Impact of Working Capital Management on Cash Holdings
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
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
Bibliography: 2.2. Type of Survey Gilje & Grimen (1992) describe two different ways of conducting a study Figure 3: The Venture Capital Process. (Gompers & Lerner, 1999, p.9) Fredriksens (1997, p.16) definition of venture capital is: 13