too. Having this on mind, the result should be higher future returns for the investor and, of course, enhanced performance for the venture capital backed company. Consequently, when the role of the venture capital in financing small businesses is discussed, it can be inferred that it is multiple. Therefore, more attention to the latter is devoted in the following sections.
3 Why invest in promising business? – Venture capitalist perspective
It is vast agreed and practically proven that venture capitalists invest only in promising projects. At the very beginning, investors are deeply sceptical, bad mood reasoning with more answers “no”, rather than “yes” (Mason and Rogers, 1997; cited in Mason and Harrison, 2004). Furthermore, venture capitalists screen potential investments in regards to the collecting information about business, its market approach, management team or entrepreneur (Berger and Udel, 1998; cited in Baeyens and Manigart, 2003), all in order to reduce the initial information asymmetry and potential problems with entrepreneurs. In other words, before final contracting, venture capitalist spends much of his time and efforts in assessing and observing the opportunity, in terms of its market size, strategies, customer adoption etc. (Kaplan and Strömberg, 2001b). This, in turn, should eliminate the possibility to access a non-quality project (adverse selection problem) and “... [should] ensure that the funds will not be diverted to fund an alternative project (moral hazard problem)” (Berger and Udell, 2002, p.32). In this phase of initial scanning, investor should be convinced that his money will not simply “evaporate”. Instead of that, it should make future value for him.
Pre-screening phase, accordingly, enables platform for contracting on a sustainable basis. This means that the investment will surely bear fruit later. Thus, venture capitalists provide the capital and begin with creating new value, which they can extract benefits for themselves from. Conseprocess in the firm in many different ways. Vast literature recognizes the last as a process of adding new value to the venture capital backed company. Indeed, the process of pre-investment screening discussed above, aims to provide stabile platform for investing in a company where the venture capitalist is convinced that he can add value to (Reynolds, 2000).
The mission of the venture capitalist is to raise the business and not just to get reward, because as the business is raised, the rewards will come automatically (Pandey et al, 2003). Instead of that, “riding” together with the entrepreneur is more crucial for being rewarded. Broadly speaking, raising a business means that venture capitalist provides complete oversight to the firm, in terms of provided services, help and guidance for the entrepreneur (Lerner, 1995). Indeed, venture capitalist introduces a package of services in the firm in order to enhance its performance and its value.
One of the most important services for the venture capital backed firm is the expert
advice that venture capitalist offers to the entrepreneur. Indeed, investor acts asentrepreneur’s mentor, because, investing in nearby located start-up firms, means that he has sufficient knowledge for the industry, and therefore he can be involved in designing strategies, hiring the best executives and enhancing the network of contracts with suppliers and costumers (Bottazzi and Rin, 2002; Hellmann and Puri, 2002a). According to Jungwirth and Moog (2004), this specific knowledge establishes basis for advanced assessment of the project: will it be successful or not and allows it “to be monitored at lower agency costs”(p.111).
教材管理系统的需求分析 Moreover, value-add process facilitates the venture capitalist as a firm’s promoter and consultant (Repullo and Suarez, 1998), because of his richness of expertise, competencies, experience and reputation (Sætre, 2003; Wilson, 2005). In the same line of thinking, Fried and Hirish (1995) also agree that venture capitalists create value by providing “networks, moral support, general business knowledge and discipline” (p.106). Kaplan and Strömberg (2001b) further broaden the areas where the investor could be contributable: “developing a business plan, assisting with acquisitions, facilitating strategic relationships with other companies, or designing employee compensation” (p.429). It can be inferred that, once the investor introduces its money in a business, he must devote much of his time in helping the business to succeed, structuring internal organization and appropriate human resources management (Hellmann and Puri, 2002b). In other words, venture capitalist’s help and adding-value are decanted in professionalization of the firm. Generally, it seems that firm’s professionalization is the major benefit from the venture capital financing.
The article of Hellmann and Puri (2000; cited in Bottazzi and Rin, 2002) offers good explanation of the process of professionalization. Besides above mentioned features, they point out the speed of developing and bringing ambitious product to the market by venture backed companies. Moreover, this is crucial to achieve market leadership, especially among innovative firms (Hellmann and Puri, 2002a). “Venture backed companies are, in fact, found to pursue more radical and ambitious product or process innovations than other companies” (Hellmann and Puri, 2000, p.236). Furthermore, Kortum and Lerner (1998) found that venture capital financing strongly impinge on firm’s innovation, patenting processes and the influx of technological opportunities. uently, the role of the venture capitalist is dual: careful selection of promising firms or projects and than close observation over time (Kaplan and Strömberg, 2001a; cited in Hellmann and Puri, 2002a). The latter constitutes the next phase of the process of venture capital financing accompanied with creating new value.
4 Venture capital – “rich services package” and innovation stimulator
Even though the main role of venture capital is feeding small, innovative and fast growing firms with fresh capital, many articles (Giudici and Paleari, 2000; Kortum and Lerner, 2000; Bottazzi and Rin, 2002; Hellmann and Puri, 2002a; Sætre, 2003; Wilson, 2005) suggest that venture capital backed firms receive many other services from venture capitalist which are as much important for the entrepreneur, as the very capital infused is.
In their article, Giudici and Paleari (2000) argue that as the capital is introduced in the firm, venture capitalist gains power to dynamically impinge on the management
上一页 [1] [2] [3] [4] [5] [6] [7] [8] [9] 下一页
风险投资融资英文文献和翻译 第4页下载如图片无法显示或论文不完整，请联系qq752018766
