VENTURE CAPITALIST RELATIONSHIPS IN THE DEAL STRUCTURING AND POST‐INVESTMENT STAGES OF NEW FIRM CREATION

Lloyd Steier and Royston Greenwood

Journal of Management Studies, 1995, vol. 32, issue 3, 337-357

Abstract: Entrepreneurs often turn to outsiders for financial assistance. Venture capitalists represent an outside source of finance that generally takes an active interest in managing the firm. Two common practices within the venture capital industry are co‐investing and staged financing. Responding to the call for more process research which examines the deal structuring and post‐investment stages of venture capital involvement, this research utilized a case study approach to explore salient features and themes that emerged in a relationship involving entrepreneurs and multiple co‐investors in a new firm start‐up. Central findings of the study included: penetrating the venture capital network is a significant first step in securing financial resources and, intriguingly, relationships supersede business plans in securing these resources; paradoxically, venture capitalists establish milestones and tight time‐lines yet inadvertently contribute to many of the delays experienced by a start‐up firm; the operating logic of venture capital networks, constrained by the hierarchical structures of their constituents, may be incompatible with the needs of a start‐up firm; activities within the deal structuring and post‐investment stages are more dynamic and iterative than current models suggest; and, staged financing, when combined with multiple venture partners, requires a clear understanding of each party's collaborative role in the enterprise.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
https://doi.org/10.1111/j.1467-6486.1995.tb00779.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jomstd:v:32:y:1995:i:3:p:337-357

Ordering information: This journal article can be ordered from
http://www.blackwell ... s.asp?ref=00022-2380

Access Statistics for this article

Journal of Management Studies is currently edited by Timothy Clark, Steven W. Floyd and Mike Wright

More articles in Journal of Management Studies from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().