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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
CONCLUSION AND IMPLICATIONS
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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Last Updated 4/5/97 by Cheryl Ann Lopez
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