Different Types of Venture Capital Investors and Value-added to High-Tech Portfolio Firms
This paper examines the knowhow in strategic business areas that venture capital companies and organizations impart to their portfolio firms in early-stage high-tech enterprises and the mechanisms they use to impart this knowledge. The paper considers three types of investors, independent, private-sector venture capital firms, public-sector venture capital organizations, and business angels, who can be regarded as informal venture capital investors. The study draws on a limited data set to illustrate their activities. The paper draws attention to different theoretical approaches that might explain the observed behaviour. It examines whether the differences are related to the intermediary position of each investor type and subsequent incentives they have in doing their jobs - especially expounded by contract-based approaches - or the competencies in doing their jobs based on competence-based view of the firms. It turns out that neither approach alone can account for the observed behaviour. It is claimed that the two different types of rationales have interactive relations thus reinforcing the observed patterns of behaviour. Thus an active involvement both ex ante and ex post by the private sector venture capital firms might be the result of both factors at work. Another important finding relates to the role of public sector venture capital organizations as the most passive among the investor types. This leads the paper to suggest a reconsideration of the role of the public sector organisations in venture capital activity.
|Date of creation:||2008|
|Contact details of provider:|| Postal: Lönnrotinkatu 4 B, FIN-00120 HELSINKI|
Phone: +358 (0)9 609 900
Fax: +358 (0)9 601 753
Web page: http://www.etla.fi/
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2007. "Whom You Know Matters: Venture Capital Networks and Investment Performance," Journal of Finance, American Finance Association, vol. 62(1), pages 251-301, February.
- Tereza Tykvová, 2006. "How do investment patterns of independent and captive private equity funds differ? Evidence from Germany," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 20(4), pages 399-418, December.
- Schäfer, Dorothea & Schilder, Dirk, 2006.
"Informed capital in a hostile environment: the case of relational investors in Germany,"
Freiberg Working Papers
2006,03, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
- Dorothea Schäfer & Dirk Schilder, 2006. "Informed Capital in a Hostile Environment: The Case of Relational Investors in Germany," Discussion Papers of DIW Berlin 549, DIW Berlin, German Institute for Economic Research.
- Barney, Jay B. & Busenitz, Lowell W. & Fiet, James O. & Moesel, Douglas D., 1996. "New venture teams' assessment of learning assistance from venture capital firms," Journal of Business Venturing, Elsevier, vol. 11(4), pages 257-272, July.
- Bottazzi, Laura & Da Rin, Marco & Hellmann, Thomas, 2008.
"Who are the active investors?: Evidence from venture capital,"
Journal of Financial Economics,
Elsevier, vol. 89(3), pages 488-512, September.
- L. Bottazzi & M. Da Rin & T. Hellmann, 2007. "Who are the active investors? Evidence from Venture Capital," Working Papers 611, Dipartimento Scienze Economiche, Universita' di Bologna.
- Bottazzi, L. & Da Rin, M. & Hellmann, T., 2008. "Who are the active investors? Evidence from venture capital," Other publications TiSEM 9336411f-ac48-4fad-8a2c-d, Tilburg University, School of Economics and Management.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Joerg Freiling, 2004. "A Competence-based Theory of the Firm," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 15(1), pages 27-52.
- Hyytinen, Ari & Väänänen, Lotta, 2002. "Government Funding of Small and Medium-sized Enterprises in Finland," Discussion Papers 832, The Research Institute of the Finnish Economy.
- Thomas Hellmann & Manju Puri, 2002.
"Venture Capital and the Professionalization of Start-Up Firms: Empirical Evidence,"
Journal of Finance,
American Finance Association, vol. 57(1), pages 169-197, February.
- Hellmann, Thomas F. & Puri, Manju, 2000. "Venture Capital and the Professionalization of Start-up Firms: Empirical Evidence," Research Papers 1661, Stanford University, Graduate School of Business.
- Sapienza, Harry J., 1992. "When do venture capitalists add value?," Journal of Business Venturing, Elsevier, vol. 7(1), pages 9-27, January.
- Tykvova, Tereza & Walz, Uwe, 2007. "How important is participation of different venture capitalists in German IPOs?," Global Finance Journal, Elsevier, vol. 17(3), pages 350-378, March.
- Ehrlich, Sanford B. & De Noble, Alex F. & Moore, Tracy & Weaver, Richard R., 1994. "After the cash arrives: A comparative study of venture capital and private investor involvement in entrepreneurial firms," Journal of Business Venturing, Elsevier, vol. 9(1), pages 67-82, January.
- M. Knockaert & A. Lockett & B. Clarysse & M. Wright, 2005. "Do human capital and fund characteristics drive follow-up behaviour of early stage high tech VCs?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/325, Ghent University, Faculty of Economics and Business Administration.
- Knockaert, M. & Lockett, A. & Clarysse, B. & Wright, M., 2005. "Do human capital and fund characteristics drive follow-up behaviour of early stage high tech vcs?," Vlerick Leuven Gent Management School Working Paper Series 2005-20, Vlerick Leuven Gent Management School.
- Baum, Joel A. C. & Silverman, Brian S., 2004. "Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups," Journal of Business Venturing, Elsevier, vol. 19(3), pages 411-436, May.
- Schilder, Dirk, 2006. "Public venture capital in Germany: task force or forced task?," Freiberg Working Papers 2006,12, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
- Sapienza, Harry J. & Manigart, Sophie & Vermeir, Wim, 1996. "Venture capitalist governance and value added in four countries," Journal of Business Venturing, Elsevier, vol. 11(6), pages 439-469, November. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:rif:dpaper:1149. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kaija Hyvönen-Rajecki)
If references are entirely missing, you can add them using this form.