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DISCUSSION

    Results of this study indicated that venture age, managers' backgrounds, and industry characteristics (listed in order of importance) were significantly related to venture capital financing, but strategy and financial characteristics were not.  Findings also indicated that firm age, managers' backgrounds, strategies and industry characteristics were significantly related to venture performance.  These results make several interesting contributions to the discussion of venture capital financing.  Findings clearly indicated that firms with venture capital funding were older at the time of their IPOs than firms without such funding.  Even among those with venture capital funding, venture capitalists owned a greater percentage of stock in older firms.  On the one hand, these findings are consistent with prior evidence that venture capitalists invest in later stages of new venture development (Bruno & Tyebjee, 1985; Poindexter, 1976; Robinson, 1987; Tyebjee & Bruno, 1984; Wells, 1974).  On the other hand, it may simply be that the resources provided by venture capitalists allowed funded ventures to wait longer before going public.

    It is also interesting to note that, although based entirely on secondary data, findings of this study regarding the relative importance of variables explaining venture capital financing were more consistent with the findings of prior survey based studies than with more "objective" studies.  Findings indicated that, after firm age, management team characteristics were by far the most important variables explaining venture capital investment.  Industry characteristics were mildly important, and strategy and financial variables examined in this study were not significant.

    Results indicated that management team variables that were significant predictors of venture capital investment were also significant predictors of firm performance.  These findings are consistent with the notion that venture capitalists make investments based on criteria that ultimately lead to higher levels of firm performance, and add yet another indication of the importance of management quality.  However, it is noteworthy that, within this sample, performance was not related to venture capital investment, perhaps because all the ventures in this sample were high potential firms.

    Finally, it is important to note that while firm strategy was significantly related to firm performance, strategic issues were not important predictors of venture capital financing.  While this finding is in conflict with some research indicating that strategy is an important consideration for venture capitalists (e.g., Rosman & O’Neill, 1993; Sandberg & Hofer, 1987; Sandberg et al. 1988; Tyebjee & Bruno, 1984), it supports other studies indicating that strategy is relatively unimportant (e.g., Bruno & Tyebjee, 1985; Hisrich & Jankowicz, 1990, MacMillan, Siegel & SubbaNarasimha, 1985; MacMillan, Zemann & SubbaNarasimha, 1987; Tyebjee & Bruno, 1984).  It is generally reported that venture capitalists would rather back a second rate product with a first rate team than the other way around.  However, given strong evidence within the entrepreneurship literature that strategy has an important impact on venture performance,
 perhaps venture capitalists would be wise to focus more on strategy when screening potential deals.  Clearly, an important area for future research is to continue to investigate the relationship between firm strategy and venture capital financing in an effort resolve these apparently contradictory findings.

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