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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’.

New Technology Business Firms are known to be volatile dynamic organizations whose innovations are subject to short life cycles and product imitability. Venture capitalist firms who allocate funds to these start-ups need to evaluate multiple facets associated with the individual firm’s internal and external characteristics, as well as, its own unique objectives and goals. This study applies a multicriteria decision making model to the identification for venture capital firms of potential New Technology Business Firms who are requesting capital infusions.

Limited access to capital is a classic issue in and a burden to micro, small and medium enterprises (MSMEs) in Indonesia. The existence of the problem with information asymmetry and agency conflicts that are predominant at the level of small businesses, increasingly hampers the opportunity to obtain funds from various external sources. Especially for businesses that are at the pioneering stage, entrepreneurs are required to think creatively, have the courage to take risks, and be independent in fulfilling resources to realize business opportunities. The availability of funds certainly has an impact on business performance, either directly or indirectly. Based on a literature review, business performance is categorized into financial and non-financial dimensions with various measurement proxies. However, some of the models and measurements proposed are not always suitable in assessing the performance of MSMEs, especially in the startup phase. Therefore, this chapter concurrently describes the funding patterns and the funding alternatives to measure the performance of new businesses based on the existing literature. Theoretically, this research adds a perspective in the field of entrepreneurial finance regarding funding patterns that can be implemented by startup businesses in Indonesia and provides a proposal for measuring the concept of performance that is more adaptive and comprehensive for businesses in the startup stage. The implication of this research for entrepreneurs leads to the need to adjust funding decisions according to the changing stages of the business lifecycle and to expand the funding window to support the sustainability of small businesses.

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.

Take the image of the entrepreneur as a driven accepter of risk, an individual (or set of individuals) hungry to amass a fortune as quickly as possible. This image is consistent with the traditional finance theory view of entrepreneurial startups, one that assumes that profit maximization is the firm’s sole motivation (Chaganti, DeCarolis & Deeds, 1995). Myers’s (1994) cost explanation of the pecking order hypothesis (i.e. entrepreneurs prefer internally generated funds first, debt next, and external equity last) incorporates this economically rational view of entrepreneurs’ financing preferences. According to this view, information asymmetry and uncertainty make the availability of external financing very limited and the cost of it prohibitively high. To compensate, entrepreneurs must give up greater and greater control in order to “buy” funds needed to achieve the desired growth and profitability. Indeed, Brophy and Shulman (1992, p. 65) state, “Those entrepreneurs willing to relinquish absolute independence in order to maximize expected shareholder wealth through corporate growth are deemed rational investors in the finance literature.” Undoubtedly, cost and availability explanations of financing choices are valid for many new and small businesses. However, many entrepreneurship researchers have long been dissatisfied with the incompleteness of this perspective.

The chapter provides a practical guide to identify and define different funding sources for entrepreneurial and innovation endeavors, including a methodology to describe return on investment expectations from funding sources. Also, the authors provide recommended key performance indicators and valuation methods when pitching to potential investors.

This chapter addresses the general process of determining the value of a particular company, with additional detail on how valuation processes might be adapted to produce credible value conclusions of emerging technology ventures. There are three primary approaches to business valuation. There is the income approach, which indicates that value is a product of expected future cash flows – cash flows that are discounted to equate them to dollars in-hand (present value). There is the market approach, which attempts to draw conclusions of value based on the market prices of similar companies in the public and/or private markets. Finally, there is the asset approach, which indicates that the value of a company is equal to the sum of the values of its net assets. Specific adjustments are appropriate with respect to each of these approaches where the value of an emerging technology company is concerned. Professional valuation standards require that all of these approaches be considered in the valuation, even if the available information does not permit their credible application. Often, multiple approaches and techniques can be applied. The results of applying multiple techniques often do not overlap, and it is the analyst’s very important task to reconcile differing valuation results, or to decide which result or results should be discarded.

How general can a “general” theory of entrepreneurship be? Abstraction is a necessity but is it possible to include venture opportunity variation in a general theory of entrepreneurship building on two contrasting perspectives such as equilibrium economics and disequilibrium economics. Two important boundaries need to be explicated. First, defining entrepreneurship as the creation of new economic activity includes both the creation of new means – ends (cf. Schumpeter, 1934) – as well as optimizing within known means – ends frameworks (cf. Kirzner, 1997). Second, such a theory includes an opportunity – actor nexus because it is the first tangible or intangible evidence of existing venture opportunities. Formal models of entrepreneurship often start with a person and at some point in time an exchange of persons with firms take place which is confusing because both levels of analysis and outcome are mixed with each other. Apparently, there is no such thing as entrepreneurship without actors, but if we want to create knowledge about the creation of economic activity, we need to frame our boundary around the nascent initiative instead of single actors and/or teams of actors because value can only be assessed in relation to the costs of services withdrawn. Analogous to this is, for example, the theory of firm and the theory of organizations with boundaries well beyond single actors or groups of actors. Another factor behind a venture-based theory of entrepreneurship comes from empirical evidence from the Swedish PSED, which suggests that approximately 16% (n=97) nascent entrepreneurs are exchanged during the start-up process. Formal models of entrepreneurship could therefore start with the nexus of venture opportunities and enterprising actors as suggested by Shane (2003) or with resources as suggested by Davidsson (2000) and progress forward in the entrepreneurial process. Entrepreneurship models built around the economic activity itself needs to be dynamic allowing different outcomes and feedback loops because resource combinations alter our perception of value and diffuses information, which may lead to additional resource combinations (Hayek, 1945).

How are city demographics correlated with the amount of venture capital they receive? This chapter uses a unique dataset of 58,000 venture deals from 2000 to 2014 from the CrunchBase dataset and census data from the same period. Place and the role of venture capital asserts venture capital’s spatial dependency and uses statistical software to find a strong positive correlation between the amount of venture capital funding and foreign, international, male professionals within a city, the gendering of venture capital, and the negative correlation of unskilled, foreign labor with funding.

As venture capital travels along social ties, this chapter suggests that foreign, international, and male professionals’ positive correlation may be due to these members having a wider and more diverse social network, allowing the ability to conjure funds. Moreover, the demographic may be a synonym for Sassen’s International Class, allowing the study to dovetail with a broader set of research. Finally, this chapter also provides a mechanism to classify cities based off their venture capital activity. The implications of this study are a better understanding of the trends correlated with venture capital, a classification system for cities, and a possible caveat to “virtuous cycle” theory. A supplement to the paper and to visualize implications for cities, we also created this D3 visualization visualizing the geographic positioning and relationships of those 58,000 deals, providing communicable and interactive research.