Entrepreneurs have been considered an important engine of long-term economic growth since Schumpeter popularized the concept of “creative destruction” (1942, 73). But the new ventures striving to bring innovations to the market often times require large upfront investments that cannot be borne alone by young companies still generating little or no cash flow (Gompers/Lerner 2006). By catalyzing the development of high-tech start-ups (Hellmann/Puri 2002), venture capitalists (VCs) play an important role in social and economic growth, innovation and value creation (Kortum/Lerner 2000; Gompers/Lerner 2001; Hege et al. 2003; EVCA 2005; Global Entrepreneurship Monitor 2009). Indeed, VCs do not simply inject the necessary funding into promising young companies, they also take an active role in helping to manage the ventures, advising them on strategic matters, sharing their business knowledge and introducing the company managers to the relevant business contacts. By providing so-called “smart money”, VCs support fledgling businesses in overcoming the liabilities of newness and smallness (Sapienza/Gupta 1994; Baum/Silverman 2004; Sørensen 2007).
KeywordsVenture Capital Private Equity International Investment Global Entrepreneurship Monitor Venture Capital Investment
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