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Studies on the venture capital process
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE).
2006 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis consists of an introductory part, including venture capital definitions, the history of venture capital in Sweden, and an overview of the venture capital process, and four self-contained papers on venture capital and the venture capital process.

Paper 1 investigates the standardisation of the contractual strategies applied in the Swedish venture capital industry. The study was based on a questionnaire data regarding the use of contractual covenants. Our results indicate that the greatest differences occur among those with different investment preferences. There would appear to be two distinct venture capital cultures controlling contractual choices in these groups. Our findings generally conform to expectations as predicated by institutional theory.

Paper 2 investigate venture capital firms’ valuation practices in two different economic contexts, in the economic boom of 1999 and in the downturn market of 2002 by using an experimental case study design with a case based on a real firm. Contrary to our expectations, in times of heightened stringency and economic downturn, venture capital investors employ fewer valuation models than they do in boom times. The main contribution of our research is an increase in the knowledge of venture capitalists’ valuation practices under different market conditions. It can also contribute to researchers developing more relevant theories of valuation, valuation models and valuation practice.

Paper 3 empirically examines the linkage between governance, trust and performance based on a questionnaire sent to entrepreneurs in venture capital backed companies in Sweden. The results suggest that the level of trust between the venture capitalist and the entrepreneur affects the relationship between VCs governance and the portfolio company’s performance.

Paper 4 analyse exit strategies and exit-directed activities among entrepreneurs in venture capital relationships. The study focuses on the effect of the venture capital organization (independent, public sector and captive) on strategy and exit-directed activities. The results indicate that firms with a trade sale strategy tend to have a higher degree of exit activities compared to other exit strategies. Furthermore, the type of venture capital organization involved (especially when comparing private independent VCs to public sector VCs) also affects exit strategies and activities.

Place, publisher, year, edition, pages
Umeå: Handelshögskolan vid Umeå universitet , 2006. , 187 p.
Series
Studier i företagsekonomi. Serie B, ISSN 0346-8291 ; 59
Keyword [en]
venture capital, contract, institutional theory, governance, trust, valutation, exit
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-851ISBN: 91-7264-160-6 (print)OAI: oai:DiVA.org:umu-851DiVA: diva2:144734
Public defence
2006-09-22, 205, Samhällsvetarhuset, Umeå universitet, Umeå, 00:00
Opponent
Supervisors
Available from: 2006-09-04 Created: 2006-09-04 Last updated: 2017-05-24Bibliographically approved
List of papers
1. Institutional theory and contracting in venture capital: the Swedish experience
Open this publication in new window or tab >>Institutional theory and contracting in venture capital: the Swedish experience
2004 (English)In: Venture Capital: an International Journal of Entrepreneurial Finance, ISSN 1369-1066, E-ISSN 1464-5343, Venture Capital, Vol. 6, no 1, 47-71 p.Article in journal (Refereed) Published
Abstract [en]

This paper tests the tenets of institutional theory by means of an empirical study of the contractual strategies applied in the Swedish venture capital industry. Venture capitalists differ in, for example, their preferences for early or later stage investments. Some have more experience than others and some are employed by public funds while others work in non-public funds. The sector, however, was expected to be relatively homogeneous due to the small size of the industry and the cultural milieu in which it is located. This homogeneity was tested regarding the use of contractual strategies among venture capitalists in Sweden. Seventy-nine separate contractual covenants were examined in relation to distinctive sector variables, structure, experience and investment preferences. The results indicate that the greatest differences in contractual strategies occur among those with differing investment preferences. There appear to be two distinct venture capital cultures controlling contractual choices in these groups. The public and the non-public sector have limited variations in their contractual choices, although public funds employ slightly more standardized strategies. Little difference was found between the contractual choices made by experienced and inexperienced venture capitalists. The findings generally conform to the outcomes predicted by institutional theory.

Place, publisher, year, edition, pages
London: Taylor & Francis, 2004
Keyword
venture capital, contracts, institutional theory
National Category
Economics and Business
Research subject
Business Studies
Identifiers
urn:nbn:se:umu:diva-5266 (URN)10.1080/1369106042000175582 (DOI)
Available from: 2006-09-04 Created: 2006-09-04 Last updated: 2011-06-22Bibliographically approved
2. How do venture capital firms value entrepreneurial ventures?
Open this publication in new window or tab >>How do venture capital firms value entrepreneurial ventures?
(English)In: TECHNOVATION, ISSN 0166-4972Article in journal (Refereed) Submitted
Identifiers
urn:nbn:se:umu:diva-5267 (URN)
Available from: 2006-09-04 Created: 2006-09-04 Last updated: 2017-05-24Bibliographically approved
3. The effects of governance and trust on performance in a venture capital relationship
Open this publication in new window or tab >>The effects of governance and trust on performance in a venture capital relationship
(English)Manuscript (preprint) (Other academic)
National Category
Economics and Business
Identifiers
urn:nbn:se:umu:diva-5268 (URN)
Available from: 2006-09-04 Created: 2006-09-04 Last updated: 2017-05-22Bibliographically approved
4. Exit strategy and the intensity of exit-directed activities among venture capital-backed entrepreneurs in Sweden
Open this publication in new window or tab >>Exit strategy and the intensity of exit-directed activities among venture capital-backed entrepreneurs in Sweden
2006 (English)In: Venture Capital: A European Perspective, 2006, 143-156 p.Chapter in book (Other academic)
Identifiers
urn:nbn:se:umu:diva-5269 (URN)
Available from: 2006-09-04 Created: 2006-09-04 Last updated: 2017-05-24Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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Output format
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