Abstract
Venture capitalists provide money and non-monetary contributions to high-growth ventures to help them become great companies. Although it is known that these contributions have an impact on the growth of the firm, little is known in Mexico of their nature, how they get into the venture, and how they contribute to the development of the company. The present article reports a proposed substantive theory that explains how the venture capitalist work hand in hand with the entrepreneur to grow the company. This substantive theory emerged from data collected through interviews to nine venture capitalists and nine entrepreneurs, and analyzed as proposed by the grounded theory methodology. The resulting substantive theory acknowledges that contributions of venture capitalists, often called value-added, are relative to building an exit for the investment.
Highlights
The venture capital industry was born in the United States of America, U.S.A., in 1946 when the firm American Research and Development was created to invest in technology-based young firms, it was not until the 70s-80s, mainly due to regulatory changes, when the industry attracted more money and venture capitalists (Gompers & Lerner, 2006)
The government created the venture capital fund Fondo Emprendedores CONACYT-NAFIN to invest in ventures based on scientific and technologic breakthroughs in 2004, the venture capital fund of funds Mexico Ventures I to increase the number of independent venture capitalists in the country in 2010, and the seed capital fund Fondo de Coinversión de Capital Semilla to increase the number of viable business opportunities for the venture capital industry in 2013 (Ramírez, 2015)
The nine interviewed dyads, that is, nine venture capitalists and nine entrepreneurs in their portfolios, amounted for 100% of the venture capital funds, 38% of venture capitalists investing in companies in the country, and 27% of the ventures funded with venture capital in 2014
Summary
The venture capital industry was born in the United States of America, U.S.A., in 1946 when the firm American Research and Development was created to invest in technology-based young firms, it was not until the 70s-80s, mainly due to regulatory changes, when the industry attracted more money and venture capitalists (Gompers & Lerner, 2006). The government created the venture capital fund Fondo Emprendedores CONACYT-NAFIN to invest in ventures based on scientific and technologic breakthroughs in 2004, the venture capital fund of funds Mexico Ventures I to increase the number of independent venture capitalists in the country in 2010, and the seed capital fund Fondo de Coinversión de Capital Semilla to increase the number of viable business opportunities for the venture capital industry in 2013 (Ramírez, 2015) Today, despite these efforts to invigorate the industry that resulted in the creation of 14 venture capital funds (“Estadísticas,” 2017), venture capital is referred to as “capital emprendedor” in Mexico, venture capital financing is still barely known in Mexico
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