round. Applying a language-based text analysis to a large sample of tweets from 2,094 US entrepreneurs, we analyze entrepreneurs' digital identities before and after VC funding. The results of our analysis show that VC funding can impact the entrepreneur's digital identity in both a positive and a negative way. On the positive side, entrepreneurs increasingly use language indicative of higher self-confidence, positive emotions, and increased professionalism. On the negative side, we find that the entrepreneur's digital identity loses its authenticity, particularly with high funding amounts raised. The latter can be problematic as authenticity is shown to be a critical resource that entrepreneurs possess to build legitimacy and engage stakeholders in their venture. Our study contributes to research on the consequences of VC funding for entrepreneurs as well as to research on entrepreneurial digital identities. Practical implications exist for entrepreneurs managing their entrepreneurial identities over the course of venture development. [ABSTRACT FROM AUTHOR]

Weibo sentiment and R&D innovation are important signals that influence the financing processes of venture corporations. We collect relevant data between 1 January 2011, and 31 December 2020, to analyse the effect of the signalling mechanism of Weibo sentiment and R&D innovation on venture corporate financing. The conclusions are as follows. The positive effects of Weibo sentiment on venture valuation and investment success are weaker than the effects of R&D innovation, and the positive effects of Weibo sentiment and R&D innovation on venture valuations are stronger for young than older venture firms. The positive effects of Weibo sentiment and R&D innovation on venture valuations are stronger for less experienced ventures than for more experienced ventures. These conclusions show that the two signals of Weibo sentiment and R&D innovation have different strengths in terms of venture valuation and investment success, with the effect of the Weibo sentiment signal being relatively less strong. Moreover, venture corporate age and venture corporate experience play important negative moderating roles in the relationship between the two signals and venture valuation. [ABSTRACT FROM AUTHOR]

Disagreement, while generally seen as an act threatening interlocutors' face, is indispensable in particular contexts. Based on an in-depth linguistic and paralinguistic analysis of 12 cases of disagreement from a Chinese venture capital reality TV show We Are the Hero, we found that in this special context disagreement was a 'dispreferred' moment, but also an informative, educational, and amusing occurrence with multiple functions. While disagreements were frequently initiated (particularly by the investors), they were mostly indirect, carefully mitigated by participants with linguistic devices such as explanations, private verbs, questions, humor, as well as paralinguistic devices such as friendly facial expressions and movements. Furthermore, disagreements, especially aggravated ones, were often interactively mitigated by both on-stage participants (particularly the host) and the post-production team in an interestingly cooperative way. The interactive process of mitigating disagreements not only saved the interlocutors' face, but also contributed to the multiple purposes of the show. Our findings suggest that politeness, as an invisible hand behind communicative acts, is still present despite the 'conflict' that characterizes this form of TV show. [ABSTRACT FROM AUTHOR]

Purpose: Established companies often engage with startups as a way to improve their innovation performance. While there has been extensive discussion on the reasons, modes, and expected outcomes of these initiatives, there is still a need to understand more about how corporate engagements with startups (CEwS) evolve and how they can enhance a company's innovation capability. This study proposes a framework of engagement strategies, discussing their purposes and implications to understand the subject better. Design/methodology/approach: This study involved managers from twelve large, established companies across various sectors. The authors used a multicase approach to analyze their experiences and offer a framework for corporate-startup engagement. Findings: The framework for corporate-startup engagement consists of four main strategies: (1) innovative improvement, (2) R&D expansion, (3) more value to corporate venture capital and (4) ecosystem articulation. The authors found that ecosystem articulation, which combines the potentials of the other three strategies, is the most sophisticated approach. Originality/value: This study offers a systematic view of the CEwS phenomenon, identifying the various modes of engagement, the reasons for adopting each one and potential ways to advance and improve them. For managers, the study reveals the CEwS as a lever to build innovation capabilities over time. [ABSTRACT FROM AUTHOR]

This paper empirically examines the representation of female venture capitalists (VCs) on boards and how they exert substantial influence on firm innovation performance in China. We first identify a positive association between female VCs' board participation and firm innovation, implying that Chinese female VCs contribute to growing resource commitments and greater success in innovation through quality board services in portfolio firms. We then show that firms with female VC board directors exhibit a lower adverse effect of managerial myopia, capital market pressure, and product market competition on innovation activities. These results are robust to the use of instrumental variable (IV) estimations, subsamples, and alternative variable definitions. [ABSTRACT FROM AUTHOR]

This paper investigated how hiring one of the Big 4 auditing firms helps initial public offering (IPO) owners attract venture capitalists' (VCs) backing when going public to address the gap in auditing and venture capital literature. For this, the paper examined a large dataset from 1995 to 2019 consisting of 33,536 IPO firms from 22 countries with diverse socioeconomic, political, and cultural contexts. The study found that hiring Big 4 auditors increases IPO owners' chances of recruiting VCs by up to 50%. The analysis also supports prior findings, which state that IPO owners strategically choose Big 4 audit firms to lower agency costs and send quality signals to improve openness and disclosure as well as boost VCs' confidence in the IPO market. This research offers multiple benefits to academics, policymakers, investors, and issuers. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Estudios Empresariales Segunda Época is the property of Editorial de la Universidad de Jaen and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper takes the recent public policy innovations of the European Commission to foster the growth of 'unicorns' through direct interventions as an entry point to inquire into the changing role of the EU in the European Venture Capital Market. Based on a reconstruction of EU public policy interventions from the 1990s onwards, we show the constitutive, yet changing role of EU public actors in that market. The latest engagement of EU public policy, aiming to select and nurture start-ups with the potential to become unicorns, we argue, must be understood as a new layer in this trajectory of foundational market investment. Moving from an initial 'market crafting' approach (1990–2000) to 'market fixing' (2001–2013), this new mode of intervention represents a qualitatively new level, which seeks to shape innovation outcomes along a European investment chain. We identify this modality of intervention as a new form of economic statecraft, driven by the goal of securing technological sovereignty, which together with the two other layers forms the basis of the European Investor State. [ABSTRACT FROM AUTHOR]

Purpose: Venture capital (VC) is an essential element in healthy entrepreneurial environments; therefore, many countries in developing entrepreneurial economies support the industry via direct or indirect government interventions. The purpose of this study is to examine through the example of the Hungarian market, whether direct or hybrid state involvement has contributed more to the growth of the invested enterprises. The findings are relevant in the design of government VC schemes and in the contracts mitigating the moral hazards inherent in government funding. Design/methodology/approach: The basis of empirical research is a unique hand-collected database covering Hungarian government-backed VC (GVC) investments. Based on the financial data of investee firms, the authors investigate whether firms financed by hybrid VC involving market participants are able to outperform firms that receive pure public financing using panel regression. Findings: Based on Hungarian evidence, hybrid VC-backed firms generated lower growth and employment than their purely government-backed peers. Both schemes showed meagre innovation activity. The conclusion is that because of the conflict of private and economic policy objectives in hybrid financing, the exposure of hybrid risk capital to moral hazard is higher than that of pure public financing. Private interests in hybrid funds can only improve investment efficiency if they are structured along the lines of market-based independent financial intermediation and the contracts imitate the ones existing amongst limited and general partners in private schemes. Research limitations/implications: The research covers the data of Hungarian government-backed firms by tracking the full range of 86 investments made in the purely government scheme and 340 firms that received funding in the hybrid scheme. The research focuses on two government initiatives, and the results are influenced by the specific regulation of the programs; therefore, the results cannot be generalized for all government agendas; they are indicative in the designs of the agendas. Originality/value: There is a limited number of empirical studies investigating the impact of VC in developing markets, especially in the Central and Eastern Europe region. This firm-level research on the impact of public VC can help improve the effectiveness of development policies. By analysing the entirety of investments of a VC program that is near to its completion, the authors provide new insight into the efficiency and prospects of GVC schemes in the region. [ABSTRACT FROM AUTHOR]

Purpose: Impact investors differ from venture capital firms as they invest to create social and commercial value. This paper pursues the question: how do impact investors select social enterprises? The aim of this study is to understand the selection and investing process of impact investors. Design/methodology/approach: This study developed a database of 115 impact-investing firms across different geographies. Emails were sent to investors associated with each of the impact-investing firms found in the database, out of which 32 replied with consent for a telephonic or in-person interview. Findings: The significant findings presented in the paper are the following. First, this study shows the impact-investing selection process model. The four major steps in the selection process are context, investment focus, venture analysis and decision. In each step, social values and missions become the defining characteristics of the selection process. Second, the findings also discuss the typologies of impact investors as a function of their selection approaches. Practical implications: This paper discusses the impact investing strategy among social enterprises. It provides a framework for impact investing among investee social enterprises. As an impact investing professional, one learns investment strategy through this paper. Social implications: Impact investing is a growing field. It is believed that impact investing could greatly impact sustainable development goals, climate change goals and help in inclusive development. This study helps to further understand impact investing process and hopes to help social enterprises and impact investors make a better match, thereby, creating a greater overall social and environmental impact. Originality/value: This study helps both practitioners and academics to understand the complexity of impact investing. This study helps develop heuristics that impact investors may use to make investments. This study provides a framework for investing, which the impact investing firms may use to invest. [ABSTRACT FROM AUTHOR]

Copyright of Automatisierungstechnik is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: This study aims to investigate limited partners' (LPs) influence on venture capital (VC) fund returns. Design/methodology/approach: We merge data from Preqin and SDC's VentureXpert spanning from 1993 to 2014 and conduct multiple regression analysis to examine the influence of LPs on VC fund performance. Additionally, we conduct three distinct robustness tests to verify the credibility of our findings. Findings: Our empirical analysis demonstrates that newbie LPs consistently exert a significant positive influence on VC fund returns. Research limitations/implications: VC and LP data is self-reported, and there is no comprehensive dataset as some LPs prefer to maintain anonymity. Originality/value: Extant literature on LPs' contribution to VC fund performance is limited. The general assumption is that the role of LPs in VC fund performance is confined to funding. We introduce a new variable, LP track record, as a proxy for LP experience to examine if this variable influences VC performance. [ABSTRACT FROM AUTHOR]

Digital business model innovation plays a crucial role in the growth of high‐tech small and medium‐sized enterprises (SMEs). In this research, we introduced tripartite evolutionary game models that include the government, venture capital (VC) institutions, and high‐tech SMEs, operating within the context of government venture capital. Within the scenarios of government revenue and loss compensation, we assess the evolutionary stable strategies of each stakeholder and analyze variations in the evolution results. Using numerical simulation, we investigate how factors impact players' strategic choices and the evolution of the system. The findings indicate the presence of an indirect transmission mechanism among players' strategic choices, which collaboratively stabilizes the game system. Furthermore, we investigate the policy consequences of various compensation mechanisms and find that high‐tech SMEs' strategic choices are not influenced by these compensation approaches. However, the incentive effects of different compensation on the government and VCs' investment strategies vary. Revenue compensation is more favorable for VC institutions but places a greater financial burden on the government. In contrast, loss compensation is a more efficient approach for the government. This study offers valuable insights for the management and operation of government venture capital funds, and the advancement of digital business model innovation for high‐tech SMEs. [ABSTRACT FROM AUTHOR]

The transaction cost economics framework has been used for more than three decades to explain how firms transact and organize in hierarchies and markets. However, when market innovations and societal changes occur, organizing theories should be updated to reflect the novel aspects of the environment. In this paper, we leverage recent technology and social innovations as a catalyst for synthesizing and extending transaction cost theory. Venture funding transactions today only vaguely resemble funding transactions from decades past. Yet, scholars still frequently rely on theoretical tenets that were established before the advent of the internet to explain funding transactions. In this research, we codify venture-funding modalities along a continuum from more market-esque to more hierarchical and develop funding transaction propositions for the new funding context. [ABSTRACT FROM AUTHOR]

Entrepreneurial teams represent a critical evaluation criterion for venture capitalists (VCs) in the context of making investment decisions. Despite the importance of teams in VCs' new venture evaluation, we lack an understanding of the ways in which VCs evaluate entrepreneurial teams. Using multiple case studies of 15 VCs, we identify five distinct approaches to evaluation: intuitive approach, extended intuitive approach, systematic intuitive approach, psychological rational approach, and scientific rational approach. These approaches vary in terms of the extent to which the VCs performing the evaluation develop structured procedures, incorporate objective data analysis, and spend time on data collection and analysis. Our findings reveal VCs' heterogeneous approaches to evaluation, which feature different combinations of subjective and objective evaluations. [ABSTRACT FROM AUTHOR]

Copyright of Zeitschrift für Gesellschaftsrecht is the property of Verlag Oesterreich GmbH and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Business angels (BAs) and venture capitalists (VCs) play major roles in the early funding stages of a venture. Although a significant proportion of venture funding rounds results from multiple investor types, most existing research takes an isolated view of either BAs or VCs. Research on the conditions and reasons for the formation of co-investments by BAs and VCs remains scarce. This study closes this gap by considering the impact of investor characteristics of BAs and VCs on the likelihood of co-investment. We focus on investor reputation, prior investment ties, and geographic proximity between the new venture and the investor. We address the questions of how these investor characteristics predict the probability of a co-investment between BAs and VCs in the first funding round of a new venture. Relying on the resource-based view and agency theory, we examine conditions that are in place when the two types of investors co-invest. Using a large-scale dataset with more than 7300 funding rounds of US-based ventures between the years 2005 and 2017, we find support for our hypotheses that investor reputation, prior investment ties, and geographical proximity impact the likelihood of co-investment and that these associations differ depending on the investor type. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

Purpose: There is an increasing awareness of environmental, social and governance (ESG) factors in the private equity (PE) environment. While many studies deal with the implementation of ESG in the field of PE, only little is known about how the subcategory venture capital. Therefore, this study aims to answer the questions: What are the motivations for venture capitalists to consider ESG in their investment decisions? How do they implement it and what are the barriers that hinder them? Design/methodology/approach: An inductive study based on semi-structured interviews with 11 investors of venture capital firms (VCs) was conducted to explore the drivers, the barriers and the strategies to implement ESG in the investment decision-making. Findings: All investors perceive that ESG will play a major role in investment decisions in the long term. VCs have seen benefits primarily in terms of performance and commercialization of startups that incorporate the ESG aspect. Limited partners are a driving force for change in this process. No standardized framework and lack of resources for implementation are mainly assumed as barriers. Practical implications: Politics and industry might support particularly smaller VCs in their implementation by providing standardized frameworks. Owing to increasing awareness and interest of ESG criteria among VCs, startups should also address these criteria. Originality/value: This paper contributes to the literature by examining how ESG is currently considered in VCs' decisions and what challenges they face. Therefore, this research contributes to the understanding of the decision-making process among venture capitalists. [ABSTRACT FROM AUTHOR]

This article documents the existence of an intensive margin of the gender gap in innovative entrepreneurship. Not only there are fewer women than men who become entrepreneurs, but female entrepreneurs also hold smaller equity stakes, make less substantial investments, and are less frequently appointed as firm executives compared to their male counterparts. Leveraging the context of emergency contraception deregulation in Italy and varying abortion service accessibility, I find that mitigating maternity risk narrows these gaps. Consequently, female-led firms become riskier and more attractive to venture capital investors during their early stages. [ABSTRACT FROM AUTHOR]

Based on 259 articles published in the entrepreneurship, management, and finance literatures during 1990-2022, we provide an integrative review and synthesis of governance in new ventures. We structure our review around the formal contract between the new venture and its investors, and discuss the governance approaches of various pre-initial public offering investors across the three stages of the investment cycle: precontractual, contract design, and post-contractual. Pre-contractual governance and contract formation are explained using a signaling theory lens. To capture the intricacies of post-contractual governance, particularly for late-stage investors such as venture capitalists and private equity firms that have conflicting interests, multiple identities, and overlapping governance roles, we relax the core tenets of agency theory to direct academic inquiry toward a more sophisticated framework—multiple agency theory—that better reflects the complexities of post-contractual governance. Given the limitations of formal contracting in resolving the ambiguities of start-up governance, we integrate our narrative by using a complementary social embeddedness theory lens that highlights the importance of informal governance embedded in personal and social ties in creating implicit obligations based on trust, reciprocity, and reputation. Finally, we discuss how governance breakdowns can cause start-ups to fail, especially in their later stages. [ABSTRACT FROM AUTHOR]

This article explores venture capital (VC) as a means and process of accumulating future social necessity. It explores the mechanisms of growth that make VC-backed firms distinct. I argue that a distinctive feature of surplus value capture through VC is valorization via socially necessary contracted space-time, a corrective to Marx’s theorization of socially necessary labor time, which appears incomplete in the context of VC. First, extending Marx’s general formula for capital, I develop a general formula for VC, demonstrating how the VC investment upends traditional theories of capitalist accumulation. Second, I argue that VC invests in firms seeking to capture ‘human capital’ resources and uncapitalized market ‘space’ (noncapitalist social logics of exchange) with the aim of achieving ‘product-market fit’. Third, I demonstrate how time and space are contracted under the VC process as a value capture (VC) mechanism relating to future social necessity. VC is, I argue, about accumulating today what we will all need to be consuming tomorrow, just to keep up with social norms. Finally, I explore how the valorization of crisis (VC) demonstrates the accumulation of future social necessity in practice. I conclude with thoughts concerning the possibility of alternatives beyond the overdetermined rapacity of ‘VC’.

An investment-ready entrepreneur is the one who is able to understand the specific preferences of investors and is able to satisfy or respond to these preferences in terms of risk and return, providing an appropriate placement structure and relevant information. Therefore, this research analyzes the financial and market potential of Croatian small and medium-sized enterprises in attracting venture capital. On the basis of existing research, a theoretical model called the financial-market potential of the enterprise was formed. Through multiple log-linear regression, its importance in attracting venture capital was examined from the perspective of entrepreneurs who attracted venture capital. The influence of the rate of return on assets, financing with own capital and quasi-market share on the amount of attracted venture capital is positive, while the influence of the rate of return on equity is negative, so the hypothesis of the existence of a positive influence of the financial-market potential of the enterprise on the amount of attracted venture capital was accepted. The scientific contributions of the conducted research lies in the development of scientific knowledge about the investment criteria of risk capital, the formation of a theoretical model of the financial-market potential of the enterprise, as well as in the empirical verification of the established model. The limitation of the research itself stems from the fact that the venture capital market in Croatia is insufficiently developed and the associated small number of investments. Therefore, the aforementioned research can be extended to the countries of Central and Eastern Europe in the future.

Despite the prevailing focus on the public markets, private companies represent approximately half of the world economy, if not more. This is a descriptive article presenting a summary of data and results from the 2024 Private Capital Markets Report, which is the product of the annual private capital markets survey. The annual survey was launched in 2009 and examines the behavior and trends of senior lenders, asset-based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately-held businesses, investment bankers, business brokers, limited partners, and business appraisers. Most of the survey panelists are based in the United States of America, but this is not a requirement. The data set also includes many panelists outside of the U.S. There was a total of 1,143 respondents represented in the 2024 survey. An empirical result of this article is that we test the theory that the recent return of warrants to mezzanine deals is associated with a higher interest rate environment. We find evidence supporting that association. These results may be helpful for academics and practitioners forecasting mezzanine activity and deal terms.