Impact of Working Capital Management on Cash Holdings

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Venture Capitalists on the Seed Stage Arena
A Fit or Misfit

Johan Adolfsson

Avdelning, Institution Division, Department

Datum Date 2003-06-03

Ekonomiska Institutionen 581 83 LINKÖPING
Language Svenska/Swedish X Engelska/English Report category Licentiatavhandling Examensarbete C-uppsats X D-uppsats Övrig rapport ____ ISBN ISRN Ekonomprogrammet 2003/30 Serietitel och serienummer Title of series, numbering ISSN

URL för elektronisk version http://www.ep.liu.se/exjobb/eki/2003/ep/030/ Title Author Venture Capitalists on the Seed Stage Arena - A Fit or Misfit Johan Adolfsson

Abstract Background: Growth oriented entrepreneurial businesses need funding for the development of their idea, technology, product etc. However, for the businesses in the very earliest stages of development, access to funding is very limited. Growing young ventures are important job creators and positively affect growth in an economy. Bridging the gap of funding to these companies is therefore on the agenda of governments around the world. Purpose: To describe the situation facing seed stage investing venture capitalists. I will emphasize difficulties and evaluate venture capitalists ability in addressing them. Effects of the difficulties in form of access to financing for entrepreneurs and a possible need for government intervention will be examined. Method: Empirical information from seed stage investing venture capital organizations have been collected in the form of face-to-face interviews, email- questionnaires and a telephone interview. Organizations from Sweden, Denmark and Germany are included in the study. Result: Several factors make seed stage investing unattractive compared to later stages. Important difficulties are higher risks, high costs for fund management, goal incongruence in the investor – venture capitalist relation and lack of bargaining power for seed venture capitalists. Environmental factors that have an impact on seed investing are the deal flow, the investment climate and access to soft funding. Seed stage investing is a very challenging business and the difficulties are to a large extent hard to overcome. The investors more likely have to accept them and I conclude that long term profitability of seed funds is unlikely, at least in absence of government support in form of soft funding towards the entrepreneurial businesses. Keywords Seed capital, Venture capital, Financing, Equity gap, Soft funding, Entrepreneurial activity, Öystein Fredriksen

Avdelning, Institution Division, Department

Datum Date 2003-06-03

Ekonomiska Institutionen 581 83 LINKÖPING
Språk Svenska/Swedish X Engelska/English Rapporttyp Licentiatavhandling Examensarbete C-uppsats X D-uppsats Övrig rapport ____ ISBN ISRN Ekonomprogrammet 2003/30 Serietitel och serienummer Title of series, numbering ISSN

URL för elektronisk version http://www.ep.liu.se/exjobb/eki/2003/ep/030/ Titel Författare Riskkapitalister och Investeringar i Sådd Stadiet Johan Adolfsson

Sammanfattning Bakgrund: Små tillväxtorienterade företag behöver kapital för att utveckla sin idé, teknologi, produkt etc. Tyvärr är dock tillgången till kapital för dessa företag för närvarande mycket sparsam. Detta ses som ett problem ur ett nationalekonomiskt perspektiv eftersom tillväxtföretagen är mycket viktiga skapare av arbetstillfällen samt ekonomisk tillväxt. Syfte: Att beskriva den situation riskkapitalister står inför vid investeringar i sådd stadiet. Jag poängterar svårigheter och värderar riskkapitalisternas kapacitet att hantera dessa. Betydelsen av statligt stöd i olika former diskuteras. Metod: Empirisk information samlas in från riskkapitalister som investerar i sådd stadiet i form av personliga intervjuer, telefonintervjuer samt e-mail formulär. Organisationer från Sverige, Danmark och Tyskland ingår i studien. Resultat: Många faktorer gör sådd investeringar oattraktiva jämfört med investeringar i senare stadier. Viktiga svårigheter är högre risk, högre...
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