The value-added contribution of advisors in the process of a venture capital Lahti, Tom.

By: Lahti, Tom
Material type: ArticleArticlePublisher: 2014Description: 307-326Subject(s): Capital Value-Added | Venture | Uncertainty | Agency Theory | Advisors In: International Small Business JournalSummary: This article examines the determinants of the value-added contribution offered by advisors to entrepreneurs seeking venture capital (VC) funding. It hypothesizes that the contribution of advisors is particularly helpful in addressing problems of asymmetric information and uncertainty. The study develops seven hypotheses derived from agency theory using data from questionnaire responses given by entrepreneurs that used advisors to acquire VC. The results indicate that advisor value-added contributions are substantial when entrepreneurs have limited experience in dealing with venture capitalists (VCs). Other determinants are stage of venture development, level of innovation and the entrepreneur
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This article examines the determinants of the value-added contribution offered by advisors to entrepreneurs seeking venture capital (VC) funding. It hypothesizes that the contribution of advisors is particularly helpful in addressing problems of asymmetric information and uncertainty. The study develops seven hypotheses derived from agency theory using data from questionnaire responses given by entrepreneurs that used advisors to acquire VC. The results indicate that advisor value-added contributions are substantial when entrepreneurs have limited experience in dealing with venture capitalists (VCs). Other determinants are stage of venture development, level of innovation and the entrepreneur

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