Mitigation of Moral Hazard and Adverse Selection in Venture Capital Financing: The Influence of the Country’s Institutional Setting

A venture capitalist (VC) needs to trade off benefits and costs when attempting to mitigate agency problems in their investor-investee relationship. We argue that signals of ventures complement the VC’s capacity to screen and conduct a due diligence during the pre-investment phase, but its attractiveness may diminish in institutional settings supporting greater transparency. Similarly, whereas a VC may opt for contractual covenants to curb potential opportunism by ventures in the post-investment phase, this may only be effective in settings supportive of shareholder rights enforcement. Using an international sample of VC contracts, our study finds broad support for these conjectures. It delineates theoretical and practical implications for how investors can best deploy their capital in different institutional settings whilst nurturing their relationships with entrepreneurs

Individual Preferences and Social Interactions Determine the Aggregation of Woodlice

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Relocation to get venture capital : a resource dependence perspective

This is the author accepted manuscript. The final version is available from SAGE via the DOI in this record.Using a resource dependence perspective, we theorize and show that non-venture-capital-backed ventures founded in U.S. states with a lower availability of venture capital (VC) are more likely to relocate to California (CA) or Massachusetts (MA)—the two VC richest states—compared to ventures founded in states with a greater availability of VC. Moreover, controlling for self-selection, ventures that relocate to CA or MA subsequently have a greater probability of attracting initial VC compared to ventures that stay in their home state. We discuss the implications for theory, future research, and practice

Escalation of commitment in venture capital decision making: Differentiating between domestic and international investors

Drawing upon an escalation of commitment framework, this study investigates how differences between cross-border and domestic venture capital investors in emotional, social, and institutional factors affect their decision to terminate an unsuccessful investment. We track the exit outcome of 1060 venture capital investments in 684 European technology companies. Results show that domestic investors have a high tendency to escalate their commitment to a failing course of action, while cross-border investors terminate their investments efficiently, even when investing through a local branch. This is explained by cross-border investors having a lower social and emotional involvement with the project and a lower embeddedness in the local economic and social environment, decreasing individual decision biases. Further, they are affected to a lower extent by normative pressures to further invest from their co-investment network. Local branches of cross-border investors are also shielded from escalation of commitment. We conjecture that their international investment committee acts as an organizational safeguard against individual decision biases. Domestic investors may hence benefit from mimicking the behavior of cross-border investors

CROSS-BORDER VENTURE CAPITAL AND THE DEVELOPMENT OF PORTFOLIO COMPANIES

This paper studies how cross-border venture capital investors as opposed to domestic venture capital investors influence the development of their portfolio companies. For this purpose, we use a longitudinal research design and track sales from the year of initial venture capital investment up to seven years after this investment in 692 European technology-based companies. Findings demonstrate how companies backed by cross-border venture capital investors initially exhibit lower sales growth compared to companies backed by domestic investors. After a couple of years, however, companies backed by cross-border investors exhibit higher sales growth compared to companies backed by domestic investors. Finally, companies that raise finance from a syndicate comprising both domestic and cross-border investors develop into the biggest sales generators. Overall, this study provides a more textured understanding of the role played by venture capital investors as their portfolio companies develop and thereby require different resources or capabilities over time.venture capital, cross-border, international, portfolio company development

Effects of urbanisation and management practices on pollinators in tropical Africa

1.Urban expansion is an increasing threat to biodiversity, especially in tropical Africa where biodiversity hotspots are being encroached upon by fast‐growing cities. Threatened species include bees and other pollinators, which deliver important ecosystem services but are sensitive to land use changes. 2.We investigated the impact of urbanisation and vegetation management practices on pollinator abundance, bee diversity and bee functional traits. We sampled 126 locations in a stratified random design across an urbanisation gradient in two medium‐sized cities in the West African Forests biodiversity hotspot, encompassing three management practices (farmed sites; amenity lands, i.e. greenspaces managed for aesthetics; informal greenspaces), and tested their effect with generalised linear models. 3.Urbanisation did not affect bee abundances or diversity but had a negative impact on both wasp and beetle abundances. There was also a management‐mediated impact of urbanisation on bee abundances, which decreased with urbanisation on farmed sites but not amenity land or informal greenspaces. Management practices alone influenced bee abundances with farms harbouring fewer bees, and amenity lands fewer beetles. 4.Bee genera occurrence and dominance patterns were influenced by both urbanisation and management, with some otherwise common genera rare in urban areas. 5.Most functional traits were influenced by management, with fewer polylectic bees, cavity‐nesting bees and long‐tonged bees in farmed sites. Amenity lands hosted smaller bees and fewer savannah specialists. Some traits were influenced by urbanisation, with more long‐tongued bees and cavity‐nesting bees found in urban areas. 6.Synthesis and applications. Pollinator responses to urbanisation are complex. In our research, we demonstrate how bee, lepidopteran and non‐fruit fly abundances have been maintained across an urbanisation gradient in tropical Africa, but not wasp and beetle abundances. Moreover, bee community composition and the distribution of traits shifted markedly. How greenspaces were managed was also critical. We found that farmed sites hosted the lowest bee abundances and amenity lands the fewest beetles. Retaining informal greenspaces and amenity lands in African cities, including protecting nesting sites for stingless bees, and limiting pesticide application would be important for conserving bees and the pollination service they provide to both crops and native vegetation