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Venture capitalist governance and value added in four countries

(1996) JOURNAL OF BUSINESS VENTURING. 11(6). p.439-469
Author
Organization
Abstract
The rapid internationalization of markets for venture capital is expanding the funding alternatives available to entrepreneurs. For venture capital firms, this trend spells intensified competition in markets already at or past saturation. At issue for both entrepreneurs and venture capital firms is how and when venture capitalists (VCs) can provide meaningful oversight and add value to their portfolio companies beyond the provision of capital. An important way VCs add value beyond the money they provide is through their close relationships with the managers of their portfolio companies. Whereas some VCs take a very hands-off approach to oversight, others become deeply involved in the development of their portfolio companies. Utilizing surveys of VCs in the United States and the three largest markets in Europe (the United Kingdom the Netherlands, and France), we examined the determinants of interaction between VCs and CEOs, the roles VCs assume, and VCs' perceptions of how much value they add through these roles. We examined the strategic, interpersonal, and networking roles through which VCs are involved in their portfolio companies, and we analyzed how successful such efforts were. By so doing we were able to shed light on how and when VCs in four major markets expend their greatest effort to provide oversight and value-added assistance to their investment companies. Consistent with prior empirical work, we found that VCs saw strategic involvement as their most important role, i.e., providing financial and business advice and functioning as a sounding board. They rated their interpersonal roles (as mentor and confidant to CEOs) as next in value.
Keywords
CEO, AGENCY

Citation

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Chicago
Sapienza, HJ, Sophie Manigart, and W Vermier. 1996. “Venture Capitalist Governance and Value Added in Four Countries.” Journal of Business Venturing 11 (6): 439–469.
APA
Sapienza, HJ, Manigart, S., & Vermier, W. (1996). Venture capitalist governance and value added in four countries. JOURNAL OF BUSINESS VENTURING, 11(6), 439–469.
Vancouver
1.
Sapienza H, Manigart S, Vermier W. Venture capitalist governance and value added in four countries. JOURNAL OF BUSINESS VENTURING. 1996;11(6):439–69.
MLA
Sapienza, HJ, Sophie Manigart, and W Vermier. “Venture Capitalist Governance and Value Added in Four Countries.” JOURNAL OF BUSINESS VENTURING 11.6 (1996): 439–469. Print.
@article{155409,
  abstract     = {The rapid internationalization of markets for venture capital is expanding the funding alternatives available to entrepreneurs. For venture capital firms, this trend spells intensified competition in markets already at or past saturation. At issue for both entrepreneurs and venture capital firms is how and when venture capitalists (VCs) can provide meaningful oversight and add value to their portfolio companies beyond the provision of capital. An important way VCs add value beyond the money they provide is through their close relationships with the managers of their portfolio companies. Whereas some VCs take a very hands-off approach to oversight, others become deeply involved in the development of their portfolio companies. Utilizing surveys of VCs in the United States and the three largest markets in Europe (the United Kingdom the Netherlands, and France), we examined the determinants of interaction between VCs and CEOs, the roles VCs assume, and VCs' perceptions of how much value they add through these roles. We examined the strategic, interpersonal, and networking roles through which VCs are involved in their portfolio companies, and we analyzed how successful such efforts were. By so doing we were able to shed light on how and when VCs in four major markets expend their greatest effort to provide oversight and value-added assistance to their investment companies. Consistent with prior empirical work, we found that VCs saw strategic involvement as their most important role, i.e., providing financial and business advice and functioning as a sounding board. They rated their interpersonal roles (as mentor and confidant to CEOs) as next in value.},
  author       = {Sapienza, HJ and Manigart, Sophie and Vermier, W},
  issn         = {0883-9026},
  journal      = {JOURNAL OF BUSINESS VENTURING},
  keywords     = {CEO,AGENCY},
  language     = {eng},
  number       = {6},
  pages        = {439--469},
  title        = {Venture capitalist governance and value added in four countries},
  url          = {http://dx.doi.org/10.1016/S0883-9026(96)00052-3},
  volume       = {11},
  year         = {1996},
}

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