The Funding Gap Contractual Drivers of Risk in Private Venture Capital

The Swedish private venture capital sector is one of the key providers of funds and knowledge to emerging firms and thus crucial for these start-up firms success. However, due to a recent increase in perceived investment risk related to this segment, venture capitalists operating in the Swedish market are deserting the start-ups in favor of other segments. This has caused the overall private venture capital start-up investments and prospects made in the since 2011 to decrease severely, leaving the entrepreneurs with more unattractive funding options. In cases of similar shifts in the market, fund managers who address the phenomenon suggest a potential coherence between the drivers of incomplete contractual obligations and the direct risks of the funds. The potential coherence is said to be more significant in the case of innovative firms, which would explain the shift to some extent. The idea of coherence has also been addressed by previous research, however, a real connection has yet to be proven. This thesis aims to examine the presence as well as the strength of this potential coherence, which in turn may offer explanatory value to what extent contractual agreements could aid managers of both venture capital funds as well as entrepreneurs in their efforts to negate risks. In order to address the purpose of the study, we chose to conduct an inductive case study of a number of investments made in the Swedish start-up segment by private venture capital from 2010 to 2013. The case study resulted in eight primary arguments, three of which addressed contractual agreement and five related to the funds’ investment risk. These arguments were structured and analyzed based on contractual- and agency theory. The analysis revealed that there was a strong coherence between the drivers of incomplete contracts and risks experienced by the funds post-investment. We argue that this coherency might offer explanatory value to events like the previously mentioned drop in investments on the Swedish market. Lending support to both venture capital managers and entrepreneurs in creating more viable contractual agreements, which will also reduce risk and increase the willingness to invest in this sector

Att implementera abstrakta värden - En flerfallstudie om bankernas CSR-arbete vid utlåning av kapital

Samhällsutvecklingen under de senaste åren har komplicerat verkligenheten för de svenska bankerna. Man upplever ett ökat tryck från externa intressenter att ta ett större socialt ansvar i samhället, banken måste således lägga fokus vid såväl direkta som indirekta effekter av dess agerande. CSR, eller företagets sociala ansvarstagande, innebär att företaget inte enkom fokuserar på den finansiella statusen utan även tar hänsyn till värden som etik och miljö. Dessa åtaganden kristalliseras mer eller mindre tydligt i bankernas egenformulerade utlåningspolicys som används vid utlåning av kapital. CSR begreppets abstrakta natur ger upphov till osäkerhet, både vad avser bankens eget arbete för socialt ansvarstagande men även för externa parter, för vilka det kan vara svårt att förstå och se vilka åtaganden bankerna faktiskt gör. Studien syftar till att undersöka hur de svenska bankernas offentliga uttalanden och publikationer alltså dess ambitioner, vad avser dess utlåningspolicy, korrelerar med de faktiska handlingar som banken utför. Härvid ligger tyngdpunkten på vilka rutiner och vilka metoder man använder för att säkerställa att utlåningen sker på ett enhetligt och moraliskt riktigt sätt, samt hur dessa praktiska riktlinjer implementeras och förankras i bankens verksamhet. De slutsatser som man kan dra på basis av ansatsen är att de svenska storbanker som varit föremål för studien ej helt har lyckats med att implementera de abstrakta sidorna av deras CSR-ambitioner, varför diskrepans mellan ambition och praktik har uppstått. Anledningen därtill att bankerna i regel ej har tillräckliga resurser, bristfälliga kommunikationskanaler samt intressekonflikter.The recent development in society’s structure has given rise to a more complex reality for the Swedish banks. There is an increased pressure from external stakeholders for the banks to take a greater social responsibility in society; the bank must therefore focus on both direct as well as indirect effects of its actions. The term corporate social responsibility implies that the company does not only focus on its financial status but also on values such as ethics and environment. These commitments are crystalized, more or less clearly, in the banks’ lending policy’s, whom are entirely defined by the banks themselves. The nature of the abstract CSR expression gives rise to uncertainty, both in regards to the banks own efforts towards social responsibility but also for the external stakeholders, for which it can be quite difficult to understand what commitments are actually made. This study aims to investigate how the Swedish banks public statements, with regards to their lending policy, correlates with the actual actions carried out by the banks. The emphasis lies on the routines and methods used by the banks to ensure that their lending practice is carried out in a uniform and morally accepted way, as well as how these practical guidelines are implemented within the bank. The conclusions derived from the study are that the largest Swedish banks, that has been the aim of the study, has not managed to fully implement the abstract values off their CSR-ambitions. Hence, discrepancy between ambition and practice has risen. The reason for this discrepancy is that the banks, in general, has insufficient resources, a lack of communication channels as well as conflicts of interests