Chapter 1: Pioneers in Venture Capital Research
Hans Landström Introduction The importance of venture capital We need growth-oriented entrepreneurial ventures in society. These ventures represent an important power in an economy – they create innovations and dynamics, new jobs, income and, not least, wealth. Although growth-oriented entrepreneurial ventures, or what Birch (1987) calls ‘gazelles’, can be found in all industry sectors and locations (urban as well as rural), there are some indications that the ventures with the highest growth potential are often characterized as knowledge-based and technologically driven – primarily based on intangible assets, operating in rapidly developing ﬁelds and with no documented history. One of the main problems facing these growth-oriented entrepreneurial ventures is raising capital for the growth of the business and gaining access to the competence, experience and networks necessary for growth which most entrepreneurs lack (Brophy, 1997). It is in this domain of growth-oriented entrepreneurial activities that we need an eﬃcient venture capital market that can provide adequate capital and management skills. For example, it has often been argued that the scope and sophistication of the US venture capital industry is one reason for the exceptional ability of the US economy to turn innovative ideas from universities and R&D laboratories into high growth companies such as the Intel Corporation, Cisco Systems, Microsoft, Oracle, Amazon.com, Yahoo!, etc. (Maula et al., 2005). Thus, growth-oriented ventures are important in society, and venture capital is a signiﬁcant vehicle for promoting their growth. The importance of venture capital makes it essential to understand the way the...
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