The main purpose of this thesis is to understand if Investors working in Private Equity and Venture Capital understand what corporate culture is and take it into account when deciding whether to invest or not in a startup or a target company. In order to reach this goal, an empirical research has been developed, interviewing a sample of private equity fund managers and professional business angels, selected randomly and without any personal connection to the author.

The objective of this research is to investigate the role of geography in the venture capital investment in the US biotechnology industry. Data include 4,409 quarterly investment deals from the MoneyTree Survey during 1995 and 2008. Strong spatial concentration patterns are identified. Using both ordinary squares regressions and geographically weighted regressions, we find that as the geographic distance between biotechnology firms and their investors decreases, deal size increases. Location in established biotechnology clusters, such as New England and California, helps to bring a larger deal into individual firms as well. Also, the impact of distance decay in these two clusters is more significant than that in other regions. In addition, we find that a global venture capital investing syndication network brings large deals. Furthermore, firms in later stages of development, and/or with few financing rounds, tend to receive more capital per deal.

Thesis (M.M. (Entrepreneurship and New Venture Creation))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2017. / This explorative study examines the decision making criteria at the screening stage by venture capital firms in South Africa. The study also probes into the decision making criteria on the personality side and whether that has any association with the “big five” characteristics. A threesection questionnaire including both Likert style type (decision making and short version of big five) and nominal questions was sent to venture capital firms. Logistic regression as well as correlation analysis was run on the data. The findings were that individual attributes (entrepreneurs’ characteristics and experience) environment, industry and macro economic environment (characteristics of product and services, characteristics of the market and financial considerations) are all positively related to venture capital firms’ decision to grant finance to an entrepreneur. Findings on the big five characteristics are that only openness to experience, consientiousness and extrarversion were seen as critical considerations by venture capital firms, but not agreeableness and emotional stability characteristics. The study findings are beneficial for entrepreneurs and venture capital firms. / MT2017

Social innovations are solutions related to humanistic needs and the betterment of mankind with the intent of creating social value and eventual societal level changes. Social innovation therefore broadens traditional views of innovation to include processes of societal transformations and human behaviors. These social innovations are becoming more commonplace across all sectors, including capital markets. Private equity and venture capital firms in the capital markets sector engage in social innovation by investing capital with the goal of delivering both economic and social value. Despite the critical importance of venture capital (VC) in the success of social innovations through socially responsible investing, there is a paucity of research in understanding the factors that affect the performance of these social VC firms. This research gap is addressed by asking the following primary research question: What is the role of strategic and structural factors in the performance of socially innovative venture capital firms? The firm level research is theoretically based on the well-established design school. This framework highlights the overarching importance of strategy and structure in the accomplishment of firm goals. In the context of the venture capital industry, it was hypothesized that certain unique strategic and structural factors (i.e., stage of investment, age, size, and network relationships) would influence the performance of socially innovative VC firms. A moderated mediation model was proposed to examine these factors and their influence on performance variation. The sample of socially innovative VC firms was generated from the ThomsonOne Private Equity Database. The research design and methodology followed a systematic and objective process. This included identification of the sample of 381 VC firms, collection of mission statements for each VC firm, development of key word list pertaining to social innovation for content analysis and the collection of archival data on each VC firm. Content analysis was then used to identify the degree to which the firm’s strategic orientation (mission statement) was related to social innovation. Finally, both traditional and more cutting edge statistical analyses (Preacher & Hayes, 2008) were used to evaluate the moderated mediation model. The results of this study provide several key take-a-ways for both researchers and practitioners focusing on social venture capital. Firstly, results indicated that firms adopt distinct foci of social investing that directs their strategic orientation. These various foci have vastly differing effects on the firm’s overall performance, the strategic decisions they make, and the architecture of their structural design. It is therefore necessary to treat each focus area separately given differences in strategies, industry and investment focus, and market orientations. Secondly, including socially related language in the firm’s mission statement does not guarantee that a VC firm will actually implement a social orientation or seek to create the social value inherent in social innovation. Thirdly, certain investment strategies appear to be more advantageous depending of the size of the firm and the socialness of the firm’s orientation. Lastly, results supported that the adoption of a social orientation did not negatively influence firm performance. Overall, results suggest that pursuing a social orientation is viable and effective in delivering blended value strategies for VC firms engaging in social innovation. These findings offers socially oriented venture capital firms insights into strategic and structural aspects that are important to their success in achieving positive exists of their portfolio companies, thus increasing both financial and social value.

O venture capital (VC) é uma importante fonte de captação de recursos para as empresas de base tecnológica ao realizar aporte financeiro temporário e suporte gerencial em troca de participação societária. Trata-se de uma alternativa que se enquadra nos estágios iniciais de desenvolvimento das empresas de biotecnologia. A biotecnologia é considerada uma das áreas mais promissores do século XXI e representa o segundo maior segmento investido pelo mercado nos EUA. No Brasil, o mercado de VC é pouco explorado em comparação com os EUA, resultando no menor número de trabalhos realizados nesta área. A contribuição desta pesquisa na literatura está na análise das dificuldades encontradas pelos gestores de fundos de VC e as empresas de biotecnologia no Brasil. A metodologia utilizada contempla entrevistas com gestores de fundos de VC e questionários junto às empresas de biotecnologia. Concluiu-se que as dificuldades estão presentes nas três funções do ciclo de VC analisadas: captação de recursos, investimentos e desinvestimentos. Na captação de recursos, dificuldades relacionadas ao pequeno histórico e cultura de investimentos em VC no Brasil foram constatadas, além da influência de variáveis macroeconômicas, desestimulando os investidores a atuarem neste mercado. Em relação aos investimentos, há diferenças de percepção entre as gestoras e as empresas quanto aos critérios utilizados no processo de seleção, além da dificuldade de se realizar co-investimentos. No aspecto do desinvestimento, a falta de alternativas viáveis de mecanismos de saída disponíveis no mercado de VC nacional força as gestoras a buscarem a venda estratégica. A pesquisa limitou-se a analisar somente o mercado de VC brasileiro e empresas atuantes no segmento de biotecnologia, não sendo objeto de análise o mercado de PE e empresas atuantes em outros segmentos. / Venture capital is an important source of fund raising for technology based-firms by providing temporary financial and managerial support in exchange for equity. It is an alternative that fits in the early stages of development of biotechnology companies. Biotechnology is considered one of the most promising areas of the twenty-first century and it is the second largest segment of the investment market in the USA. In Brazil, the venture capital market is underexplored compared to the USA, resulting in fewer works done in this area. The contribution of this research in the literature is the analysis of the difficulties between venture capitalists and biotechnology companies in Brazil. Methodology includes interviews with venture capitalists and questionnaires with biotechnology companies. It was concluded that the difficulties are present in the functions of the VC cycle analyzed: fundraising, investments and exits. In fundraising, difficulties related to the history and culture of small investments in VC in Brazil have been verified, as well as the influence of macroeconomic variables, discouraging investors to act in this market. Regarding investments, there are differences of perception between venture capitalists and firms as for criteria used in the selection process, in addition to the difficulty to perform co-investments. In the aspect of exits, the lack of feasible alternative exit mechanisms available in the domestic VC market force the management to seek strategic sale. The research was limited to examining only the VC market and Brazilian firms operating in the biotechnology segment, not being subject to analysis the private equity market and firms operating in other segments.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.

För entreprenörer som arbetar med projekt i en "start up"- fas kan det vara svårt att lyckas med finansieringen. Detta beror på att det inte finns någon ekonomisk historik att visa upp för finansiärerna. För att lyckas få in tillräckligt med kapital för att kunna finansiera ett projekt kan man vända sig till olika typer av investerare. De vanligaste sättet är att man antingen vänder sig till banker, venture capital-bolag eller affärsänglar. Vad som motiverar dessa aktörer är olika, men det gemensamma för dessa aktörer är att det är svårt att få dem att investera i ett projekt. Under senare tid har det dock skapats ett nytt sätt för entreprenörer att få in kapital till sina projekt. Detta nya fenomen kallas för crowdfunding, vilket innebär att entreprenörer lägger ut sina projekt på internet. Entreprenören beskriver sig själv, sitt projekt och motiverar vad pengarna ska användas till. Sedan har vem som helst möjlighet att investera valfri summa till projektet, som motprestation får finansiären någon form av belöning. Crowdfunding har under de senaste åren blivit mer och mer populärt och fler entreprenörer väljer att använda sig av det. Denna studie syftar till att undersöka vilka faktorer som lockar individer till att satsa kapital i crowdfunding-projekt. Studien har baserats på information från 260 stycken projekt där olika faktorer har tagits fram som kan tänkas påverka möjligheten att lyckas. Dessa faktorer baseras på entreprenören, projektets produkt samt investerarens avkastningen. / Entrepreneurs that are in a "start-up" phase within a project they are working on finds it hard to find investors. This could appear within almost every project when a financial history don't exist to show the investors. If a project successfully wants to be financed there are different ways and options to explore. One can turn to either venture capital or business angels. What motivates these investors varies in different projects. What the investors all have in common is that it's hard to get them to invest in a project. During the last years there have been a new way for entrepreneurs to raise capital, called crowdfunding. Through crowdfunding, entrepreneurs can add their project/projects online on websites. The entrepreneurs describes themselves, their project and what the money will be used to. Through these websites it's open for the public to donate an amount of money in to the project and in return the investor gets some form of reward. This form of investment has become more and more common throughout the years and today there are many investment made with this method. This study is a research that shows which factors whom makes the investors interested to invest in a crowdfunding- project. The study is based on information from 260 different projects were we were able to discover some factors which can increase the possibility to succeed. These factors are based on the entrepreneur, the projects product and the investors return.

För entreprenörer som arbetar med projekt i en "start up"- fas kan det vara svårt att lyckas med finansieringen. Detta beror på att det inte finns någon ekonomisk historik att visa upp för finansiärerna. För att lyckas få in tillräckligt med kapital för att kunna finansiera ett projekt kan man vända sig till olika typer av investerare. De vanligaste sättet är att man antingen vänder sig till banker, venture capital-bolag eller affärsänglar. Vad som motiverar dessa aktörer är olika, men det gemensamma för dessa aktörer är att det är svårt att få dem att investera i ett projekt. Under senare tid har det dock skapats ett nytt sätt för entreprenörer att få in kapital till sina projekt. Detta nya fenomen kallas för crowdfunding, vilket innebär att entreprenörer lägger ut sina projekt på internet. Entreprenören beskriver sig själv, sitt projekt och motiverar vad pengarna ska användas till. Sedan har vem som helst möjlighet att investera valfri summa till projektet, som motprestation får finansiären någon form av belöning. Crowdfunding har under de senaste åren blivit mer och mer populärt och fler entreprenörer väljer att använda sig av det. Denna studie syftar till att undersöka vilka faktorer som lockar individer till att satsa kapital i crowdfunding-projekt. Studien har baserats på information från 260 stycken projekt där olika faktorer har tagits fram som kan tänkas påverka möjligheten att lyckas. Dessa faktorer baseras på entreprenören, projektets produkt samt investerarens avkastningen. / Entrepreneurs that are in a "start-up" phase within a project they are working on finds it hard to find investors. This could appear within almost every project when a financial history don't exist to show the investors. If a project successfully wants to be financed there are different ways and options to explore. One can turn to either venture capital or business angels. What motivates these investors varies in different projects. What the investors all have in common is that it's hard to get them to invest in a project. During the last years there have been a new way for entrepreneurs to raise capital, called crowdfunding. Through crowdfunding, entrepreneurs can add their project/projects online on websites. The entrepreneurs describes themselves, their project and what the money will be used to. Through these websites it's open for the public to donate an amount of money in to the project and in return the investor gets some form of reward. This form of investment has become more and more common throughout the years and today there are many investment made with this method. This study is a research that shows which factors whom makes the investors interested to invest in a crowdfunding- project. The study is based on information from 260 different projects were we were able to discover some factors which can increase the possibility to succeed. These factors are based on the entrepreneur, the projects product and the investors return.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.