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Entrepreneurship and the Financial Community

Entrepreneurship and the Financial Community

Starting up and Growing New Businesses

Edited by Bart Clarysse, Juan Roure and Tom Schamp

This highly accessible book brings together the insights of leading academics and researchers to promote a better understanding of the role of private equity providers in the development of growth-oriented start-ups and the management of growth processes.

Chapter 8: Cross-Border Venture Captalists’ Support for the Internationalization of New Software Ventures

Markus M. Mäkelä and Markku V.J. Maula

Subjects: business and management, entrepreneurship


8. Cross-border venture capitalists’ support for the internationalization of new software ventures Markus M. Mäkelä and Markku V.J. Maula* 1. INTRODUCTION Many of the fastest-growing born global ventures in small open economies such as Finland, Sweden and Israel have attracted cross-border venture capitalists (CBVCs) to support their internationalization. In this chapter, we show how CBVCs can provide substantial internationalization support for portfolio companies that need to expand across national borders from a country with limited domestic markets. However, we also show why these potential benefits do not always materialize. Despite venture capitalists’ increasing importance to rapidly internationalizing new ventures, little research has examined the role of foreign venture capitalists in supporting the internationalization process of their portfolio companies. In this chapter, we outline roles that CBVCs (defined as venture capitalists that manage their investment from a country foreign to the investee venture) play in internationalizing new software ventures that have their primary markets in a foreign country. We used the grounded theory methodology to obtain our results from the analysis of internationalization processes of seven software companies. We collected the data primarily by interviews of entrepreneurs and venture capitalists and secondarily by browsing the companies’ web pages, related press releases, www news services, newspapers and other documents. Our results speak to the importance of planning investor strategy according to the internationalization strategy and selecting optimally positioned CBVCs to support internationalization. If CBVCs are located in a venture’s target market of internationalization, they can be valuable by legitimizing...

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