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Private company investors operate in unique environments. Seed equity investors, which generally include venture capitalists and angel investors, often have the particularly unusual role of becoming involved in the oversight of the investee company. This continuing involvement with the investee firm introduces conflicting interests: the desire to maximize the profit from the investment, but also the desire to maintain a positive relationship with the entrepreneur(s) (consistent with the theory of upper echelons/strategic management). We discuss in detail this unusual investment context and the role that accounting disclosures can have in this environment. We predict that accounting disclosures can influence the tradeoff between the profit motive and the relationship motive. Using 64 experienced angel investors as participants in a realistic experimental setting, we find that disclosures indicating conservatively biased accounting choice and lower account risk (variance) lead to angels increasing the valuation of the target firm and forgoing higher profits. Increasing the valuation serves to foster the relationship with the entrepreneur(s). Our findings have implications for entrepreneurs making choices about discretionary disclosures and for standard setters; we also inform theory related to overcoming anchoring.

Institutional complexity shapes what is perceived as possible by framing cultural debates about practices, but organizations in turn shape how logics interpenetrate fields, suggesting that we must consider both the degree of compatibility between logics and the degree of practice variation in a field. Our exploratory study of three entrepreneurial impact finance organizations considers how they situate their practices between the market and community logics. We offer a recursive view that considers how multiple institutional logics shape practices and how entrepreneurial organizations adapt and invent new practices that, through their continued use, can influence the institutional complexity of a field.

The financing of entrepreneurship has seen marked changes over time and continues to evolve rapidly. From the traditional sequence of self-funding, Angel financing, the rigors of securing Venture Capital, and, for successful firms, Initial Public Offerings (IPOs), the funding sequence has undergone substantial changes. Recent observations such as in the Wall Street Journal (November 05, 2018) suggest that many successful young firms (often tech companies) have continued to raise capital from private equity sources rather than in the public equity markets via IPOs. These additional fundraising efforts generally follow an extended period of business development and revenue generation wherein when many successful entrepreneurial firms that had proven large enough to go public stayed private (so called “unicorns”) because of the extent to which their funding requirements can in recent times flow from private sources. But today, there are many indications that some such firms (e.g. Uber, Lyft) are now seeing the advantages of going public, engaging in IPOs, which are often followed rapidly in very recent times by raising additional public share capital in a relatively short interval after the IPO.