Frontiers of Entrepreneurship Research
1996 Edition

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FACTORS UNDERLYING CHANGES IN RISK PERCEPTIONS OF NEW VENTURES BY VENTURE CAPITALISTS

Douglas D. Moesel, Lehigh University

Jim Fiet, Clemson University

Lowell Busenitz, University of Houston

Jay Barney, Ohio State University


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INTRODUCTION
METHOD
RESULTS
CONCLUSION AND IMPLICATIONS
REFERENCES
TABLES


ABSTRACT

Venture capitalists (VCs) self-discipline investment behavior in new ventures through utilizing regular funding rounds. These allow updated risk perceptions to be formalized into equity sharing contracts with new venture management teams (NVTs). This study examines average change in funding provided per VC firm in moving from first to second funding rounds to measure changes in risk perception. We hypothesize that risk perception changes are influenced by NVT reactions to VCs’ involvement pattern, NVT procedural justice reactions, and firm performance levels considered simultaneously- not independently. We find initial support for this approach to VCs’ risk perception changes.

 

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1997 Babson College All Rights Reserved
Last Updated 4/5/97 by Cheryl Ann Lopez

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