ABSTRACT Research has started to show how predictive and control strategies can each be effective in investment and entrepreneurial decisions. We bridge effectuation theory with theory on Actively-Open Minded Thinking (AOT), a construct tapping analytical, debiased reasoning skills and, in a study of venture capital investors, we support a novel hypothesis that AOT and control orientation have a complimentary role in predicting success. When either AOT or control orientation, but not both, is relatively high, investors report more homerun exits. We contribute to the effectuation literature by suggesting that AOT is a type of predictive logic that captures the benefits of prediction not previously captured by conceptualizations. Additionally, while the venture capital literature has previously stressed that venture capitalists tend to be prediction oriented, we show that control orientation can also be linked to success.

ABSTRACT Patents are the most important tool to protect innovation and support the value creation process in early-stage financing as well as in Private Capital investments. This work studies the growing body of academic literature concerning the relations between Private Equity, Venture Capital and patents and formulates a theoretical framework and an agenda for future research. We review the specific body of research resulting from the entwining of corporate finance and innovation management. Through a bibliometric analysis of the literature, we adopt a quantitative approach to develop a content analysis on the 292 articles found. We present the open debate related to the improvement of the metrics to proxy the technological value of a company’s innovation, especially in relation to startups and venture capital investments. We assess the key contributions, thematic clusters and emerging themes, formulating a theoretical framework grounded on the state of research. Additionally, we highlight the lack of integration of findings on signalling before the investment and the strategic use of Intellectual Property Protection Mechanisms assets by the investor to create value during the holding period. Finally, we outline future venues of research in the study of the relations between investments in innovative companies and positive socio-economic externalities.

ABSTRACT Researchers have suggested that new venture investors quickly conclude their decisions and rely on heuristics. However, there is a paucity of empirical work exploring the impact of time constraints on new venture investment decisions. To fill this gap, we are exploring the impact of time constraints on the new venture investment decision process and the final investment decision using the arguments of the Dual Process Theory. A balanced experiment setup is used, where the treated group is given time constraints to make the decision. Results show that investors under time constraints consider only a subset of the available information signals to perceive the probable prospects and to make final investment decisions. This consideration of a subset of information signals results in a partial assessment of the proposal where investors focus more on return potential than risk exposure aspect of investment proposals. This inclination towards return potential increases the scale of investment.

ABSTRACT Private equity (PE) and venture capital (VC) firms increasingly consider climate issues in their portfolio investment decisions. However, what are the underlying motives and which exact consideration strategies are employed? Based on the responses of 479 VC and 215 PE fund managers from two large surveys carried out in 2021, four motives emerge: ethical responsibility, responding to external stakeholders, product differentiation, and portfolio performance. Responding to external stakeholders and portfolio performance motives matter more to PE firms, while the product differentiation motive is more important for VC firms. No difference is found with respect to ethical responsibility as a motive. Regarding climate consideration strategies, screening strategies (positive and negative) are the most popular. Differences between VC and PE firms exist, and the motives to consider climate issues have an impact on the strategies employed. The implications for policymakers and the entrepreneurial finance sector are discussed.

ABSTRACT This paper aims to analyze the moderating role of debt maturity and the mediating role of information asymmetry in the relationship between financial leverage and investment efficiency and to compare the results between firms domiciled in emerging and those headquartered in developed countries. Using two proxies for investment efficiency, the results showed that debt maturity moderates the association between financial leverage and investment efficiency at both levels of developed and emerging countries. This paper also confirmed that information asymmetry carries the influence of financial leverage to investment efficiency only for those enterprises headquartered in emerging countries.

Economics literature maintains that individuals' personality shape economic behavior by acting on preferences, such as risk attitude and trust, and by exaggerating biases in individuals' judgement (Rabin 1998(Rabin , 2013)).Challenging the standard assumptions about the economic agents -that they are selfish, rational, and possess stable preferences -was the starting point (Kahneman 2003) that spurred a plethora of studies investigating psychological "portrait" of economic agents, and origins of their tastes and personality traits

ABSTRACT Empirical literature on venture capital (VC) and VC-related policies posit that VC can play a major role in helping high-tech start-ups grow and innovate. Motivated by the VC policies recently adopted in Europe and by the heterogeneity of the VC effects across countries and regions, we assess this hypothesis in Europe. Using systematic literature review methods, we summarize the results of 34 firm-level studies published between 2000 and 2023 that estimate value-added effects of VC on funded firms in 17 European countries. The results show a clear preponderance of positive effects on firm expansion and investment. The evidence on the effects on innovation and productivity is more limited and mixed. Regarding the channels of these effects, there is considerable evidence that VC reduces credit constraints of funded firms and limited, but supportive, evidence that VC reduces other barriers to growth. The type of VC emerges as a key moderating factor. Private, independent VC tends to have the largest effects. Government VC tends to have lower, but positive, effects and it often complements private VC. Based on the results of the review and on the current landscape of VC in Europe, we provide recommendations for policy and future research.

ABSTRACT Despite references to crowdfunding as a community-embedded phenomenon, few studies explore the antecedents and implications of crowdfunding communities. This study suggests community identification and trust as two core aspects of crowdfunding communities, while aiming to identify their antecedents and implications for crowdfunding campaign information-sharing intentions and behavior. Information-sharing is a necessary condition for successful entrepreneurial fundraising when using crowdfunding. For this purpose, we use survey data collected from users of Finland’s leading reward crowdfunding website, Mesenaatti.me, while analyzing it using structural equation modelling. Our findings show that community identification and trust are both positively associated with crowdfunding contribution attitudes and with information-sharing intentions. However, only community identification is associated with information-sharing behaviors. Enjoyment, homophily, and community outcome expectations are antecedents of both community identification and trust. Tie strength and normative pressures are antecedents of community identification. Finally, information-sharing intentions mediate the effect of community trust on information-sharing behavior. We discuss explanations for these findings and their implications for crowdfunding research and practice.

ABSTRACT This study investigates the value of third-party ratings of personality in investor pitches for predicting the investment intention and successful equity crowdfunding of U.S.-based startups. Based on 1175 ratings of 100 randomly selected investor pitch videos, we find that not only do investors’ impressions of entrepreneurs Big Five personality traits predict investment intention but that several of these also predict entrepreneurs’ actual crowdfunding success (particularly: openness, conscientiousness and extraversion). The study contributes to our knowledge of the links between (perceived) individual-level traits of the entrepreneur and their ability to finance a venture, a key challenge in the early stages of startups.

ABSTRACT This study investigates the factors being associated with equity-crowdfunded companies’ likelihood of survival in the US. We focus on factors observable to crowdinvestors, either being set by entrepreneurs (signals) or being non-alterable (determinants), at least in the short run. Such observable factors at the time of crowdinvesting include company and campaign characteristics, growth potential, and company riskiness. Cox proportional hazards model is used on a sample of 429 US equity-crowdfunded companies. We find that 89% of the companies survived for a minimum of three years after a successfully funded initial equity offering. This survival rate is around ten percentage points higher than in Europe. We document that equity retention, funding goal, and current year revenue estimate are associated with the likelihood of building an enduring business. Higher proportion of equity offered to crowdinvestors signals lower investment quality and thus lower probability of survival. In contrast, companies with higher funding target and current year revenue have better prospects for survival after a successful equity offering. The funding goal affects the probability of survival through the capital intensity channel; if a company in a capital intense industry has been successfully funded, the threat from the competitors is lower given the high entry barriers.