The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities

By S. Bonini, Vincenzo Capizzi. Venture Capital, 2019

116 citations recorded by the source corpus.

ABSTRACT The last decade has seen the emergence of alternative sources of early-stage finance, which are radically changing and reshaping the start-up eco-system. These include incubators, accelerators, science and technology parks, university-affiliated seed funds, corporate seed funds, business angels – including “super-angels”, angel groups, business angel networks and angel investment funds – and both equity- and debt-based crowdfunding platforms. In parallel with this development, large financial institutions that have traditionally invested in late-stage and mature companies, have increasingly diversified their investment portfolios to “get into the venture game”, in some cases, through the traditional closed-end funds model and, in other cases through direct investments and co-investments alongside the closed-end funds. This paper reviews the main features, investment policies and risk-return profiles of the institutional and informal investors operating in the very early stage of the life cycle of entrepreneurial firms. It concludes that traditional closed-end venture capital funds continue to play an important role in early stage finance because of their unique competences (e.g. screening, negotiating and monitoring) in what has become a wider and more complex financing ecosystem.

Subfields: Accounting, Finance, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/a4b39bab6868be98e36ba3edeb0b2c7f77d4b616