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Raising capital for rapid growth in young technology ventures: when business angels and venture capitalists coinvest

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  • Christophe Bonnet
  • Peter Wirtz

Abstract

We investigate the relational dynamics of raising equity finance to support strong growth in a technology venture when different investor types (business angels and venture capitalists) coinvest. Our objective is to ascertain which of two theoretical frameworks, agency theory or the cognitive approach to entrepreneurial finance, is the strongest predictor of the interactions between investors and entrepreneurs. We conducted a prospective case study whose analysis yields overall support for both approaches, while it also indicates that the relevance of agency-related and cognitive concerns clearly depends on the stage of the process and on investor-type. We conclude that first-time entrepreneurs may have an interest in addressing both formal and informal venture capitalists and that the proper timing and combination of investor-profiles may help to lower the cost of capital and contribute to future growth.

Suggested Citation

  • Christophe Bonnet & Peter Wirtz, 2011. "Raising capital for rapid growth in young technology ventures: when business angels and venture capitalists coinvest," Venture Capital, Taylor & Francis Journals, vol. 14(2-3), pages 91-110, December.
  • Handle: RePEc:taf:veecee:v:14:y:2011:i:2-3:p:91-110
    DOI: 10.1080/13691066.2012.654603
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    File URL: http://hdl.handle.net/10.1080/13691066.2012.654603
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    Cited by:

    1. Peter Wirtz & Christophe Bonnet & Laurence Cohen, 2015. "Angel Cognition and Active Involvement in BAN Governance and Management," Working paper serie RMT - Grenoble Ecole de Management hal-01182804, HAL.
    2. Peter Wirtz & Christophe Bonnet & Laurence Cohen, 2015. "Angel Cognition and Active Involvement in BAN Governance and Management," Working Papers hal-01182804, HAL.
    3. Laurence Cohen & Peter Wirtz, 2018. "Caractéristiques des entrepreneurs, finance entrepreneuriale et trajectoires de croissance," Working Papers hal-01723858, HAL.
    4. Christophe Bonnet & Peter Wirtz & Martine Séville, 2013. "Nascent Governance: The Impact Of Entrepreneurial Finance On Board Formation And Roles," Grenoble Ecole de Management (Post-Print) halshs-00850021, HAL.

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