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1 – 10 of 29The study compares the impacts of mixed syndication venture capital (VC) investment and private VC (PVC) investment on the transitional performance indicators of intangible…
Abstract
Purpose
The study compares the impacts of mixed syndication venture capital (VC) investment and private VC (PVC) investment on the transitional performance indicators of intangible assets, fixed assets, liabilities and number of employees in Estonia. It also examines the impact of mixed syndication on investees' sales and profit.
Design/methodology/approach
This study conducted panel data regression analyses based on the dataset consists of yearly data from 2006 to 2015 for more than 187,000 unlisted firms in Estonia.
Findings
Results showed that mixed syndication had a significant positive effect on the number of employees of investees but not on investees' sales and profit. PVC investment had a significant positive effect on investee sales but not on the transitional performance indicators of investees.
Originality/value
The study has two unique research contributions. First, it investigates the impact of syndicated investment on investees' transitional performance indicators in addition to performance indicators. Second, it focuses on Estonia, an emerging country that has somewhat achieved success in fostering information and communications technology startups and is one of the earliest emerging countries to implement a mixed syndication VC investment policy.
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Stefanie Weniger, Svenja Jarchow and Oleg Nenadić
Literature on entrepreneurial finance has long overcome the view of an investor as a sole provider of financial capital. Entrepreneurs need to consider more aspects when deciding…
Abstract
Purpose
Literature on entrepreneurial finance has long overcome the view of an investor as a sole provider of financial capital. Entrepreneurs need to consider more aspects when deciding on an investor. Especially the depiction of corporate venture capital (CVC) investors has long highlighted advantages and disadvantages compared to independent VC (IVC) investors. The authors investigate what drives entrepreneurs' preferences for CVC relative to IVC and thereby focus on two key issues in the entrepreneur's consideration – the role of resource requirements and exit strategies.
Design/methodology/approach
The data were collected in an online survey that gathered information on several characteristics of entrepreneurs and their ventures. The resulting data set of 105 German entrepreneurs was analyzed using logistic regression and revealed important drivers for entrepreneurs' investor preferences.
Findings
The study’s findings confirm that the venture's resource needs, specifically the need for marketing resources and access to the corporate network, which play a significant role in the decision on whether a CVC or IVC investor is preferred. Moreover, the analysis debunks the hypothesis that entrepreneurs view a CVC investment as the first step toward acquisition. However, those entrepreneurs striving for an IPO are less likely to prefer CVC.
Originality/value
The study expands the literature on CVC attractiveness and specifically considers the entrepreneurs' intentions and needs. The results confirm but also debunk some widespread perceptions about why entrepreneurs choose to pursue financing from a CVC investor.
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Raymond J. Jones and Manjula S. Salimath
Private equity and venture capital (VC) firms in the capital markets sector invest capital with the primary goal of delivering economic value. However, some firms in the capital…
Abstract
Purpose
Private equity and venture capital (VC) firms in the capital markets sector invest capital with the primary goal of delivering economic value. However, some firms in the capital markets sector have started to shift this focus to create (i.e. invest in) social value. More specifically, traditional VC firms are starting socially oriented funds, while other firms have emerged to focus solely on investments in social enterprises. These VC firms are contributing to an interesting paradox – performance metrics are not measured by profit alone but also by social innovation. From an architectural perspective, the authors examine the implications of internal design, i.e. how specific strategic and structural factors influence the financial performance of VC firms with a social orientation to determine if these firms really can “do well and do good.”
Design/methodology/approach
Social orientation was determined by content analysis of mission statements of the VC firms. Firm strategies, structures and performance were sourced from secondary data. A moderated mediation model was used to test relationships.
Findings
Results suggest that (1) socially responsible VC firms adopt distinct foci of social investing that directs their strategic orientation and (2) these various foci have vastly differing effects on the firm's overall performance, strategic decisions made and the architecture of their structural design.
Originality/value
This study is among the first to explore socially responsible VC architectural dimensions, with implications for firm design based on blended measures of success.
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Carla Martínez-Climent, María Rodríguez-García and Domingo Ribeiro-Soriano
Daniel Stefan Hain and Roman Jurowetzki
The purpose of this paper is to shed light on the changing pattern and characteristics of international financial flows in the emerging entrepreneurial ecosystems of Sub-Saharan…
Abstract
Purpose
The purpose of this paper is to shed light on the changing pattern and characteristics of international financial flows in the emerging entrepreneurial ecosystems of Sub-Saharan Africa (SSA), provide a novel taxonomy to classify and analyze them, and discuss how such investments contribute to competence building and sustainable development.
Design/methodology/approach
In an exploratory study, the authors analyze the characteristics of international venture capital investors and the start-ups receiving funding in Kenya and map their interaction. The authors proceed by developing a novel taxonomy, classifying investors according to their main rationales (for-profit-for-impact), and start-ups according to the locus of needs and markets addressed by the start-up (local-global) and the locus of the start-ups capacity and knowledge (local-global).
Findings
The authors observe a new type of mainly western investors who support innovative ideas in SSA by identifying and investing in domestically developed technical innovations with the potential to address global market needs. The authors find such innovations to be mainly developed at the intersect of global and local knowledge.
Originality/value
The authors shed light on the – up to now – under-researched emerging phenomenon of international high-tech investments in SSA, and develop a novel taxonomy of technology investments in low-income countries, guiding further research on the conditions, impact, practical, and policy implications of this new form of finance flows.
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Christian A. Cancino, Jose M. Merigo, Juan P. Torres and David Diaz
The purpose of this study is to present the evolution of academic research in venture capital (VC) research between 1990 and 2014.
Abstract
Purpose
The purpose of this study is to present the evolution of academic research in venture capital (VC) research between 1990 and 2014.
Design/methodology/approach
The study analyzes the most influential journals in VC research by analyzing papers, which were published on the Web of Science database.
Findings
Results show a steady increasing rate of VC research during the past 25 years. The paper reports the 40 academic journals that permanently publish articles about VC research.
Originality/value
The main contribution of this work is to develop a general overview of the leading journals in VC research, which leads to the development of a future research agenda for bibliometric analysis, such as the review of the most productive and influential authors, universities and countries in VC research.
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Benedetta Montanaro, Angelo Cavallo, Giancarlo Giudici and Antonio Ghezzi
This study aims to analyze the impact of different exit alternatives, investor presence and founders’ human capital on the exit value of European venture capital (VC)-backed high…
Abstract
Purpose
This study aims to analyze the impact of different exit alternatives, investor presence and founders’ human capital on the exit value of European venture capital (VC)-backed high technology startups.
Design/methodology/approach
The empirical analysis is based on a sample of 107 European firms that obtained an exit through Merger&Acquisition (M&A) or an initial public offering (IPO) between 2010 and 2017, backed by VC investors.
Findings
This study provides empirical evidence on how different exit alternatives, investor heterogeneity and founders’ human capital may affect the exit value of European VC-backed startups. Exiting through an IPO and retaining a larger equity stake are positively correlated with the exit value. The presence of business angels and non-governmental VC firms is associated with larger valuations. Founders’ previous education was positively correlated with the exit value.
Originality/value
Exit strategies in technology startups are essential to capitalize investors’ efforts and reinvest cash into new ventures, supporting the development of entrepreneurial ecosystems and countries’ competitiveness. The results of this study provide interesting hints for policymakers and contribute to an in-depth understanding of the drivers of exit valuation for startups.
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Daniel Stefan Hain and Jesper Lindgaard Christensen
The purpose of this paper is to investigate how access to financing for incremental as well as radical innovation activities is affected by firm-specific structural and behavioral…
Abstract
Purpose
The purpose of this paper is to investigate how access to financing for incremental as well as radical innovation activities is affected by firm-specific structural and behavioral characteristics.
Design/methodology/approach
Deploying a two-stage Heckman probit model on survey data spanning the period 2000–2013 and covering 1,169 firms, this paper analyzes the effect of a firm’s engagement in incremental and radical innovation on its likelihood to get constrained in their access to external finance, and how this effect is moderated by the firm’s age and size.
Findings
In line with earlier research, it is confirmed that the type of innovation matters for the access to external finance, but in a more nuanced way than generally portrayed. While incremental innovation activities have little negative effect on the access to external finance, radical innovation activities tend to be penalized by capital markets. This effect appears to be particularly strong for small firms.
Originality/value
This paper provides nuanced insights into the interplay between types of firm-level innovation activities, structural characteristic and access to external finance.
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Antonella Francesca Cicchiello, Maria Cristina Pietronudo, Daniele Leone and Andrea Caporuscio
The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries…
Abstract
Purpose
The aim of this research is to contribute to the existing literature about the entrepreneurial conditions in crowd-based contexts by describing how different European countries regulate equity crowdfunding market in order to incentive the investments and protect investors.
Design/methodology/approach
Based on a legal acts' analysis, we conduct a qualitative study comparing the crowdfunding regulation addressed to investors. In particular, we focus our analysis on the European countries with the highest concentration of crowdfunding platforms (i.e. the UK, Germany, France, Italy and Spain).
Findings
The results show that some countries, such as the UK, Germany and France, present an investor-oriented approach based on non-restrictive regulation, while other countries, such as Spain and Italy, have a restrictive approach that protects investors excessively and discourages them. In particular, the case study of France shows how the introduction of unrestricted regulation can produce positive effects on the volume of crowdfunding transactions.
Practical implications
The paper is addressed to investors, policymakers and intermediaries (platforms) to help the first in orienting themselves between the different crowdfunding regulations and the latter in aligning and orchestrating rules and norms.
Originality/value
This is the first study that analyses the role of investor-oriented regulations in the promotion of entrepreneurship through the identification of four key factors to monitor equity crowdfunding regulations.
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