IDEAS home Printed from https://ideas.repec.org/p/dij/wpfarg/1100704.html
   My bibliography  Save this paper

Investor type and new-venture governance:cognition vs. interest alignment

Author

Listed:
  • Christophe Bonnet

    (Grenoble Ecole de Management)

  • Peter Wirtz

    (Université de Lyon 2 - COACTIS)

Abstract

We study the specific rationale governing entrepreneur-investor relations in young ventures which raise equity capital from different investor types in pursuit of a strong growth strategy. Special emphasis is put on the governance process through which investors and entrepreneurs interact in a complex setting, where an entrepreneur faces at least two distinct investor types (business angels and venture capitalists). We do so in an effort to capture the specific role and impact of each for venture dynamics, trying to reach beyond static descriptions of entrepreneurs’ and investors’ characteristics. To this end, we set up a prospective case study (Bitektine, 2008). We actually use the case of a young growth venture in the process of raising external equity from angel investors and venture capitalists to test the relevance of two conflicting theories of venture governance. The study design has been set up to answer the following question: What is the dominant logic behind the governance of entrepreneur-investor interactions at an early stage in the growth process? Is it mainly driven by considerations of personal interest, as agency theory would have it, or does entrepreneurial and investor cognition play a dominant role?

Suggested Citation

  • Christophe Bonnet & Peter Wirtz, 2010. "Investor type and new-venture governance:cognition vs. interest alignment," Working Papers CREGO 1100704, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    • Handle: RePEc:dij:wpfarg:1100704
    as

    Download full text from publisher

    File URL: https://repec-crego.u-bourgogne.fr/images/stories/wp/1100704.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mark Van Osnabrugge, 2000. "A comparison of business angel and venture capitalist investment procedures: An agency theory-based analysis," Venture Capital, Taylor & Francis Journals, vol. 2(2), pages 91-109, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Laurence Cohen & Peter Wirtz, 2018. "Caractéristiques des entrepreneurs, finance entrepreneuriale et trajectoires de croissance," Working Papers hal-01723858, HAL.
    2. Laurence Cohen & Kirsten Burkhardt, 2019. "Entrepreneurs (novices vs. experts) and investors: Interaction and rationality dynamics (effectual vs. causal) [Entrepreneurs (novice vs. expert) et investisseurs : interactions et dynamique des ra," Post-Print hal-02177388, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christophe Bonnet & Laurence Cohen & Peter Wirtz, 2015. "Angel Cognition and Active Involvement in BAN Governance and Management," Working paper serie RMT - Grenoble Ecole de Management hal-01182804, HAL.
    2. Donia Trabelsi & Baran Siyahhan, 2021. "Startup cash flows and venture capital investments: A real options approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 737-750, April.
    3. Tom Vanacker & Veroniek Collewaert & Ine Paeleman, 2013. "The Relationship between Slack Resources and the Performance of Entrepreneurial Firms: The Role of Venture Capital and Angel Investors," Journal of Management Studies, Wiley Blackwell, vol. 50(6), pages 1070-1096, September.
    4. Tiago Botelho & Richard Harrison & Colin Mason, 2021. "Business angel exits: a theory of planned behaviour perspective," Small Business Economics, Springer, vol. 57(1), pages 583-602, June.
    5. Berger, Marius & Hottenrott, Hanna, 2021. "Start-up subsidies and the sources of venture capital," Journal of Business Venturing Insights, Elsevier, vol. 16(C).
    6. Eriseld Kalemaj, 2017. "Social Contract: Sovereign Contracted or Created? - Comparative Analysis Between T. Hobbes and S. Pufendorf," European Journal of Multidisciplinary Studies Articles, Revistia Research and Publishing, vol. 2, January A.
    7. Daniel Appelhoff & René Mauer & Veroniek Collewaert & Malte Brettel, 2016. "The conflict potential of the entrepreneur’s decision-making style in the entrepreneur-investor relationship," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 601-623, June.
    8. Cox, Kevin C. & Lortie, Jason & Stewart, Steven A., 2017. "When to pray to the angels for funding: The seasonality of angel investing in new ventures," Journal of Business Venturing Insights, Elsevier, vol. 7(C), pages 68-76.
    9. Johannes Wallmeroth & Peter Wirtz & Alexander Peter Groh, 2017. "Institutional Seed Financing, Angel Financing, and Crowdfunding of Entrepreneurial Ventures: A Literature Review," Working Papers hal-01527999, HAL.
    10. Kamran Ahmed Siddiqui & Mohammad Emad Al-Shaikh & Ishtiaq Ahmed Bajwa & Omar Alenzi, 2021. "Venture capital challenges in Saudi Arabia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 291-302, March.
    11. Richard T. Harrison & Colin M. Mason, 2007. "Does Gender Matter? Women Business Angels and the Supply of Entrepreneurial Finance," Entrepreneurship Theory and Practice, , vol. 31(3), pages 445-472, May.
    12. Markus Fitza & Thomas J. Dean, 2016. "How much do VCS and underwriters matter? A comparative investigation of venture capitalist and underwriter effects on IPO underpricing," Venture Capital, Taylor & Francis Journals, vol. 18(2), pages 95-114, April.
    13. Alexandra Moritz & Joern H. Block & Andreas Heinz, 2016. "Financing patterns of European SMEs -- an empirical taxonomy," Venture Capital, Taylor & Francis Journals, vol. 18(2), pages 115-148, April.
    14. Mojca Svetek, 2023. "The Role of Entrepreneurs’ Perceived Competence and Cooperativeness in Early-Stage Financing," Entrepreneurship Theory and Practice, , vol. 47(6), pages 2047-2076, November.
    15. Manuel Kaiser & Elisabeth S. C. Berger, 2021. "Trust in the investor relationship marketing of startups: a systematic literature review and research agenda," Management Review Quarterly, Springer, vol. 71(2), pages 491-517, April.
    16. Jeaneth Johansson & Malin Malmström & Joakim Wincent, 2021. "Sustainable Investments in Responsible SMEs: That’s What’s Distinguish Government VCs from Private VCs," JRFM, MDPI, vol. 14(1), pages 1-22, January.
    17. Jerry Coakley & Aristogenis Lazos & Jose Liñares-Zegarra, 2022. "Strategic entrepreneurial choice between competing crowdfunding platforms," The Journal of Technology Transfer, Springer, vol. 47(6), pages 1794-1824, December.
    18. Ozgur Arslan-Ayaydin & Darold Barnum & Mehmet Baha Karan & Atilla Hakan Ozdemir, 2014. "How is Moral Hazard Related to Financing R&D and Innovations?," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 111-131.
    19. Regan Stevenson & Sean R. McMahon & Chaim Letwin & Michael P. Ciuchta, 2022. "Entrepreneur fund-seeking: toward a theory of funding fit in the era of equity crowdfunding," Small Business Economics, Springer, vol. 58(4), pages 2061-2086, April.
    20. Bonini, Stefano & Capizzi, Vincenzo & Valletta, Mario & Zocchi, Paola, 2018. "Angel network affiliation and business angels' investment practices," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 592-608.

    More about this item

    Keywords

    business angel; venture capital; governance; agency theory; cognition; prospective case study.;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dij:wpfarg:1100704. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Angèle RENAUD (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.