Venture Capital Financing: A Conceptual Framework

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Equity financing in entrepreneurship primarily includes venture capital, corporate venture capital, angel investment, crowdfunding, and accelerators. We take stock of venture financing research to date with two main objectives: (a) to integrate, organize, and assess the large and disparate literature on venture financing; and (b) to identify key considerations relevant for the domain of venture financing moving forward. The net effect is that organizing and assessing existing research in venture financing will assist in launching meaningful, theory-driven research as existing funding models evolve and emerging funding models forge new frontiers.

This paper summarizes current issues in entrepreneurial finance and venture capital, and overviews the papers that appear in a special issue.

Chalmers University of Technology, 2020

Entrepreneurial high growth firms are recognized as having a disproportionate impact on economic development and job creation. It is further recognized that many of these firms need access to venture capital if the high-growth potential is to be realized. Intervention by governments to improve access to finance for entrepreneurial ventures have often focused on supply-side measures. However, there is a growing recognition that access to finance can also be hindered by weaknesses on the demand-side where entrepreneurs need information and advice on the process of raising equity finance and what it means to be investment ready. This thesis focuses on the demand-side of financing and the entrepreneur's point of view on venture capital. Although there is a vast literature about how venture capitalists (VCs) screen and select the entrepreneurial firms they wish to invest in, only a handful of studies have examined venture capital investments from an entrepreneur's perspective. Based on interviews with 53 venture capital backed entrepreneurs and a quantitative longitudinal study of 273 venture capital backed startups, this thesis aims to better understand the "knowledge gap" on the demand-side and how entrepreneurs handle problems and challenges when raising and being funded by venture capital. The findings in this thesis are related to the full venture capital cycle, from the initial selection phase, through the investment process to after the exit. In paper ONE and TWO we argue that entrepreneurs might be considered as a more active part in the VC-entrepreneur relationship than most previous studies have assumed. To avoid the VC's asymmetric information advantage I suggest in paper ONE that the entrepreneurs develop informal tools to mitigate potential problems and risks. In paper TWO we show how entrepreneurs in "thin" venture capital markets recognize the opportunities that a "thick" venture capital market can provide. In paper THREE we propose that entrepreneurs who are in the process of raising venture capital have reasons to negotiate around future exit choices with the VC when considering the long-term effects of venture capital.

Journal of Management Development, 2004

Asserts that the venture capital industry is an essential source of capital for new enterprises and a major engine of growth in the US economy. Its decisions are based on an assessment of the prospects of the enterprises it decides to support, of their products and markets and the facilities they will need. Outlines six lessons for the industry.

Venture Capital

This paper reviews the circumstances surrounding the launch of Venture Capital: An International Journal of Entrepreneurial Finance in 1999. It highlights a number of significant changes in the structure of the entrepreneurial finance market over the past 20 years, notably the decline of "classic" venture capital, the effective closure of the small-cap IPO market, the scale-up problem and the emergence of a second equity gap, the geographical dispersion of venture capital and the institutionalisation of the business angel market. A number of new players in the marketcoinvestment schemes, equity crowdfunding platforms and blockchain technology-based Initial Coin Offeringsare discussed and the challenges and opportunities they pose for investors, entrepreneurs, policy makers, regulators and academic researchers are assessed. Against this background, a number of key features of the evolution of the content and focus of the Journal are discussed. The paper finishes with a summary of the papers included in this Special Issue.

Springer Texts in Business and Economics, 2019

Financing the Venture 12.1 Introduction This chapter examines the financing options available to entrepreneurs from initial start-up through growth and expansion. It examines the key sources of finance with attention to debt, equity and retained profit. While much of the popular focus of entrepreneurial financing has been placed on venture capital, this is only one of many options available to entrepreneurs, and it is not always the most appropriate or popular. Furthermore, as we will show, securing venture capital financing is quite difficult and most new ventures will not be eligible for such financing.

Journal of Management Research and Analysis, 2023

An availability of Finance for startups is a new era of business nowadays and has empowered innovation and growth in human’s life. With this business evolution, young entrepreneurs, small startup businesses even followed by small financing companies have started involving themselves for new and unique business ideas with a source of Venture Capital. This Research Paper explores the role of Venture Capital Financing in fostering innovative businesses. The paper provides an overview of the venture capital analysis, highlighting its unique characteristics, importance and differentiates investment strategies from the view point of Investors as well as Investees. It also examines the motivation and factors considered by venture capitalist when evaluating investment opportunities, including scalability, sources, vision, market potential, and technology and management teams. Furthermore, this paper examines the implications of venture capital financing from the point of Investee, Entrepreneurs on growth strategy of start-ups, mentorship, and value addition beyond just the monetary investment as well as contacts building along with strategic guidance. The study analysis the risk and reasons of failure of venture capital financing followed by the challenges faced, including the information being asymmetry, business being very risky and exist strategies. Finally, this paper highlights the importance, preferable fund-raising terms, rounds raised for investment and rounds utilized expectations of investors as well as of investee and the size of venture financing. Overall, this research paper offers valuable insights into significant role of venture capital financing in shaping entrepreneurial strategy and establishing the transformation of innovative and creative ideas into a successful enterprise. Keywords: Venture Capital Financing, Equity, Analysis, Risk and challenges

Oxford Handbooks Online, 2012

We study the financing strategies of 191 start-ups after they have received venture capital (VC) and thereby contribute to the staging literature. The VC backed start-ups have raised financing on 345 occasions over a five-year period after the initial VC investment.

Handbook of Research on Venture Capital, 2007