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Joachim Henkel - One of the best experts on this subject based on the ideXlab platform.
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quality signals the role of patents alliances and team experience in Venture Capital Financing
Research Policy, 2015Co-Authors: Daniel Hoenig, Joachim HenkelAbstract:Abstract Observable resources, particularly patents, alliances, and team experience, are known to affect a start-up's ability to attract Venture Capital Financing. In this context they potentially fulfill a twofold function: as productive assets and, likely, as signals of characteristics of a Venture that are not observable at the time of assessment. In particular, patents, alliances, and team experience may serve as signals of the unobservable quality of a Venture's technology. Most existing studies based on firm-level transaction data cannot disentangle signaling from productive effects. Using a conjoint-based survey among 187 European and U.S. Venture Capitalists, we find they rely on research alliances and, partly, on team experience as signals of technological quality. While patents affect the Venture Capitalists’ decision making in their property rights function, we find no indication that they serve as technology quality signals.
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quality signals the role of patents alliances and team experience in Venture Capital Financing
Social Science Research Network, 2014Co-Authors: Daniel Hoenig, Joachim HenkelAbstract:Observable resources, particularly patents, alliances, and team experience, are known to impact a start-up’s ability to attract Venture Capital Financing. In this context they potentially fulfill a two-fold function: as productive assets and, likely, as signals of characteristics of a Venture that are not observable at the time of assessment. In particular, patents, alliances, and team experience may serve as signals of the unobservable quality of a Venture’s technology. Most existing studies based on firm-level transaction data cannot disentangle signaling from productive effects. Using a conjoint-based survey among 187 European and U.S. Venture Capitalists, we find they rely on research alliances and, partly, on team experience as signals of technological quality. While patents impact the Venture Capitalists’ decision making in their property rights function, we find no indication that they serve as technology quality signals.
Sophie Manigart - One of the best experts on this subject based on the ideXlab platform.
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government as fund of fund and vc fund sponsors effect on employment in portfolio companies
Social Science Research Network, 2017Co-Authors: Thomas Standaert, Sophie ManigartAbstract:Governments around the world have set up fund-of-fund programs to increase the supply of Venture Capital Financing to young growth-oriented firms. In these programs, a government fund-of-fund acts as limited partner in a Venture Capital fund. The Venture Capital investment process is hereby delegated to external investors, which were selected by the government fund-of-fund. We investigate employment growth in 108 portfolio companies that benefited from the ARKimedes fund-of-fund in Flanders. Accounting for the heterogeneity in the types of Venture Capital investors managing hybrid funds, and the associated goal diversity and resource endowments, we find that portfolio companies backed by hybrid independent Venture Capital funds show greater employment growth than those backed by hybrid captive or hybrid government Venture Capital funds. This finding is relevant because it indicates that the financial objectives of hybrid independent Venture Capital funds are highly compatible with the government’s objective of employment growth, as providing companies with superior monitoring and value adding services with the objective of realizing a successful exit creates employment in the process.
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firm valuation in Venture Capital Financing rounds the role of investor bargaining power
Journal of Business Finance & Accounting, 2012Co-Authors: Andy Heughebaert, Sophie ManigartAbstract:Abstract: This study explores the impact of the bargaining power of Venture Capital (VC) firms on the valuation of their portfolio companies. VC firm types with greater bargaining power vis-a-vis the entrepreneur are expected to negotiate lower valuations compared with VC firm types with less bargaining power. Consistent with this hypothesis, university and government VC firms, which have comparatively greater bargaining power, negotiate lower valuations compared with independent VC firms. The valuations of captive VC firms equal those of independent VC firms. Our findings suggest that valuations in the VC contract reflect the relative bargaining power of the VC investor.
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firm valuation in Venture Capital Financing rounds the role of investor bargaining power
Journal of Business Finance & Accounting, 2010Co-Authors: Andy Heughebaert, Sophie ManigartAbstract:This study explores the impact of bargaining power of Venture Capital (VC) firms on the valuation of their portfolio companies. We argue that VC firm types with greater bargaining power vis-a-vis the entrepreneur negotiate lower valuations compared to VC firm types with less bargaining power. We find that VC firm types with stronger bargaining power, namely university and government VC firms, value investments lower compared to independent VC firms. The valuations of captive VC firms equal those of independent VC firms. Our findings suggest that valuations in the VC contract reflect the relative bargaining power of the VC investor.
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follow on Financing of Venture Capital backed companies the choice between debt equity existing and new investors
Research Papers in Economics, 2006Co-Authors: Katleen Baeyens, Sophie ManigartAbstract:We study the Financing strategies of 191 start-ups after they have received Venture Capital (VC) and thereby contribute to the staging literature. The VC backed start-ups have raised Financing on 345 occasions over a five-year period after the initial VC investment. Surprisingly, bank debt is the most important source of funding for these young and growthoriented companies, supporting the view that VC investors have a certifying role in their portfolio companies. Bank debt is available to firms with a lower demand for money, lower levels of risk and of information asymmetries, implying that staging of equity funding is less important for these firms. A firm only raises equity when it’s debt capacity is exhausted, hinting that equity investors are investors of last resort. New equity is provided by the existing shareholders in 70% of the equity issues, supporting earlier findings that staged Financing is important in Venture Capital Financing. New shareholders invest when large amounts of funding are required and when risk and information asymmetries are high. We interpret these findings as support for the extended pecking order theory. In line with syndication arguments, new investors thus provide risk sharing opportunities and skills to screen and monitor and thereby reduce information asymmetries. New equity investors face adverse selection problems, however, in that only the most risky investments are syndicated.
Ola Bengtsson - One of the best experts on this subject based on the ideXlab platform.
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relational Venture Capital Financing of serial founders
Journal of Financial Intermediation, 2013Co-Authors: Ola BengtssonAbstract:I study how often and why a serial founder receives Financing for his new company from a Venture Capital (VC) firm that also invested in his previous company. One in 10 VC investments leads to a repeated relationship and one in three serial founders enters into a repeated relationship with any previous VC firm. A repeated relationship is more likely when the relational VC firm has acquired more private information about the founder, but less likely if the founder’s new Venture has a bad fit with the VC firm’s geographic or industry focus. My findings add to the literature on relational Financing by showing that the preservation of information is an important motivation for relational Financing when screening and monitoring costs are high. Yet, repeated relationships are discontinued because investors also respond to information problems by specializing in certain types of firms. Finally, I find evidence of non-relational investments being passed onto trusted VC syndication partners.
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relational Venture Capital Financing of serial founders
Social Science Research Network, 2008Co-Authors: Ola BengtssonAbstract:Relationships are an important solution to information problems in finance. This study addresses relational Financing for a class of investors who face particularly severe information problems-Venture Capitalists (VCs). Using a hand-collected dataset of 637 serial founders, I examine how often and why a serial founder receives Financing for his new company from a VC who also was an investor in his previous company. Such repeated relationships are surprisingly uncommon. Only one in ten VC investments leads to a repeated relationship and only one in three serial founders enters into a repeated relationship with any previous VC. VCs with more information about a founder are significantly more likely to engage in relational Financing, but the likelihood of repeated relationships is lower when the new company is in a geographically distant location. Relationship VCs are more involved in the founder's new company.
Daniel Hoenig - One of the best experts on this subject based on the ideXlab platform.
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quality signals the role of patents alliances and team experience in Venture Capital Financing
Research Policy, 2015Co-Authors: Daniel Hoenig, Joachim HenkelAbstract:Abstract Observable resources, particularly patents, alliances, and team experience, are known to affect a start-up's ability to attract Venture Capital Financing. In this context they potentially fulfill a twofold function: as productive assets and, likely, as signals of characteristics of a Venture that are not observable at the time of assessment. In particular, patents, alliances, and team experience may serve as signals of the unobservable quality of a Venture's technology. Most existing studies based on firm-level transaction data cannot disentangle signaling from productive effects. Using a conjoint-based survey among 187 European and U.S. Venture Capitalists, we find they rely on research alliances and, partly, on team experience as signals of technological quality. While patents affect the Venture Capitalists’ decision making in their property rights function, we find no indication that they serve as technology quality signals.
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quality signals the role of patents alliances and team experience in Venture Capital Financing
Social Science Research Network, 2014Co-Authors: Daniel Hoenig, Joachim HenkelAbstract:Observable resources, particularly patents, alliances, and team experience, are known to impact a start-up’s ability to attract Venture Capital Financing. In this context they potentially fulfill a two-fold function: as productive assets and, likely, as signals of characteristics of a Venture that are not observable at the time of assessment. In particular, patents, alliances, and team experience may serve as signals of the unobservable quality of a Venture’s technology. Most existing studies based on firm-level transaction data cannot disentangle signaling from productive effects. Using a conjoint-based survey among 187 European and U.S. Venture Capitalists, we find they rely on research alliances and, partly, on team experience as signals of technological quality. While patents impact the Venture Capitalists’ decision making in their property rights function, we find no indication that they serve as technology quality signals.
Mircea Boscoianu - One of the best experts on this subject based on the ideXlab platform.
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aspect regarding the design of active strategies for Venture Capital Financing the flexible adjustment for romania as a frontier Capital market
Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (Online), 2019Co-Authors: Gabriela Prelipcean, Mircea BoscoianuAbstract:Industry 4.0 revolution find a real interest of entrepreneurs but in the case of frontier and emerging markets it is difficult to find a reliable source of long-term Financing. The decoupling of the technological evolution from the evolution of the access to Financing capacities must be analysed from different point of view (financial, legislative, socio- technical). In Romania, as a frontier market there are only few alternative investment solutions capable to respond to the long-term Financing demand of performant projects. The main interest is to understand the strategies for adaptation of Venture Capital fund (VCF) at real conditions. Venture Capital funds (VCF) represents a particular form of private equity investments, scale down and more focused on innovative start-up (or even expansions on technology or markets) projects (the typical value is 10 mil Euro). This form of investments is a personalized response to the general problem related to the actors that do not have tangible assets for collaterals and / or cannot demonstrate the ability to make a profit. In the case of VCF, as a vehicle oriented on innovation and technology, the business plan represents the main element for project portfolio selection in the context of matching the interests of investors with the interests of financed firm’s managers. This contribution is especially important for the case of frontier and emerging markets characterized by additional restrictions (access to strategies, liquidity problems, and agency costs beyond a simple monitoring). For Romania, it is essential to adapt VCF investors' objectives to all phases (selection, evaluation, contract signing and restructuring, progress monitoring, stimulating value-added and, especially, closing the VCF cycle) to real conditions and considering the performance indicators balancing with the value creation mechanisms specific of industry 4.0. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
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aspect regarding the design of active strategies for Venture Capital Financing the flexible adjustment for romania as a frontier Capital market
Social Science Research Network, 2019Co-Authors: Gabriela Prelipcean, Mircea BoscoianuAbstract:Industry 4.0 revolution find a real interest of entrepreneurs but in the case of frontier and emerging markets it is difficult to find a reliable source of long-term Financing. The decoupling of the technological evolution from the evolution of the access to Financing capacities must be analysed from different point of view (financial, legislative, socio- technical). In Romania, as a frontier market there are only few alternative investment solutions capable to respond to the long-term Financing demand of performant projects. The main interest is to understand the strategies for adaptation of Venture Capital fund (VCF) at real conditions. Venture Capital funds (VCF) represents a particular form of private equity investments, scale down and more focused on innovative start-up (or even expansions on technology or markets) projects (the typical value is 10 mil Euro). This form of investments is a personalized response to the general problem related to the actors that do not have tangible assets for collaterals and/or cannot demonstrate the ability to make a profit. In the case of VCF, as a vehicle oriented on innovation and technology, the business plan represents the main element for project portfolio selection in the context of matching the interests of investors with the interests of financed firm’s managers. This contribution is especially important for the case of frontier and emerging markets characterized by additional restrictions (access to strategies, liquidity problems, and agency costs beyond a simple monitoring). For Romania, it is essential to adapt VCF investors' objectives to all phases (selection, evaluation, contract signing and restructuring, progress monitoring, stimulating value-added and, especially, closing the VCF cycle) to real conditions and considering the performance indicators balancing with the value creation mechanisms specific of industry 4.0.
