Dissertations / Theses on the topic 'Ventur capital'

The decision process of venture capitalists has received much attention from researchers and it is a complex and unclear process. There are plenty of factors that affect venture capitalists´ investment decisions. The purpose of this study is to find out the important factors in the due diligence process for the venture capital firms and venture capitalists during their investments. The authors find it interesting to find out factors that influence venture capitalists during their investment decisions according to due diligence process. Qualitative method was seen suitable for this study. Three phone interviews were conducted with three venture capital firms in Turkey named Is Private Equity, Ilab Ventures and Bosphorous Group. The authors find out management, market, location, product, industry and financial factors are important factors for venture capitalists to decide whether to invest or not.

Le capital-risque fournit les capitaux pour le lancement, le développement et la croissance des jeunes entreprises. Il facilite l'innovation et le progrès d'une économie. Les investisseurs institutionnels de capital-risque (VCs) représentent la plus grande contribution de capital. Les deux principaux facteurs du succès sont représentés par les entrepreneurs et les investisseurs. C'est grâce à leurs efforts, engagement et alignement que les idées initiales se transforment en entreprises viables offrant de grandes expansions et un fort retour sur investissement. Entrepreneurs et investisseurs sont confrontés aux conflits d'intérêts. La gouvernance des jeunes entreprises, définie et formée par des contrats d'investissement, fournit une structure de gouvernance adaptée qui est vitale pour libérer le potentiel en atténuant les conflits d'agence. Composée de trois publications, cette thèse apporte des éclairages nouveaux sur l'évolution de la jeune gouvernance, sur le début d'une formalisation de la gouvernance et sur l'impact de la gouvernance sur la future performance
Entrepreneurial finance provides the capital for launch, early development and growth of ventures,. It acts as an enabler for innovation and advancement of an economy. Institutional venture capital investors (VCs) account for the largest capital contribution. The two main pillars for venture success are represented by the entrepreneurial team and the investors. It is due to their effort, joint engagement and alignment that initial prospectus business ideas turn into viable companies with high upscaling opportunities and strong return on investments. Entrepreneurs and investors face conflicts of interest. Young venture governance, defined and shaped in form of venture capital investment contracts, provides a finely adapted corporate governance structure which is vital to unleash the full potential by mitigating agency conflicts. Comprising of three publications, this dissertation provides novel insights on the evolution of young venture governance over time, on the initial start of a formalization of the governance structure, and on the impact of motivating governance and contract terms on future venture performance

This study investigates variability in the importance of investment decision criteria used by venture capitalists in assessing new technology-based ventures and relates the criteria to the subsequent performance of the investment in the new venture. Variability was measured using interval and ordinal scale approaches for both criteria ratings and rankings. The analyses found that the criteria used by venture capitalists form a general hierarchy that is consistently ranked across ventures. However, there are some criteria that do not form part of this hierarchy and whose importance varies depending on the specific venture being evaluated. The criteria that are consistently considered important by venture capitalists can be thought of as necessary conditions for investment. The hypotheses concerning the relationship between the criteria and subsequent deal performance are that:· deal performance can be assessed by venture capitalists earlier for Internet-related ventures than for other-technology based ventures (H1);· Internet-related ventures have more extreme levels of deal performance (H2);· a small number of criteria will distinguish between successful and unsuccessful deal performance (H3);· criteria that do distinguish have above average variability (H4); and· criteria related to first-mover advantage distinguish between successful and unsuccessful deals (H5). The study was conducted in two parts. The original study (n=100) conducted by Bachher (2000) gathered information about the importance of the investment criteria using a web-based survey. The follow-up study (n=40) gathered information about the success of the investments by surveying the original participants and gathering information from the Internet. Limitations of the study include a nonrandom sample, a small sample size for the follow-up survey and the very small number (n=5) of unsuccessful investments identified. Evidence for hypotheses H1 and H2 was in the predicted direction but failed to achieve statistical significance. The evidence is supportive of H3. Evidence for H4 and H5 was not found. Additional analysis of the results suggests that venture capitalists whose investments were ultimately unsuccessful placed less importance on technology-related criteria than did venture capitalists investing in the other ventures. This finding implies that venture capitalists need to perform detailed assessments of the technology of new ventures.

Fundraising with venture capitalists can remain a largely mysterious process. In a world shrouded with non-disclosure agreements, the entrepreneurs are often unaware of the common practices of deal terms and are unable to benchmark their term sheets with respect to those given to others. Inherent conflicts of interest in the split of the financial returns, liquidation, and control of the company lead the venture capitalists to structure the deals which benefit their interests at cost to the interests of the entrepreneurs. This dissertation identifies and characterizes the term sheet structures used by venture capitalists today and establishes their frequency. This information can be used by entrepreneurs to benchmark their term sheets and by venture capitalists to evaluate their investment strategies.

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This thesis analyzes the differences between venture capital (VC) funds managed by banks and funds managed by independent institutions. Banks as VC fund managers (or bank affiliates funds) contact companies that commonly require banking services such as loans, underwriting and M & A advisory. Fang et al. (2013) and Hellman et al. (2008) explore the possibility that bank affiliates seek to invest in companies that may in the future be clients of the bank to which they are associated. In this case, banks sponsor VC funds to strengthen their commercial area. In addition, bank affiliates have access to the same flow of opportunities as independent funds. This thesis explores another possibility: independent funds seek co-investment with bank affiliates to facilitate the access of their investees to advantages such as greater capital volume and obtaining credit. In this case, the flow of opportunities of bank affiliates is differentiated because they are easier to participate in co-investments. Thus, the first objective of this thesis is to seek evidence that bank affiliates have a different flow of opportunities and that they are easier to co-invest. The second objective is to investigate whether the reinterpretation of Section 20 of the Glass-Steagall Act of 1933 (or GSA) that occurred in 1989 affected the structuring of the investments of affiliated funds of banks. The GSA has in many ways limited the performance of commercial banks. Section 20 prohibited commercial banks and their subsidiaries from being the underwriters in corporate bond issues. Over the years, there have been some attempts by Congress to soften or remove the GSA, but with little success. Regulators and banks were able to effectively soften the GSA through successive reinterpretations of their content. In 1989, the Federal Reserve (Fed) allowed some financial institutions to underwrite corporate assets (including IPOs). This permission created, exogenously, two groups of financial institutions: those that could and could not do underwriting (we call the commercial banks that obtained this authorization as subsidiaries Section 20 or SS20). This constituted an exogenous shock that affected only a portion of commercial banks and thus allows us to identify whether underwriting activity affects the behavior of banks as VC fund managers. A change in the investment style after 1989 that occurs only for the SS20 would be indicative that bank affiliates adjust their investment style in function of the activities and interests of the holding company. This also suggests the conflict of interest between these two activities. Regarding the first objective, we find that the model of VC investment of affiliates of commercial banks is dependent on the round of entry into the company. When they invest in the first round, commercial bank affiliates enter rounds up to four times larger in investments with fewer co-investors and investment rounds than independent funds. Investments of bank affiliates in companies in the first round of financing are made in sectors other than the investments of independent funds and 35% of the companies invested by banks acquire a bank loan. Co-investment in companies that have passed the first round of investment represents most of investments for VC funds. Bank affiliates make 63% of the investments in this modality (55% for independents) and invest companies 400 miles away. Bank affiliates coincide with a larger number of funds, even with lower ratio numbers. Despite some differences, the sectors invested between affiliated funds and banks are similar. Investment in VC increases the likelihood of selling other banking products such as loans, underwriting and M & A advisory. Finally, companies invested in the first round by bank affiliates seeking loans from the VC bank have a spread of 90 basis points higher than companies seeking loans from other banks. In relation to our second objective, we identified a change in the investment model of funds affiliated with banks that have SS20 as compared to the VC funds of banks without such subsidiaries. There was a drop in the percentage of investments made in the first round of the company's VC by approximately 15%, and the main reason for this decline is the 19% decrease in first-round investments made alone. Early-stage investments fell by approximately 10%, while the co-investment percentage increased by 19%. There was a decrease, both in the percentage of rounds that the bank invested and, in the total, invested in the company by 20%. The distance between bank and company has decreased by 400 miles. These changes in the investment style impacted the percentage of companies that went through IPO by more than 10%. The results suggest a change in the investment model of commercial banks SS20 after 1989. The subsidiaries invested in more mature and closer companies, co-investing in more investments. One possible explanation is the search for more mature companies that can issue debentures, shares or use the new services that SS20 have been authorized.
Esta tese analisa diferenças entre fundos de venture capital (VC) geridos por bancos e os geridos por instituições independentes. Bancos enquanto gestores de fundos de VC (denominamos por afiliados de bancos os fundos geridos por bancos) entram em contato com empresas que comumente necessitam de serviços bancários tais como empréstimos, underwriting e assessoramento em M&A. Fang et al. (2013) e Hellman et al. (2008) exploram a possibilidade que afiliadas de bancos procurem investir em empresas que possam no futuro ser clientes do banco ao qual estão associadas. Nesse caso, os bancos patrocinam fundos de VC para fortalecer sua área comercial. Além do mais, as afiliadas de bancos têm acesso ao mesmo fluxo de oportunidades que os fundos independentes. Essa tese explora outra possibilidade: que fundos independentes busquem o coinvestimento com afiliadas de banco para facilitar o acesso de suas investidas a vantagens tais como maior volume de capital e obtenção de crédito. Nesse caso, o fluxo de oportunidades das afiliadas de bancos é diferenciado porque estas possuem maior facilidade para participar de coinvestimentos. Assim, o primeiro objetivo dessa tese é buscar evidências de que afiliadas de bancos têm um fluxo de oportunidades diferenciado e que têm maior facilidade para coinvestir. O segundo objetivo é investigar se a reinterpretação da Seção 20 do Glass-Steagall Act de 1933 (ou GSA) que ocorreu em 1989 afetou a estruturação dos investimentos de fundos afiliados de bancos. O GSA limitou de vários modos a atuação dos bancos comerciais. Em particular, a Seção 20 proibiu que bancos comerciais e suas subsidiárias e depositárias fossem os underwriters em emissões de títulos corporativos. Ao longo dos anos, houve algumas tentativas do Congresso para amenizar ou remover o GSA, mas com pouco sucesso. Os reguladores e bancos conseguiram amenizar efetivamente o GSA por meio de sucessivas reinterpretações de seu conteúdo. De especial interesse para o nosso tópico, em 1989 o Federal Reserve (FED) permitiu que algumas instituições financeiras fizessem o underwriting de ativos corporativos (inclusive IPOs). Essa permissão criou, de maneira exógena, dois grupos de instituições financeiras: as que podiam e as que não podiam fazer underwriting (denominamos os bancos comerciais que conseguiram esta autorização como subsidiárias Seção 20 ou SS20). Isso constituiu um choque exógeno que afetou apenas uma parcela dos bancos comerciais e, portanto, permite identificar se a atividade de underwrinting afeta o comportamento dos bancos enquanto gestores de fundos de VC. Uma mudança no estilo de investimento após 1989 que ocorra somente para as SS20 seria indicativa de que afiliadas de bancos ajustam seu estilo de investimento em função das atividades e interesses da holding. Isso também sugere o conflito de interesse entre essas duas atividades. Com relação ao primeiro objetivo, encontramos que o modelo de investimento em VC das afiliadas de bancos comerciais é dependente do round de entrada na empresa. Quando investem no primeiro round as afiliadas de bancos comerciais entram em rounds até quatro vezes maiores, em investimentos com menor número de coinvestidores e rounds de investimento do que os fundos independentes. Os investimentos de afiliadas de bancos em empresas no primeiro round de financiamento são feitos em setores distintos aos investimentos de fundos independentes e 35% das empresas investidas por bancos adquirem um empréstimo bancário. O coinvestimento em empresas que passaram do primeiro round de investimento representa a maioria dos investimentos para os fundos de VC. Afiliadas de bancos fazem 63% dos investimentos nesta modalidade (55% para independentes) e investem empresas 400 milhas mais distantes. As afiliadas de bancos coinvestem com um maior número de fundos, mesmo com índices de número de relacionamento mais baixos. Apesar de algumas diferenças, os setores investidos entre fundos afiliados e bancos são similares. O investimento em VC aumenta a probabilidade da venda de outros produtos bancários como: empréstimos, underwriting e assessoramento em M&A. Por fim, empresas investidas no primeiro round por afiliadas de bancos que buscam empréstimo junto ao banco investidor de VC tem um spread de 90 pontos base maior do que as empresas que buscam empréstimo em outros bancos. Com relação ao nosso segundo objetivo, identificamos uma mudança no modelo de investimento dos fundos afiliados a bancos que possuem SS20, quando comparado com os fundos de VC de bancos sem tais subsidiárias. Houve uma queda na porcentagem de investimentos feitos no primeiro round de VC da empresa em aproximadamente 15%, e o principal motivo desta queda é a diminuição em 19% dos investimentos em primeiro round realizados sozinhos. Os investimentos em early-stage caíram aproximadamente 10%, enquanto a porcentagem de coinvestimento aumentou 19%. Houve uma queda, tanto na porcentagem de rounds que o banco investiu quanto no total investido na empresa em 20%. A distância entre a sede do banco e da empresa diminuiu em 400 milhas. Estas mudanças no estilo de investimento impactaram na porcentagem de empresas que saíram por IPO em mais de 10%. Os resultados sugerem uma mudança no modelo de investimento dos bancos comerciais SS20 após 1989. As subsidiárias investiram em empresas mais maduras e mais próximas, coinvestindo em mais investimentos. Uma possível explicação é a busca por empresas mais maduras que podem emitir debêntures, ações ou utilizar os novos serviços que as SS20 foram autorizadas.

Introduction:

Venture capital investment process is complex and different firms vary greatly in their investment practices. This has resulted in authors given several different factors that could be imperative for venture firms investment decisions. There is thus no consensus in the field of venture investing.

Purpose:

The purpose of this thesis is to list which factors are important for venture capital firms investment decisions in start-up firms.

Method:

The authors conducted structured phone interviews with seven venture capital firms in Sweden.

Conclusion:

The authors found the following factors to be important for venture firms investment decisions in start-up firms; Busienss plans that demonstrated the thinkings of the entrepreneur, communicate ideas, visions, product, market, competition, growth potential as well as the planned intentions with the recived funds. They also desired realistic, concreate, simple plans that explained the implementation process of the start-up firm. The second factor that was important was markets where large markets, market growth, market share, market entry and global markets were mentioned. The third factor of importance was product, in which uniqueness, simplicity, patents and time-to-market were listed. Management was the fourth factor of importance, in which sensibility, competence, technical skills, entrepreurial spirit, attitude, humbelness, determination, openness, drive, chemistry and confidence were included. The fifth factor of importamce financial embraced ROI, economioes of scale, valuation and the size of the investment. The last two important factors that the authors found to be important for the venture firms in the study were location and industry.

Governments have increased their commitment to spur innovation by increasing the amount of venture capital (VC) flowing to the venture capital market over the last decades. Still, research shows that governmental venture capital (GVC) has no impact on innovation. The literature comparing governmental and private venture capital’s effect on innovation is scarce. Therefore, this study explores how different types of VC affects innovation in Swedish entrepreneurial companies. Based on VC data from the Swedish Venture Capital Association (SVCA), we use 440 VC-backed companies and 440 control companies to test the effects of governmental venture capital, private venture capital (PVC), and mixed venture capital (MVC, a combination of GVC and PVC) on four innovation indicators - patent grants, passive citations, trademarks, and industrial design rights. We use fixed-effects models to compare different VC types and Difference-in-Differences models to draw inferences about causality. Our findings show that all types of venture capital positively affect innovation, while MVC has the most substantial effects. PVC spur innovation mainly through trademarks, while GVC increases both trademarks and patent quality. We argue that MVC has access to an immense amount of capital and can allocate its non-financial resources better than both PVC and GVC separately. We also suggest that GVC focuses more on innovation quality and PVC focuses more on commercializing innovations and bringing them to the market.

There are many different forms of financing for small businesses and two common financing options mentioned in the study, bank loans and Venture Capital.Venture Capital is a form of risk capital financing, investing in unlisted stock market. The feature of the arrangement is that those people are trying to find companies that can offer unique, attractive and in demand products on a strong growing market. Since VC-firms are taking a big risk in cooperation with the investment, the VC-company strong demands while assessments are made on the company will generate a return in the future.

Bank loans are the most common form of financing for companies in the market. Requirements and assessment under the law is hard especially for small businesses because financing entails high risks. Banks require that the liquidity management in the enterprise should be stable because the bank's main objective is to repayment of debt and the interest payable on the capital.

The purpose of this study is to examine the requirements and assessments VC-firms and banks make use of the financing of small businesses.

 

Even though venture capital trade sale exits are the most common and successful exit vehicle, historically most academic attention has been given to IPO exits. This thesis takes the first steps towards opening the black box that is trade sale exits. The thesis is paper-based, and the main academic contributions belong to the four papers appended. This document opens with an introduction to the field of study as well as overall reflections in order to offer the reader a contextual background. Paper one is based on a literature review, while paper two through four are based on an inductive multiple-case study covering 19 venture capital trade sale exits from Norway and the U.S. Paper one conducts an extensive literature review of venture capital exits in general, leading up to the development of a model denoted “The Road to Venture Capital Exit”. This model identifies the variables that influence the exit process in the different phases, and describes how these variables influence the exit process.Paper two explores the relation between pre-planned exit strategies and value-adding, and suggests the existence of two different venture capitalist mindsets; the Tailor and the Architect. The Tailor uses exit possibilities as an addition to traditional deal evaluation criteria, has a pre-planned exit strategy, and adds value with exit in mind. The Architect does not use exit possibilities as an evaluation criteria, and adds value in a more general manner.Paper three examines the relationship between the venture capitalist and the entrepreneur during the trade sale exit process, finding that this relationship is characterized more by consensus and cooperation than by conflict and defection. Further, it is found that four factors influence the relationship during the exit process, and are determining for the conflict level. These factors are: pre-investment alignment, strategic hurdles and personal motives faced by the entrepreneur, the reputation and connectedness of the venture capitalist, and the probability for entrepreneurial recycling.Paper four explores the role of financial advisors in trade sale exits, by looking closer at why advisors are utilized, as well as by examining the factors determining the choice of a specific advisor. It is found that advisors are considered especially useful in bargaining situations, through playing the role of bad cops, and also by letting venture capitalists and entrepreneurs focus on their primary tasks. With regards to selection criteria, venture capitalists emphasize industry experience, prior relations and the size of the advisory firm. Finally, the findings are integrated in a framework explaining the role of financial advisors in venture capital trade sale exits.

Els aspectes de les activitats de capital de risc a Europa s'exploren en aquest treball. Un conjunt de dades de panell que cobreix 23 països de la UE / EEE entre 2.000-2.017, des d'una perspectiva macro, s'analitza empíricament amb resultats que donen suport a la investigació teòrica de la literatura de finances empresarials. El capital risc s'utilitzarà com a pla de finançament innovador alternatiu per a les empreses durant els períodes de crisi. Les variacions pel que fa a l'impacte de la crisi financera en la recaptació de fons de capital de risc i les activitats d'inversió a Europa, el creixement de el sector sanitari arran de les inversions de capital de risc dirigides a el sector, i el paper influent dels factors macroeconòmics en les sortides de capital de risc europeu, són totes questions importants per explicar la pertinència de les activitats de capital risc a Europa. Els resultats són sòlids fins i tot quan es controlen altres variables macroeconòmiques, com els fons de capital de risc com a percentatge de PIB, el cost de l'atenció mèdica com percentatge de el PIB i la despesa per càpita en salut, risc polític, impost sobre les guanys de capital.
Los aspectos de las actividades de capital de riesgo en Europa se exploran en este trabajo. Un conjunto de datos de panel que cubre 23 países de la UE/EEE entre 2000-2017 desde una perspectiva macro se analiza empíricamente con resultados que apoyan la investigación teórica de la literatura de finanzas empresariales. El capital de riesgo se utilizará como plan de financiación innovador alternativo para las empresas durante los períodos de crisis. Las variaciones en cuanto al impacto de la crisis financiera en la recaudación de fondos de capital de riesgo y las actividades de inversión en Europa, el crecimiento del sector sanitario a raíz de las inversiones de capital de riesgo dirigidas al sector, y el papel influyente de los factores macroeconómicos en las salidas de capital de riesgo europeo, son todas cuestiones importantes para explicar la pertinencia de las actividades de capital riesgo en Europa. Los resultados son sólidos incluso cuando se controlan otras variables macroeconómicas, como los fondos de capital de riesgo como porcentaje del PIB, el costo de la atención médica como porcentaje del PIB y el gasto per cápita en salud, riesgo político, impuesto sobre las ganancias de capital.
The aspects of venture capital activities in Europe are explored in this manuscript. A panel data covering 23 EU/EEA countries between 2000-2017 from a macro perspective are empirically analyzed with results that support theoretical research from entrepreneurial finance literature. Venture capital to be used as alternative innovative financing scheme for businesses during crisis periods, variations as regards the impact of the financial crisis on venture capital fundraising and investment activities in Europe, health sector growth being explained by venture capital investments directed to the sector, and the influencing role of macroeconomic factors on European venture capital exits, are all important issues in explaining the relevance of venture capital activities in Europe. The results are robust even when controlling for other macroeconomic variables such as venture capital funds as a percentage of GDP, healthcare cost as a percentage of GDP and per-capita expenditure on health, political risk, capital gains tax.

This thesis examines various issues related to venture capital (VC) firms. The thesis consists of three essays that try to answer the following questions: Do local VC firms benefit from their syndication experience with foreign partners? Do VC firms benefit from their directorships in mature public companies? What do we know about the failure of VC firms? The first essay examines the benefits of cross-border syndication to ‘local’ (in the context of the first essay, Asian) VC firms. The main finding is that, post-syndication, local VC firms invest more in the high-tech industry than they did pre-syndication. I interpret this as a result of enhanced knowledge and confidence in assessing and taking on rather risky investments. Further, local VC firms have a higher likelihood of successful exits from their portfolio companies post-syndication. I interpret these results as being benefits to local VC firms that they derive from syndicating with their foreign partners. Overall, my results indicate that there are tangible benefits for local VC firms from syndicating with international VC partners. These benefits are more pronounced when the foreign partners are from North America or Europe. The second essay examines the benefits to venture capital firms through their directorships in mature public companies. I investigate the benefits to venture capital firms in terms of fundraising and investment performance. First, my empirical results show that venture capital firms raise more funds and set higher fund-raising targets during the post-directorship period. Second, I show that venture capital firms are more likely to exit successfully from their investments post-appointment as a board of director in an S&P 1500 company. Overall, my results indicate that being on the board of mature public companies brings tangible benefits to venture capital firms. The third essay examines the failure of VC firms. Based on a sample of 2,752 VC firms in the United States established between 1980 and 2004, the study finds that almost one-third of VC firms in the sample had gone out of business by the end of 2014. I then investigate the causal factors of VC firm failure. Specifically, I examine VC characteristics (location and year of incorporation) and factors related to VC activities (fundraising, investments, and exits). The empirical results show that VC firms with a higher level of failure tolerance and risk appetite are more likely to fail, whereas VC firms with better fundraising abilities and stronger control rights are less likely to do so.

En Venture Capital satsning innebär att en investerare satsar pengar i ett företag för att efter en tid kunna sälja sina andelar. Venture capital-bolagen specialiserar sig på att gå in med aktivt affärsstöd (riskkapital och kompetens) till företag med utvecklingspotential oftast med ett tidsbegränsat engagemang. Investeraren har redan vid begynnelse av investering en målsättning att lämna och sälja sitt innehav, vilket benämns exit. Med exit menas det sätt på vilket ledning och investerare kan likvidera den värdetillväxt som uppkommit.

Uppsatsens syfte är att undersöka och beskriva de drivkrafterna som ligger bakom olika former av exitstrategier. För att uppnå uppsatsens syften gjorde vi fallstudie med hjälp av kvalitativ undersökningsmetod.

De teorier som tillämpades i uppsatsen var till att börja med de första viktiga stegen mot exiten nämligen investeringsbeslutet. För att genomföra dessa, venture capitalbolagen måste gå igenom olika urvalsprocesser. Vidare tillämpades följande teorier: investeringsfaser, exitstrategier, exitmöjligheter och konflikt över exiten.

De slutsatser som dras av undersökningen är: De främsta faktorer som påverkar eller dominerar valet av exitbeslut bland de undersökta bolagen är de ekonomiska faktorer. I undersökningen visat sig också den vanligaste exit alternativet för venture capitalbolagen är industriell försäljning . Vidare visat sig i undersökningen för kunna skapa exitmöjligheter det är viktigt att uppfylla några kriterier som marknaden kräver. Kriterierna kan vara: att välja ”rätt” bolag vid investerings tillfälle, välja ”rätt” bolag med bra affärsidé”, rätt” företagsledning, etablera bra kontaktnät, synas i ”rätt”sammanhang, att hitta ”rätt” positioner på marknaden, ha aktiv äganderoll genom till exempel att ha representanter i styrelse i portföljebolagen.

Through a case study of venture capital firms, the purpose of this essay is to examine and analyse the motives that lay behind the different alternatives of exit strategies.

The essay is based on a case study whereby qualitative data has been acquired through interviews with venture capital firms.

Theories that have been utilised as instruments of analysis are: Venture capital investment decision, investment phases, exit strategies, conflicts concerning exits.

The conclusion of the study is that, the main factors which affect the option of exit decisions are the economic factors in the firms that have been studied. Further showed the study that trade sale is the common route of exit in the firms. The study also reveals the criteria’s that must be fulfilled in order to make successful exits are; to chose the right firm during investment, have a good market position, to have quality management, to establish good contact net, to play active role in the firm by having board of directors in portfolio firm & build good public relations.

Investment returns of European venture capital (VC) funds have consistently underperformed US VC funds. This has led to reduced allocations of funds raised for European venture from traditional institutional investors and consequently less finance available for investment into high-growth entrepreneurial companies in Europe. The aim of this study is to investigate the factors that may give rise to a performance difference between European and US VC funds in the attempt to explain the reasons for the gap in performance. Potential factors are structural resulting from characteristics of the funds themselves, operational such as the investment practices of the VC firms which manage the funds and wider environmental such as culture and attitude to risk and the wider ecosystem in which the funds operate. The characteristics of the better performing funds in Europe and US are also investigated. Previous studies offer incomplete explanations on the reasons for the difference in performance. Studies have focused on the UK in comparison to US and have not included continental European funds. There are no studies that have reviewed the entire investment process from sourcing deals to exiting deals, specifically contrasting Europe and the US in the context of the variables pertaining to the investment process and the impact on the fund performance gap. Previous studies have been largely quantitative in approach and influences that cannot be quantified, such as the cultural dimension, are therefore not captured in the analyses. The study engages a critical realist philosophy and embraces an engaged scholarship, qualitative approach with some 64 semi-structured interviews with separate VC firms in UK, continental Europe and USA and 40 interviews with other stakeholders from those geographies who are related to the VC industry, including limited partner investors, entrepreneurs and advisors. Key findings of the research are that US VC firms have proportionately more partners with operational and entrepreneurial backgrounds than do European firms, they use a theme approach to identify future areas for investment, pursue a “home run” investment strategy, do most of their due diligence in house, have entrepreneurially friendly terms in their term sheets and are more proactive in achieving optimal exits for their investments than European VCs. The research has had impact in that the findings have been shared and discussed with the UK professional VC association.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.

All venture capital investments exhibit some form of asymmetric information. The seminal paper on the structure of venture investments, Kaplan and Stromberg (2004), investigates how venture capitalists use deal construction to control agency conflicts within funded deals and their associated internal, external and execution risks. Another key strand of the academic literature has reviewed the contractual arrangements venture capital firms reach, the process of venture capital selection and determinants of their success from a post-investment perspective (Fried and Hisrich (1994), Manigart, Vermeir and Sapienza (1996), Gompers and Lerner (2004), Wright and Robbie (1998)). This thesis also explores venture capital investment, albeit from a preinvestment standpoint. In contrast to Kaplan and Stromberg???s (2004) demonstration of the use of venture capital mechanisms to control agency issues, this research addresses how agency issues influence the final selection of potential investments by venture capitalists. Kaplan and Stromberg (2004) use post-funding metrics to capture risks, which influence post-contract design. From a pre-funding perspective, internal, external and execution risks are subjective, rare and difficult to measure. Nevertheless, this thesis uses pre-funding proxies to replicate these risks, some of which have direct empirical academic support. Information for sixtytwo deals, thirty-four funded and twenty-eight unfunded, was hand collected through a combination of surveys, interviews and consultation with five of Australia???s leading venture capital firms, and individuals from the Australian Private Equity and Venture Capital Association (AVCAL) board and executive. The key results indicate that once past initial screening stages, investment proposals that have a higher likelihood of receiving venture investment are those that had prior government investment, and/or, where the entrepreneur has proposed the investment be through milestone tranches and where revenue is already being generated (for early stage ventures). The results suggest that venture capitalists tend to allocate capital to investments perceived as ???safer??? with respect to agency conflicts. More specifically, venture capitalists are more reliant on signals of quality and lower risk, such as government grants, restriction of capital outlay and prior revenue generation ??? all of which reduce associated levels of internal and execution risk in new ventures.

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2004.
Includes bibliographical references (leaves 36-38).
Venture capital has been an important factor in driving innovation and creating wealth in the US. Even outside the US, venture capital is playing an increasingly important role, influencing many aspects of start-up companies. While the US has traditionally been at the forefront of the venture industry, in the past few years, this industry has matured considerably, removing the mystery around its mechanics and how wealth is created. Today, with the advent of globalization, a growing number of US venture capitalists is having a more international outlook and investing in non-US markets. The objective of my research is to determine how the US venture model is being scaled internationally, more particularly in the Australasian region. The General Partners of US and Australian venture capital firms have been analyzed in terms of their educational background and work experience, with a view to identify if there are any correlations in terms of their education background, type and location of their work experience.
by Yann Kwok.
M.B.A.

In recent years intangibles have taken a more prominent role in the economy. Within the technology sector, young companies may have very little in terms of tangible assets. With no assets to serve as collateral, these companies often find it difficult to obtain funding. Venture capital firms attempt to fill this funding gap by providing finance in exchange for equity. This research considers intangibles from the point of view of the venture capitalist. Specific emphasis is made on patenting, as a formal way of protecting intellectual property. In high technology firms patents not only prevent competitors from copying inventions, but may also preclude them from advancing in their technologies. The availability of patent statistics enables objective measurement of the level of IP protection. The role of the reporting of intangibles in the investment decision is considered. Then, the role of intangibles per se is examined. The link between patenting and the level of investment is expl ored further. In a move away from the previous studies which focused only on existing datasets, unstructured interviews were conducted amongst early stage investor associations. Thereafter, a series of interviews was carried out amongst venture capitalists in the United Kingdom. Finally, a new dataset was constructed which includes information on venture capital investments, financial accounting information, and data relating to patenting. This data was then analysed statistically using regression techniques. Policy making organisations have been promoting the need for increased reporting on intangibles. However, key findings suggest that venture capitalists consider the existing level of reporting of intangible assets by investee companies to be adequate. Increased complexity within the financial reports does not reduce the level of due diligence carried out. They are more concerned about the nature of the intangibles than the financial reporting aspect. Although this study identifies a link between patenting and the level of investment by venture capitalists, they consider the business proposition as a whole, and no specific value is ascribed to patents.

This study used protocol analysis to identify key variables in the venture capital investment decision-making process. The study used a fictional business plan which was based on six actual business plans. This fictional business plan was presented to ten venture capitalists who were asked to review it to decide whether to interview the investee. The protocols obtained from these subjects were analyzed to determine patterns within the subjects' review. The sections of the business plan which were commonly reviewed first were the deal structure, the executive summary, and the management section. The management section was used by the greatest number of subjects. The market section was used the greatest number of times. The data were also organized by type of operators used in each subject's protocols. Information Search/Retrieval operators were most common, followed by Task Structuring/Set Goal operators. When classified into the four major categories of Task Structuring/Set Goal, Information Acquisition, Analytical/ Inferential, and Choice operators, Analytical/Inferential operators were used most frequently. Choice operators were least used. The phrases were analyzed by the relevant section in the business plan. The market received the greatest number of references, followed by references to the product and to management. However, when references to the income statement and balance sheet were combined as phrases relevant to the financial statements, the financial statements were referred to more frequently than the product or the people. The subjects appeared to use an unidentified choice program within which certain models could be identified as subroutines. The subjects used an elimination-by-aspects model to screen the business plan. If the business plan met the criteria within the elimination-by-aspects model of the subject, the subject used an additive/nonlinear model for the remainder of the review. The results of this study indicate that financial statements provide information important in the venture capital investment decision-making process. This finding is contrary to the advice usually given to potential venture capital investees.

Cette thèse traite de l’entreprise pour encourager les activités entrepreneuriales et innovantes. Le premier chapitre examine et évalue la réaction du secteur privé à la participation du public au capital-risque. Le deuxième chapitre étudie et estime l’écart de performance entre les fonds de capital-risque gouvernementaux et les fonds privés, et les facteurs déterminants de cet écart. Le troisième chapitre fournit un cadre théorique pour comprendre et analyser la motivation pour l’innovation de niveau de l’entreprise dans les réseaux industriels. Dans le Chapitre 1, intitulé « Les gouvernements peuvent-ils favoriser le développement du capital-risque ? », j’examine le rôle de l’intervention gouvernementale dans l’émergence du capital risque (VC, pour ’venture capital’) en Chine de 1999 à 2013, dans l’aide base de données novatrice et d’une expérience politique unique. L’analyse statistique, qui utilise la méthode des doubles différences, montre que le programme du gouvernement central conduit à une augmentation de l’investissement local de la part des fonds de VCs publics et privés. Dans le Chapitre 2, intitulé « (Sous-)performance de capital-risque public : preuves et explications », j’utilise un échantillon de la même source que celui du chapitre 1, et je trouve que les start-ups soutenues par des fonds de capital-risque gouvernementaux sont moins susceptibles d’être introduites en bourse que les fonds de VC privés. Les résultats indiquent que l’écart de performance est réduit lorsque le marché du capital-risque passe à un stade plus avancé. Dans le Chapitre 3, intitulé « l’Association d’entreprise dans un contexte d’information imparfaite le long de la chaîne de valeur mondiale », (co-écrit avec Rui Zhang), nous montrons l’existence d’équilibres multiples dans lesquels un fournisseur peut être associé à différents sièges, mais à des étapes différentes de la chaîne de valeur. Notre modèle comporte également des forces compensatoires d’incitations à l’innovation des entreprises et nous prédisons une tendance non monotone entre innovation et productivité des entreprises
This dissertation investigates the firm incentives to participate in entrepreneurial and innovative activities. The first chapter examines and evaluates the private sector’s response to public involvement in venture capital. The second chapter studies and estimates the performance gap between government linked and private venture capitalists and the determining factors of this performance gap. The third chapter provides a theoretical framework to understand and analyze the firm-level innovation incentives in the industrial networks. In Chapter 1, titled "Can Governments Foster the Development of Venture Capital?", I examine the role of government intervention in the emergence of venture capital (VC) in China during 1999-2013 using a novel dataset and a unique policy experiment. The difference-indifference analysis shows that the central government program leads to an increase in local investment from both government and private VCs. In Chapter 2, titled "(Under)performance of government venture capitalists: Evidence and explanations", using the sample from the same source as in Chapter 1, I find that startups backed by government VCs are less likely to have Initial Public Offering (IPO) exits than private VCs. Evidence shows that the performance gap is narrowed down when the VC market develops into a more mature stage. In Chapter 3, titled "Firm Level Match under Imperfect Information Along the Global Value Chain", (joint with Rui Zhang), we develop a 1-m frictional positive assortative matching (PAM) model along the global value chain. We show the existence of multiple equilibria where a supplier could be matched to different headquarters, but at different stages on the value chain. Our model also features countervailing forces of firm innovation incentives and we predict a nonmonotonic pattern between innovation and firm productivity

The development of venture capital industry is not only about the effective operation of venture capital firm, but also its supporting environments. The venture capital firms in different countries have different operation modes, for instance, the organizational structure, the source of finance and the investment behavior. The reason of the differences is that the venture capital supporting environments such as economy, culture, laws and regulations are different in various countries.   The objective of this research is to study the venture capital supporting environments in China and analyze the role of government on how to improve these supporting environments. After research questions are decided, the author analyzes and combines the selected previous researches in different countries in order to build a more systematic, scientific and complete theoretical framework to conduct the case study in China.   In the case study, all seven venture capital supporting environments in China are studied. By analyzing the facts, the author finds out that some environments such as laws and policies and financial environment have developed rapidly in past years and become more and more adapt to the development of venture capital. However, some other environments, especially the culture environment have negative effects on venture capital and can not be easily changed within a short period of time. Based on these findings, the author tries to find out some possible actions that the government can do to reduce these limitations and improve the venture capital supporting environments.     Key words: venture capital; supporting environment; venture business; venture capitalist

O investimento em capital de risco, enquanto participação acionária em projetos embrionários, ou ainda em fase inicial, é envolto em incerteza, baixa liquidez e grande risco, oferecendo como contrapartida uma possibilidade de rentabilidade acima de qualquer padrão de mercado). O presente trabalho buscou classificar os diversos fatores de atratividade dos empreendimentos de risco, de modo a poder classificá-los pela sua relativa prioridade média em relação ao poder de decisão dos investidores de capital de risco. Os itens que obtiveram maior média foram a indicação através de uma rede confiável, a taxa de retorno e potencial donegócio e a existência de produto ou idéia superior. Ainda, o perfil médio dos investidores foi identificado como sendo do sexo masculino, com idade entre os 25 e os 34 anos, possui pósgraduação, com um montante total investido de menos de 250 mil dólares, realiza os investimentos de forma particular, investiu de uma a duas vezes nos últimos cinco anos no mercado de capital de risco, deixa seu capital investido por um período de 1 a 3 anos, se classifica como um investidor anjo, e não utiliza recursos de terceiros em seus investimentos. Foram identificadas variações dentre grupos específicos de investidores, como uma maior procura por liquidez e segurança nos investidores que optam por estratégias de investimento de menor prazo médio, a menor busca por experiência prévia do empreendedor em investidores de menor faixa etária, bem como uma maior exigência média geral nas investidoras de sexo feminino, bem como uma exigência por maior capacidade e experiência gerencial da equipe de gestão do empreendimento por investidores que possuem uma maior frequência de investimento no mercado de capital de risco. Por fim, o trabalho buscou apresentar um modelo de atração para os investidores a ser utilizado por empreendimentos que planejem captar recursos no mercado de capital de risco Brasileiro
Investment in venture capital, as an equity investment in embryonic projects, or even in the initial phase, is surrounded by uncertainty, low liquidity and great risk, offering as a counterpart a possibility of profitability above any market standard. The present work sought o classify the various factors of attractiveness of risk ventures, in order to be able to classify them by their relative average priority in relation to the decision-making inpact of venture capital investors. The items that obtained the highest average were the indication through a reliable network, the rate of return and potential of the business and the existence of a superior product or idea. In addition, the average profile of investors was identified as male, aged 25 to 34 years, has a postgraduate degree, with a total amount invested of less than $ 250,000, makes investments in a particular way, invested one to two times in the last five years in the venture capital market, leaves its capital invested for a period of 1 to 3 years, qualifies as an angel investor, and does not use third-party resources in its investments. Variations have been identified among specific groups of investors, such as a greater demand for liquidity and security in investors who opt for smaller term investment strategies, the smaller search for previous experience of the entrepreneur in younger investors, as well as a higher requirement overall average in female investors, as well as a requirement for greater capacity and managerial experience of the venture management team by investors who have a higher frequency of investment in the venture capital market. Finally, the work sought to present a model of attraction for investors to be used by enterprises that plan to raise funds in the Brazilian venture capital market.

A country’s economic growth is often related to its ability to be innovative. Innovation is unluckily difficult to measure and it is hard to find a specific source of innovation. Start-ups/new firms are however one of those specific sources. One investment type that has specialized in investing in young and highly technological portfolio-companies is venture capital. This thesis therefore aims to investigate the impact that the venture capital industry has on young and innovative companies in Sweden by a literature review and a quantitative study of approximately 60 different companies. By firstly thoroughly examining the underlying scientific theory for this subject and furthermore examining both the international as well as the Swedish venture capital industry it was possible to conduct an empirical study. A selection of young companies was taken from an impartial source and then identified as innovative or not by Schumpeter’s definition of innovation. Moreover these companies were investigated on the premises on whether they had been invested in by venture capital or not. It was found that the Swedish venture capital industry is highly involved in young and innovative Swedish companies, and a linkage between innovation and venture capital exists. However the answer to the question on whether it is venture capital that drives innovation or if it is already innovative companies that attract venture capital is inconclusive in this thesis and future studies in this field is needed.

Abstract The purpose of this study is to explore the role of relational capital in raising and utilizing venture capital by international new ventures (INVs). This study reviews literature on INVs, venture capital, and social capital theory and defines relational capital as the level of trust developed in the course of interactions between INVs and venture capital firms (VC firms) that leads to positive venture capital decisions and value creation. This empirical study of relational capital formation and utilization is accomplished by the case study method. The study is based on interviews with five case INVs regarding entrepreneurs’ and venture capitalists (VCs)’ experiences with forming and utilizing relational capital for the purpose of new venture internationalization. This study approaches the relationship between INV and VC firm from the relational capital perspective, exploring how INVs can raise venture capital for internationalization as well as how they can use relational capital to improve outcomes of new venture internationalization after venture capital is allocated. The analysis identifies the factors that affect formation of relational capital between INVs and VC firms, the outcomes that result from relational capital formed in the pre-investment stage, and the impact on performance of INVs during post-investment collaboration. This study develops a conceptual model proposing that the financing process for entrepreneurial INVs consists of forming and using relational capital to obtain venture capital investment. The particular characteristics of the INVs and VC firms, as well as behavior-related factors, have been found to be important to forming relational capital between INVs and VC firms. The relational capital formation process creates an atmosphere in which entrepreneurs and VCs provide both tangible and intangible resources to support INV internationalization. This study adds the relational capital viewpoint to the literature pertaining to venture capital and INVs by analyzing the role of relational capital in financing entrepreneurial INVs. Regarding managerial implications, the study shows how entrepreneurs can influence the venture capital investment process, where VC firms should pay attention to while working with INVs, and how policy makers could contribute by providing a positive environment for INV and VC firm collaboration
Tiivistelmä Tässä tutkimuksessa tarkastellaan kansainvälisiin uusiin yrityksiin tehtyjä pääomasijoitusprosesseja suhdepääoman muotoutumisen ja hyödyntämisen näkökulmasta. Tutkimuksessa aihetta lähestytään sekä yritysten että pääomasijoittajien kannalta ja työn teoreettinen viitekehys rakennetaan kansainvälisten uusien yritysten, pääomasijoitusprosessin, ja sosiaalisen pääoman tutkimusjulkaisujen kautta. Työssä suhdepääoma määritellään luottamukseksi, joka kehittyy vuorovaikutuksen kautta yrityksen ja pääomasijoittajan välille ja johtaa positiiviseen pääomasijoituspäätökseen ja arvonluontiin. Työn empiirisessä osassa suhdepääoman muotoutumista ja hyödyntämistä tutkitaan tapaustutkimusmenetelmällä. Tutkimuksen aineisto on kerätty haastattelemalla viiden kansainvälisen nuoren yrityksen yrittäjiä sekä pääomasijoittajia heidän kokemuksistaan yrityksen kansainvälisen kasvun rahoittamiseksi. Työssä yritysten ja pääomasijoittajien suhdetta lähestytään suhdepääoman kautta, erityisesti kun yritysten tavoitteena on saada pääomasijoitus kansainvälistä kasvua varten ja hyödyntää syntynyttä suhdepääomaa pääomasijoituksen jälkeen yrityksen kansainvälistymisprosessissa. Analyysissä tunnistetaan tekijät, jotka vaikuttavat suhdepääoman kehittymiseen, tulokset, jotka ovat seurausta ennen pääomasijoitusta syntyneestä suhdepääomasta, sekä vaikutukset, jotka yrityksen ja pääomasijoittajan välisellä suhdepääomalla on yrityksen menestymiseen pääomasijoituksen jälkeen. Tutkimuksessa yrityksen ja pääomasijoittajan erityisillä piirteillä, toimintamalleilla ja käyttäytymisellä havaittiin olevan merkitystä suhdepääoman muotoutumisessa ja hyödyntämisessä. Suhdepääoman muotoutumisprosessi luo ilmapiirin, jossa yrittäjät ja pääomasijoittajat voivat tuoda aineellisia ja aineettomia resursseja yrityksen kansainvälistymisen tueksi. Työn teoreettinen kontribuutio on erityisesti sen tuoma suhdenäkökulma pääomasijoitusprosessitutkimukseen. Työssä osoitetaan myös kuinka yrittäjät voivat käytännössä vaikuttaa pääomasijoituksen saamiseen ja päätöksentekoprosessiin ja mihin pääomasijoittajien tulisi kiinnittää huomiota yritysten kanssa työskennellessään

[Truncated abstract] This thesis investigates the influence the interpersonal relationship between the venture capitalist and the entrepreneur has upon the performance of the venture capitalist's investment. Its aim was to explore how venture capitalists add value (as opposed to what they do) to their investments in order to arrive at a fuller explanation of investment performance than that offered by agency theory – the current paradigm for the value adding relationship. The qualitative study that underpins this thesis found that in Australia, the quality of the interpersonal relationship between the venture capitalist and the entrepreneur during the value adding phase of the venture capital investment cycle positively predicts the performance of the venture capitalist's investment. The study was prompted by the researcher's personal experiences (as both a venture capitalist and as an entrepreneur in Australia) which suggested that the interpersonal relationship may influence the effectiveness of the venture capitalist's attempts to add value. Whilst the prior research had explored in depth the provision of value adding services (e.g. strategic advice, recruitment of key personnel, board participation), less progress appears to have been made in understanding the role of the interpersonal processes. Although several studies have attempted to fit an established social exchange theory to the value adding process, a published explanation of investment performance (process outcome) that includes interpersonal processes has not been identified. ... The exercise of power was found to be a negative predictor of investment performance. Power was typically exercised as the last resort measure in a failed interpersonal relationship and either precipitated or consolidated inferior investment performance. The failure of the venture capitalists to exercise their formal power in time to arrest underperformance was often due to their fear of the 'hold up' power of (threat of abandonment by) the entrepreneur. Agency theory's contribution to the explanation of investment performance was limited to (adverse) selection, at which point the combined competence of the dyad was determined. In addition to the new explanatory theory, some other insights into value adding were provided, including the key role of mutuality and the lack of explanatory power of the contract, information asymmetry, or goal alignment. The thesis offers contributions to knowledge and practice. Its contributions to knowledge include: the generation of new theory about value adding and investment performance in venture capital deals and some new theoretical concepts, the application of a methodological approach that is new to the area of interest, and a new insight into the Australian venture capital sector. It outlines the implications of the study findings for venture capitalists, entrepreneurs and policy makers, providing some fresh ideas for their consideration. It particularly highlights the need for cultural change in value adding relationships and the influence of heritage on the likelihood of the venture capitalist being successful.