A ‘Trade and Exchange’ View of the Investor–Entrepreneur Relationship: Framework for an Early-Stage Entrepreneurial Financing and Ownership Risks/Rewards Management Strategy

Ignatius Andrew Duhu (), Gideon Maas () and Arun Sukumar ()
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Ignatius Andrew Duhu: Coventry University, The International Centre for Transformational Entrepreneurship
Gideon Maas: Coventry University, The International Centre for Transformational Entrepreneurship
Arun Sukumar: Coventry University, The International Centre for Transformational Entrepreneurship

Chapter Chapter 7 in Structural Transformation and Economic Development in Africa, 2026, pp 131-159 from Springer

Abstract: Abstract Drawing from an integrated opportunity-resource-relationship (ORR) perspective, this chapter develops a theoretical model, linking the relationship between the entrepreneur (stewards) and investors (sponsors) to the available financial/non-financial resources and values created by an entrepreneur’s venture. Our theory highlights the multifaceted relationships that entrepreneurs and investors share and the bi-directional exchanges of non-financial and financial resources that build these relationships over a given period. It is argued that the relationship between the entrepreneur and the investors can be construed as being co-operative in nature and mutually beneficial. Also, that at the early stage of ventures, investors and entrepreneurs can collaborate to trade and exchange values (ownership) of funded ventures in a special way leveraging the power of data, innovation, strategy, technology, and entrepreneurship. The study adopts an in-depth, open-ended, semi-structured interview approach to investigate the investor–entrepreneur engagement. It uses data collected from secondary sources and also primary sources through interviews with business angels, venture capitalists, entrepreneurs, and promoters. The data obtained were transcribed with the support of Otter.ai and analysed using QDA Miner—a qualitative data analysis tool. The empirical evidence indicates that investor–entrepreneur relationship at the early start-up and scale-up stages suffer from multiple challenges. These challenges are related to the issues within these four conduits—equity, entrepreneur, enterprise, and the environment through which relationship flows. Although investors and entrepreneurs make efforts to address these challenges to promote a cooperative and collaborative relationship, the problem of low engagement remains. The findings can be utilized to enhance collaboration and cooperation in the investor–entrepreneur relationship by identifying the appropriate context to apply relational or control mechanisms, which would eventually lead to better performance of start-up companies. The findings have many important practical implications for investors and entrepreneurs in countries like Nigeria seeking investment opportunities or managing existing relationships. In addition, the findings have some important theory and policy implications for academia and government, respectively. This research work contributes to the body of literature within the field of entrepreneurial finance in developing countries and fills the existing gap in knowledge in the scholarly research into relationships between entrepreneurs and the traditional equity financiers—business angels plus venture capitalists. It also contributes to the literature by developing a model of financing and ownership relationship mechanisms for a more efficient data-driven, digitally enabled relationship between entrepreneurs and their investors. This project makes important contributions to the literature around investor and entrepreneur relationship in start-up companies financing in Nigerian and other developing countries’ entrepreneurial environment. The chapter contributes to the entrepreneurship finance literature by developing a ‘trade and exchange’ view of the investor–entrepreneur relationship, theoretically modelling different investment entry and exit pathways, and linking them to investment risks and rewards plus the success versus failure perceptions of raising follow-on financing for the growth of the new enterprises.

Keywords: Entrepreneurship; Entrepreneurial finance; Entrepreneur-investor relationship; Venture capitalists; Angel investors; Co-operation; Collaboration; Trade and exchange (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-92318-0_7

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DOI: 10.1007/978-3-031-92318-0_7

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