Abstract

Executive Overview This article provides a foundation for an understanding of the dynamics of venture capital from the entrepreneur's point of view. An important aspect of understanding venture capital involves the different sources of risk capital for the entrepreneur, i.e., (classic) venture capitalists (VCs), business angels, and corporate venture capitalists. Furthermore, whatever source of risk capital entrepreneurs choose, they have to take into account the different phases of the investment cycle, i.e., the pre-investment, post-investment, and exit phases. We discuss some of the key issues of which entrepreneurs need to be aware when dealing with venture capitalists during each of these three investment phases. Furthermore, we provide hands-on advice to help entrepreneurs maximize the value of their relationship with VCs throughout the investment cycle, and we point to trouble spots which can endanger value creation. For instance, in the pre-investment phase, the challenges of finding an (adequate)...

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