1,721,010 research outputs found
Philanthropic Venture Capital: An Exploratory Comparative Study
No full textThis book is the first study on philanthropic venture capital, a financing form for social entrepreneurs that unites the principles characterizing traditional venture capital with social aims. The provision of capital and non- financial services to social enterprises are of key importance for the maximizations of social impact as both elements enable social enterprises to become sustainable. However, the value proposition of the venture capital and philanthropic venture capital are different; a key issue is understanding how the practices used in the former are applied by the latter. Grounded in asymmetric information and stewardship theory, I build on and contribute to previous work showing how adverse selection and moral hazard are able to describe the philanthropic venture capital investment model. Results indicate that philanthropic venture capital investments are characterized by adverse selection. On the contrary, moral hazard tends to be a marginal issue in the deal structuring and post-investment phased of the investment, with investors acting as stewards rather than principals
A Gendered View of Risk Taking in Venture Philanthropy
No full textRelying on gender-role congruity theory, this paper investigates the relationship between the gender of the top management teams of venture philanthropy firms and their business risk-taking orientation. The research also assesses if and how experience moderates this relationship. Using a combination of survey data to capture the venture philanthropy firm’s risk orientation and biographical data to identify managers’ gender and experience, it finds that only gender affects business risk-orientation in these firms. Surprisingly, this is the opposite direction than expected, whereby teams with a higher proportion of women have a higher risk-taking profile. This suggests the need to revise the applicability of gender role congruity theory, the existence of a gender-bind dilemma, and the relevance of context in venture philanthropy
How Do Philanthropic Venture Capitalists Choose Their Portfolio Companies?
No full textIn recent years, philanthropic venture capital (PhVC) has developed as a new financing model for social entrepreneurship. First presented by Letts et al. in 1997, PhVC is the application of the venture capital (VC) strategies and techniques to the financing of social enterprises (SE). Like venture capitalists (VCs), PhVCs have developed specialized abilities in selecting entrepreneurial projects. However, while VCs select deals in terms of shareholder value maximization (Amit et al., 1998), PhVCs engage in a partnership aiming at maximizing social impact. Because of the few PhVCs and the high engagement philosophy, a limited number of SE receive support after a tough selection process. Despite the growing interest in PhVC, no study has investigated its selection. Specifically, it is unclear: a) which variables are considered; b) their degree of importance; and c) the relationship with VC variables (Kaplan and Stromberg, 2000). Additionally, no research exists on whether different types of PhVCs consider different screening variables and the existence of differences in US and European selection process
Deal Structuring in Philanthropic Venture Capital Investments: Financing Instrument, Valuation and Covenants
No full textPhilanthropic venture capital (PhVC) is a financing option available for social enterprises that, like traditional venture capital, provides capital and value-added services to portfolio organizations. Differently from venture capital, PhVC has an ethical dimension as it aims at maximizing the social return on the investment. This article examines the deal structuring phase of PhVC investments in terms of instrument used (from equity to grant), valuation, and covenants included in the contractual agreement. By content analyzing a set of semi-structured interviews and thereafter surveying the entire population of PhVC funds that are active in Europe and in the United States, findings indicate that the non-distribution constraint holding for non-profit social enterprises is an effective tool to align the interests of both investor and investee. This makes the investor behaving as a steward rather than as a principal. Conversely, while backing non-profit social ventures, philanthropic venture capitalists structure their deal similarly as traditional venture capital, as the absence of the non-distribution constraint makes such investments subject to moral hazard risk both in terms of perks and stealing and social impact focus
The Effect of Founders’ Experience on the Performance of Philanthropic Venture Capital Firms
No full textThis article assesses the relationship between the experiences of the philanthropic venture capital firm’s founding team and the venture firm’s subsequent economic, social, and total performance. Results indicate that commercial and social experiences help economic and social performance, respectively. However, when pursuing the maximization of both social and economic performance, philanthropic venture capital firms perform best when the founding team has high levels of commercial experience and low levels of social experience
An empirical investigation of the interplay between microcredit, institutional context, and entrepreneurial capabilities
Get PDFUnderstanding under which conditions microcredit is used by new, growing ventures is becoming increasingly pertinent to scholars. This paper investigates the interplay of the use of microcredit with entrepreneurial capabilities and the moderating role of institutional development in sub-Saharan Africa. Our findings show that higher constraints to entrepreneurial capabilities are associated with higher use of microcredit. In addition, we find that new, growing ventures use microcredit more where either economic or political institutions are less developed. Our findings suggest the importance of the existence of some type of institutional strength that must be in place to form the basis for microcredit activity. This allows for speculation as to whether microcredit works as the literature currently assumes
How do accelerators emerge and develop in entrepreneurial universities?
Get PDFThis paper explores the creation and development process of an accelerator by a European business university, investigating the factors that led the university to found its own accelerator and that guided its set up process in terms of choice of focal activities and governance structure, as well as the mechanisms through which it creates value for its internal and external ecosystem. Relying on an in-depth case study approach, we conducted several interviews with members of the accelerator, key university stakeholders, and external partners. Our empirical evidence points to the existence of both internal and external drivers that led to the emergence of the university accelerator and suggests that its operating and governance structures were strategically designed to leverage the university’s internal strengths and resources and to balance integration and autonomy needs. It also underscores the key roles played by the top management of the university and by the internal champion in aligning views, building consensus, and negotiating solutions in this process. Finally, it reveals how by strategically orchestrating the relationships with internal and external stakeholders a university accelerator can build internal and external legitimacy and successfully balance the need of creating value for both the university and the broader ecosystem in which it operates
How the Gender Balance of Investment Teams Shapes the Risks They Take
Get PDFThere’s solid research showing that women are more risk-averse than men when it comes to picking stocks, investing in venture capital, or making acquisitions. However, new research suggests that women may be more likely than men to take “social” risks — that is, to take risks when the decisions have important human or social consequences, in addition to financial ones
Ingredients Matter: How the Human Capital of Philanthropic and Traditional Venture Capital Differs
Get PDFPhilanthropic venture capital (PhVC), like traditional venture capital (TVC), provides funding and value-added services to a portfolio of entrepreneurial firms. However, TVC differs from PhVC, as the primary goal of TVC is to maximize the economic return of its investments. In contrast, PhVC firms expect their portfolio companies to perform well in terms of both social and economic returns. Using both American and European firms, this paper explores and compares the human capital in PhVC and TVC firm founders. Our results show that there are key differences in both general and specific human capital between these firm types. While both TVC and PhVC firm founders have high levels of commercial experience, TVC firm founders tend to hold degrees in science, engineering, business, and law more frequently than PhVC firm founders. PhVC founders also differ from TVC founders by having greater work experience in the social sector
- …
