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This study explores the potential benefits and costs of bank entry into venture capital investing. Data are obtained from a survey of banking organizations regarding their perceptions of the effects of such venture capital investing. Also, evidence on the portfolio diversification effects of such investments is provided using stock price data. These data are consistent with the existence of net benefits from bank entry into this industry. The implications for entrepreneurs are also discussed. Venture capital firms (professionally managed organizational investors) and business angels (private individual investors) invest in new and growing businesses. Their aim is to maximize their risk‐adjusted return on investment through the ex ante assessment of risk and the ex post monitoring of their client entrepreneurs. Because they invest in businesses that are inherently newer and smaller, often without substantial collateral, their deals are riskier than the loan packages that are funded by commercial banks. However, by investing in risk‐ reducing information and sharing it among coinvestors, these venture capitalists often generate returns that are the envy of many bankers. Many venture capitalists expect to earn more than 30% annually on their investments. At a time when banks have been experiencing earning problems, particularly those located in the West and Southwest, there are at least four possible benefits that could come to them and also to entrepreneurs from the entrance of banking organizations into venture capital financing. First, if banks were able to manage the increased risk, they might be successful in improving their earnings. The increased earnings would contribute to the elimination of the capital deficiency facing the banking industry. Second, if they funded entrepreneurs, the total supply of venture capital would increase and it could become much easier to locate seed money. Third, participation by banks would also contribute to the elimination of the widely reported capital gap that may exist for funding new ventures. Fourth, in the long run, if they provided venture capital, they might find that they were providing start‐up financing for future customers, customers that would not otherwise exist. This study contemplates a future role for commercial banks as a potentially huge source of funding for new ventures. It explores the possibility that under certain conditions commercial banks may be able to effectively manage the greater risk associated with venture capital investing. It concentrates on the potential effects of bank entry into venture financing on the risk of failure of the bank, a concern that underlies the existing prohibition for U.S. banks. The proposal to allow U.S. commercial banking organizations to enter the arena of venture capital investments may seem somewhat questionable in a period of massive numbers of bank failures. Yet there are reasons to believe that the potential effects of these activities may not be risk‐increasing as often argued and may, under certain circumstances, even be risk‐reducing. To understand this view, consider the reaction of commercial banks to the changes in their external environment that accompanied financial deregulation during the 1980's. The elimination of deposit rate ceilings that accompanied deregulation increased sharply the cost of bank funds. Banking organizations reacted to that increase in costs by reaching for higher‐risk loans. But, in the United States, these banks were unable through regulatory and market constraints to obtain complete compensation for the increased risk. If these banks had been able to take equity positions in venture capital investments, the upside potential from these commitments of funds to more risky undertakings could be realized, a potential that is impossible with the conventional loan contract. If commercial banks become major players in the market for venture capital, it seems likely that they will rely upon different strategies for controlling risk than those used by venture capital firms and business angels. Basic differences in their approaches to risk management could be a reflection of their costs of access to risk‐reducing information, their visibility in the community, and their tendencies to coinvest with similar types of investors. This study examines the possibility that the size of a bank will largely determine whether it views venture capital investing as a prudent means of doing business. This expectation is based on the assumption that the larger a bank, the more likely it will be to hold a portfolio of diversified venture capital investment. Thus, we would expect to find greater enthusiasm for venture capital investing among large banks than among small banks. If commercial banks were to be permitted to make venture capital investments in the United States, such a move could be so influential that no entity that depends upon this market for its survival would be unaffected. Business angels and venture capital firms could be overshadowed by the resources that banks would have at their disposal, while entrepreneurs and public policy makers would find it difficult to ever again suggest that there was insufficient capital available to fund deserving ventures. This study reviews the roles of venture capital firms and business angels and compares them to the role that could be played by banks. It also compares the perceptions of large bankers (assets >$1 billion) and small bankers (assets <$1 billion) regarding their institution's competence in managing different types of risk. This research will first examine how venture capital firms and business angels emphasize managing different types of risk. Hypotheses related to bank strategies for reducing venture capital risk will be proposed and tested. Finally, implications for entrepreneurs and public policy makers will be discussed.

The purpose of this article is to describe how investing in entrepreneurial ventures can help large firms pursue corporate entrepreneurship initiates. Ventures can be attractive partners due to their ability to provide a disproportionate share of radical innovations.

Based on existing literature and information collected via 45 surveys and 72 interviews, the paper shows that strategic fit is an important variable that determines the type of benefits ventures can provide to investing firms.

Three benefits large firms can reap from investing in ventures are: managing the risks and uncertainties of innovation; learning from the venture; and increasing bargaining power over ventures that supply innovative products.

Existing research does not go far enough to explain the range of benefits corporate venture capital can provide. The majority of investments were found in ventures that sell innovative products to the investing firm and have technological competences different from the investing firm.

Organizing for innovation is often a challenge for large firms. Because ventures may be more effective when started outside the firm than inside, investing in select entrepreneurial ventures can help firms effectively explore for radical innovation while continuing to exploit their existing resources internally.

For corporate strategists concerned about improving their firm's innovativeness, corporate venture capital can be part of a corporate entrepreneurship toolbox that can help augment a large firm's growth and competitive position. It can be particularly helpful in managing the risks and uncertainties inherent with radical innovation.

The growing prevalence of social entrepreneurship has been coupled with an increasing number of so-called “impact investors”. However, much remains to be learned about this nascent class of investors. To address the dearth of scholarly attention to impact investing, this study seeks to answer four questions that are central to understanding the phenomenon. What are the defining characteristics of impact investing? Do impact investors differ from traditional classes of investors and, if so, how? What are the motivations that drive impact investment? And, what criteria do impact investors use when evaluating potential investments?

A partially inductive study based on semi-structured interviews with 31 investors and ethnographic observation was conducted to explore how impact investors differ from other classes of investors in their motivations and unique criteria used to evaluate ventures seeking investment.

This study reveals that impact investors represent a unique class of investors that differs from socially responsible investing, from other types of for-profit investors, such as venture capitalists and angel investors, and from traditional philanthropists. The varied motivations of impact investors and the criteria they use to evaluate investments are identified.

Despite the growing practitioner and media attention to impact investing, several foundational issues remain unaddressed. This study takes the first steps toward shedding light on this new realm of early-stage venture investing and clarifying its role in larger efforts of social responsibility.

The availability of external equity finance is a key factor in the development of technology‐based firms (TBFs). However, although a wide variety of sources are potentially available, many firms encounter difficulties in securing funding. The venture capital community, particularly in the UK, has done little to finance early stage TBFs and has failed to cater adequately for the specific value‐added requirements of these firms. Non‐financial companies have the potential to become an important alternative source of equity finance for TBFs through the process of corporate venture capital (CVC) investment. Based on a telephone survey of 48 UK TBFs that have raised CVC, examines the role of CVC in the context of TBF equity financing. Shows that CVC finance has represented a significant proportion of the total external equity raised by the survey firms and has been particularly important during the early stages of firm development. In addition, CVC often provides investee firms with value‐added benefits, primarily in the form of technical‐ and marketing‐related nurturing and credibility in the marketplace. Concludes with implications for TBFs, large companies, venture capital fund managers and policy makers.

The purpose of this paper is to examine the literature on angel investors. Research on angel investors is sparse because data are sparse. Most comprehensive studies of angel investors have focused on the USA and UK. In these studies, definitions of angel investors and estimates of returns on angel investments vary dramatically. What can one make of this wide range of reported returns?

The authors examine the literature and find that the calculations of reported results are vague.

Most researchers do not explicitly report if their estimates are equal-weighted or value-weighted, nor do they say whether the results are weighted by the duration of the investment. The authors show that the unit of analysis – investment, project or angel – affects interpretations.

Limitations on the comparability between various studies of angel investing returns leave the current literature incomplete. They also offer opportunities for future study in the area.

The authors are the first to examine the angel investing literature in a comprehensive fashion, comparing between various returns found across all major studies of the subject done to date.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

Access to equity capital is critical for business success, especially for young companies which lack the cash flows necessary for debt repayment. The creation and growth of such companies is a means to economic opportunity and wealth for ethnic-minority entrepreneurs. Unfortunately, the traditional venture capital industry is extremely limited in its investments.¹ It also is significantly less likely to invest in businesses owned by ethnic-minority entrepreneurs than those owned by white entrepreneurs (Bates & Bradford, 1992).²

The purpose of this study is to investigate the effects of increased fund commitments on portfolio size and subsequent effects on portfolio success rates. This paper empirically analyzes the changes in average portfolio size over a 20‐year time period and how these changes affect the venture capitalists' ability to successfully exit their investments.

The authors utilize venture capitalists' fund level data and conduct both univariate and multivariate analysis. The multivariate analysis is conducted using a two‐limit regression tobit model. This is justified since the authors' dependent variable is a ratio bounded by zero and one, hence the tobit specification is the most appropriate methodology.

The authors find that increasing the size of portfolios not only leads to a decrease in the number of successful investments but also significantly affects portfolio success rates. They also find evidence which suggests that some optimal portfolio size exists.

The sample was limited to independent private partnerships that raised funds specifically for investment in US portfolio companies and it represents all funds maintained in the SDC database with non‐missing data on fund size and other fund characteristics.

There are three main practical implications derived from this study. First, venture capitalists overextend themselves by investing in too many portfolio firms. Second, some optimal portfolio size exists beyond which success rate of the venture capitalist's portfolio declines. Third, portfolio size is an important determinant of venture capital portfolio success rates.

The study presents new evidence that venture capitalists have a tendency to increase their portfolio size in years following growth in fund inflows, an idea that has not been investigated earlier. The authors also use data that is not adulterated by significant economic and financial conditions such as internet bubble burst of 2000 and financial crisis of 2007/2008.

The sector of interdependent venture capital in France will be detailed henceforth. We will try to understand why its investments deserve to be called ‘interdependent’.