Venture Funds Research Articles

Why don’t you like me? Exploring the social venture funding gap in angel investing

While many studies on the social venture funding gap have focused on venture-level factors to explain why social ventures receive less funding, the role of investors and their characteristics has received less attention. In this study, we propose that the reason for much of the funding gap is that many angel investors lack the analytical capabilities required to assess double bottom lines. Drawing on the literature on human capital in angel investing, we use data on 19,757 investment decisions by 1,428 angel investors from a large angel investment network to investigate the relationship between venture type, angel investor analytical capability, and investment likelihood. We find that the reluctance to invest into social ventures disappears for analytically capable angel investors (those who are relatively educated, experienced, and connected). These findings demonstrate the importance of investor human capital in social venture funding and closing the funding gap.

THE PROBLEMS OF ATTRACTING VENTURE CAPITAL IN RA

The investment environment formed in RA is still not favorable for attracting foreign venture capital. An effective state policy is needed, mainly aimed not at the creation of new venture funds, but at improving the depth of the Capital Market, the most vulnerable and at the same time the most important indicator group in the "Venture Capital and Private Equity Index". The article analyzes the risks of venture capital formation and based on it, recommendations are made in the direction of measures contributing to the improvement of the investment environment in RA.
 

Does Gender Equality Matter? – Examining Antecedents of Crowdfunding Backers’ Intentions in a Gender Equal Society

Despite promises of financial democracy, studies find differences between males and females in both the scale of their crowdfunding backing behavior and the factors impacting it. These are often explained by social feminist theory claiming that gender differences arise from dissimilar life experiences or socialization. In the current study we identify the most pervasive of gender differences and examine whether they apply in a relatively more gender equal society, where dissimilar life experiences or socialization should be minimal. Here, crowdfunding is assumed to remove traditional structural and technical barriers, while gender equality is assumed to remove socio-normative barriers for women’s engagement in venture funding. Accordingly, we test related hypotheses based on survey data collected from users of a reward crowdfunding platform in Finland, a society ranking high on gender equality. For both males and females, findings show that self-efficacy has a positive association with intentions; and that risk perceptions and susceptibility to social influence are not associated with intentions. Homophily is positively associated with intentions in females only, while pro-social orientation is positively associated with intentions in males only. Intentions are positively associated with behavior in both genders, and that effects on behavior mediated by intentions follow the same patterns.

DEVELOPMENT OF LEGAL REGULATION OF VENTURE ENTREPRENEURSHIP IN THE REPUBLIC OF KAZAKHSTAN

The article deals with the issues of organizational and legal support for the industrial and innovative development of the Republic of Kazakhstan, the adoption by our country of a number of state programs, Concepts, legislation and other documents in this area and their content relating to the issues of innovation and closely related to it, as a growing popularity, venture entrepreneurship. The origin of this high-risk business abroad and the beginning of its operation on the territory of Kazakhstan, as well as its modern legal regulation, contained, due to its difficult, complex specifics, in a number of codes, laws, government decrees, etc. are analyzed. It is noted that, to date, neither domestic investors on behalf of companies or individuals, nor foreign investors today are particularly interested in investing in an innovative economy, in projects related to venture financing. In turn, innovation activity, as a result of venture entrepreneurship, requires an integrated approach to regulation, taking into account its various components (intellectual, financial, scientific, etc.). The state creates conditions for attracting investments, developing venture business, taking a rather balanced approach to financing this business by supporting innovation activities provided by the subjects of the innovation system, including by investing in innovative projects, creating legal entities with foreign participation, creating or participating in investment and venture funds; development of risk investment funds, venture funds and venture financing, etc. The measures taken by the state continue to improve, and the authors of the article formulated some proposals in this direction.

Financing of a New Venture- Current Scenario

Start-ups are young companies founded to develop a unique product or service, bring it to market and make it irresistible and irreplaceable for customers. The government provides funding and financial assistance to start-ups through various schemes and programs. This helps start-ups to get the necessary resources to start and grow their businesses. By availing these benefits, start-ups can have a significant advantage over their competitors.The new ventures have been provided financial supportalso by Venture Capital Funds, Private Equity investors, Angel Investors, High Net worth Individuals (HNIs), incubators, accelerators, seed funds and by the government. There have been examples of Governments supporting early stage funding. The present research paper aims to discuss various financing schemes recently started by the government. It also examines the financing options for a new venture.

Do financial market frictions hurt the performance of women‐led ventures? A meta‐analytic investigation

AbstractResearch SummaryExtant research offers conflicting views about the size and nature of gender‐related disparities in venture financing and venture performance. We theorize that gender‐related frictions in debt financing, the most common source of capital for new ventures, materially impair the performance of women‐led ventures but that these frictions decline with financial development. We find strong support for these predictions in a meta‐analysis of 63 primary studies in which we use financial development to instrument for the impact of gender‐related financial frictions on venture performance; in fact, in the absence of gender‐related financial frictions, ventures led by women would modestly outperform ventures led by men. We also find that gender‐related financial frictions are greater for access to, than the terms of, debt financing.Managerial SummaryWe use meta‐analysis to offer a quantitative synthesis of the research on gender, venture finance, and venture performance. We find evidence that women encounter gender‐related frictions in obtaining debt financing for their ventures, materially impairing their ventures' performance. In fact, in the absence of these frictions, ventures led by women would modestly outperform ventures led by men. We also find that gender‐related frictions in venture finance are greater for access to, than the terms of, debt financing and that these frictions tend to be stronger in countries with less developed financial institutions and markets.

Getting off to a good start: emerging academic fields and early-stage equity financing

Prior studies show that access to academic knowledge plays a crucial role in new venture financing. We extend this research by shifting the focus from the access to academic knowledge to the developmental state of the academic field, where the academic knowledge is generated. Using natural language processing (NLP), we clustered peer-reviewed academic knowledge from Scopus into various fields. We then analyzed a sample of 341 new biotech ventures from Crunchbase to determine if increased past activity by (1) academics and (2) early-stage venture investors in a particular academic field is associated with the early-stage equity financing of new ventures associated with that field. We found that new ventures associated with academic fields for which academic activity has grown in the past receive more early-stage equity capital. However, contrary to our expectations, we also revealed that when a particular academic field shows greater early-stage venture investments in the past, the amount of early-stage equity capital received by subsequent ventures associated with the same academic field decreases. This suggests that while emerging academic fields signal the presence of business opportunities with high reward potential, past increase in the number of investments by peer early-stage investors associated with a particular academic field signals the opposite.

From distinctiveness to optimal distinctiveness: External endorsements, innovativeness and new venture funding

We examine how external endorsements help new ventures with varying degrees of innovativeness to attract funding. According to optimal distinctiveness theory, new ventures should be as different from competitors as legitimately possible. However, initial research suggests that new ventures can also buffer their legitimacy through external endorsements. We clarify that effects of such legitimacy buffers depend critically on an audience's unique legitimacy-distinctiveness relationship. Specifically, external endorsements lead to different predictions about shifts in optimal distinctiveness for return-seeking audiences compared to novelty-seeking audiences as relevant new venture funders. For return-seeking audiences, new ventures are perceived as less legitimate when they are non-innovative or radically innovative so that incrementally innovative new ventures are most attractive without endorsements. External endorsements can thus buffer the legitimacy of non-innovative and radically innovative new ventures, but they lead to different performance implications for a return-seeking audience. While non-innovative new ventures increase their attractiveness, only radically innovative new ventures can become optimally distinctive and outperform other distinctiveness configurations. In contrast, novelty-seeking audiences already have a higher tolerance for radically innovative new ventures, so the effects of external endorsements are less pronounced. Four empirical studies, using observational data and experiments in equity and reward-based crowdfunding, provide strong support for this theory and account for alternative explanations such as risk perceptions. In turn, we shed new light on the crucial, audience-specific function of external endorsements, namely, as a means to alter optimal distinctiveness levels.

Editorial: There's an AI for that

In recent months, the educators and higher education institutions have responded with concern, critique, and hope, to the rise of generative artificial intelligence (AI)’s unregulated and mounting influence. Following the period of emergency remote teaching, and the great ‘snapback’ (Jandrić et al., 2022), yet another new concern has emerged, promising to revolutionise education, or threaten its existence. The gravity of the situation has reverberated across the system, as wizardry of predictive pattern recognition fundamentally threatens the validity of long-held practices of summative assessments including essays, and online quizzes. This latest quandary/crisis shows no sign of abating, as venture capitalist funding and language modelling datasets grow. The technology becomes more deeply integrated into word processing, and cloud-based applications through which much of our academic labour is conducted. Understanding and conceptualising new technology within education has long been a necessity, as we wrestle with wrangling tools into our human interactions. Higher education’s relationship with edtech has always been characterised by a cyclical response to disruptive external influences of evolving technology, whose recent developments are often underpinned by neoliberal values of competition, efficiency, market-based solutions, and the privatisation of software platforms. Recent large language model developments are proving no different, with deregulation and the free market serving as the impetus to design and create such tools. Across higher education, educators scramble to decode the GenAI black box, deciphering hallucinations, confabulations, and smooth outputs indistinguishable from original student work. Policy responses range along a continuum of ban or embrace. New AI literacies are being woven into curricula, as change continues apace. 2023 marks a year of existential crisis precipitated by a global pandemic, followed by geopolitical events and a fatigue from the continual adaptation to a new normal. Even within, we are constantly shaping our educational systems. That pull is in many different directions – to accredit, to certify, to help learners become, to socialise, to emancipate, to measure - to meet very diverse purposes and aims. The politics and power structures inherent in our system further affect our response (Kuhn et al., 2023). While the potential of AI chatbots based on natural language processing models is undeniable, it is crucial to discern the reality from the hype and to better understand how our actions and responses are shaping our educational systems in this evolving domain. This editorial examines this dilemma further, to consider the impact on our scholarship of teaching and learning and how we as a community of researchers and educators respond.

Foregone Potential? The Effects of Gender and Ethnic Diversity on New Venture Funding

Foregone Potential? The Effects of Gender and Ethnic Diversity on New Venture Funding

Variety is the Spice of Founding: Team Affective Diversity, Functional Diversity and Venture Funding

Variety is the Spice of Founding: Team Affective Diversity, Functional Diversity and Venture Funding

Building Entrepreneurial Infrastructure: Agency, Emergence and China’s Venture Financing System

Building Entrepreneurial Infrastructure: Agency, Emergence and China’s Venture Financing System

A Typology of Student Managed Venture Fund (SMVFs)

A Typology of Student Managed Venture Fund (SMVFs)

Impact of digital transformation on business structures

Purpose. To study the impact of digital transformation on business structures and to substantiate prospective directions of development. Methodology. During the research, the authors used a systematic and comparative analysis to ensure a comprehensive understanding of the current state of digital transformation of Ukrainian business structures. Besides, such scientific methods as the method of deduction, logical research and the graphical way of presenting information were used to demonstrate the significant results of the research topic. Findings. In the process of the research, the digital transformation of manufacturing enterprises was considered. It has been proven that the digital transformation of Ukrainian enterprises must be carried out in various sectors of the economy. Leaders of the mining, processing and transport industries are recommended to determine the most promising areas of using “Industry 4.0” technologies from the point of view of increasing the efficiency of their business. On the basis of this they should develop long-term strategies for the digitalization of their enterprises, taking into account the specifics of their industries. In addition, enterprises can contribute to the development of corporate venture funds, business incubators and digital factories, which will help support innovative startups and accelerate their development. It is also possible to organize technological competitions at the national and international levels to draw attention to domestic technological developments and promote them to the world market. Originality. The impact of digital transformation of business structures in Ukraine is substantiated. A study on the vision of the concept of digital transformation, effective ways of involving innovation in development and transformation in Ukraine and in the countries of the European Union was conducted, and conclusions were drawn that the concentration of resources and the development of common standards will help to overcome the lag. Business structures are invited to enter into strategic partnerships or to create consortia in order to jointly develop innovations in terms of standards and solutions. In addition, it is recommended to establish infrastructure sharing and implement training programs. It is also important that market participants interact with government agencies, educational and research institutions in the field of development and implementation of new digital technologies. Practical value. The results of the conducted research have the potential to be used by economists, scientists and practitioners in order to develop further perspectives. This data can be used to analyze and understand current trends in the field of digital technologies, which will create a knowledge base for the development of new strategies and solutions. In general, the interaction between enterprises, educational and research organizations and government authorities in the field of digital technologies has great potential to promote the development of innovation, increase the efficiency and competitiveness of enterprises.

Authentic Learning in Entrepreneurship Education: The Case of a Student-led Social Venture Fund

Authentic Learning in Entrepreneurship Education: The Case of a Student-led Social Venture Fund

A Rebalancing of Financial Valuations and Expectations Moving Forward in the Telehealth Sector as the United States Moves Toward a Post-COVID-19 Reality.

The telehealth sector of health care delivery experienced significant growth at the start of the pandemic as web-based care quickly became essential for the ongoing safety of patients and health care providers, such as clinicians and other health care professionals. After vaccines were introduced, however, telehealth companies lost value as the need for web-based care appeared to lessen. Presently, both existing telehealth companies and new entrants to the space are seeking ways to innovate, gain investor and customer buy-in, and overcome competitors. New companies are hoping to be seen not as pandemic-era substitutes, but instead as reinforcements to in-person care, valuable in their own right thanks to the convenience and technological advancements they bring. This struggle to reframe the value proposition, or perceived benefit, of telehealth is reflected in fluctuating stock prices and dropping valuations. This viewpoint summarizes the market volatility seen in the telehealth sector since the start of the COVID-19 pandemic and suggests potential opportunities for growth in the space. This is accomplished through a qualitative secondary research approach, leveraging contemporary sources, financial references such as Yahoo! Finance, and peer-reviewed literature to support predictions for the future market. We found that, in 2020, the size of the US telehealth market rose to US $17.9 billion and is estimated to reach US $140.7 billion by 2030. Additionally, digital health venture funding nearly doubled in 2020 over the prior 2 years with total funding rising to US $14.1 billion. However, these factors produced an oversaturated market in which the volume of supply was higher than demand, resulting in a sharp drop in valuations for some as vaccination rates climbed in 2021. In the face of this rebalancing, or return to normal following excessively high or unsustainable valuations, we suggest a possible path forward for telehealth companies in the postpandemic era. Suppliers' current role in the telehealth space-whether health care industry incumbents, that is, traditional health care delivery systems and companies, or "telehealth-first" challengers-are especially relevant to the specific growth strategies they should pursue. Furthermore, consideration of the areas of medicine and characteristics that best lend themselves to web-based care may lead to a greater chance for long-term success in a postpandemic health care delivery system. In the future, we believe investors should expect a bullish market, that is, one characterized by growing share prices. Success is likely to occur in part through changing the actual models of care, as opposed to moving traditional care to a web-based format. The oversaturated market will likely condense into select established telehealth giants who were able to adapt to the changing landscape. While investors may be reasonably hesitant regarding individual telehealth companies, the industry can expect slowed but continued growth.

Venture Capital Law Renewal: A Solution for Business Convenience and Legal Certainty in Indonesia

Investing, for example, using venture funds, can now be done easily. Venture funds are raised by venture capital companies and given to investee companies. Problems can arise when the venture capital company does not have a license to operate but carries out activities as if it has a permit. Of course, this can have legal consequences for venture fund investors, investee companies, and venture capital companies. Another problem concerns the legal certainty of venture capital companies for foreigners who wish to invest in Indonesia; foreigners need to be able to judge the appropriateness of the legal products governing venture capital companies. This article is intended to determine the legal consequences facing unlicensed venture capital companies and the legal certainty for foreign investors. This research method uses a normative juridical method by conducting a literature study on the provisions of venture capital companies in Indonesia. Article VCC in Indonesia has contributed to the Indonesian economy by helping businesses grow. However, this growth must be in line with the harmonization of regulations regarding venture law and investment in Indonesia in order to provide legal certainty to prospective investors.

DEVELOPMENT OF CORPORATE VENTURE CAPITAL UNDER THE CONDITIONS OF INTENSIFICATION OF INNOVATIVE ACTIVITY

In recent years, corporate venture capital has gained popularity in all areas of the economy in different countries of the world. Along with traditional venture capital funds, business angels and accelerators, traditional corporations also invest in startups around the world. Most often, these processes take place according to the corporate venture capital model. This makes it possible to remove restrictions on the participation in corporate venture funds mainly of legal entities, will open up opportunities for the participation of various subjects in corporate venture funds, and promotes the investment of funds in innovative structures. The purpose of the article is to analyze corporate venture capital, to identify structural characteristics of corporate venture capital and peculiarities of corporate venture investing in Ukraine. During the research, the method of synthesis and analysis, induction (in the study of corporate venture capital, structural characteristics of corporate venture capital and peculiarities of corporate venture investing in Ukraine); the method of schematic, graphic images (for the visual display the received results of the study) has been used. The main structural characteristics of corporate venture capital have been singled out. The signs of structural characteristics of corporate venture capital include the parameters of the corporate venture capital investment model, the types of corporate venture investment goals, criteria for deciding on financing a startup for investors and analysts of corporate investment funds, the types of corporate venture capital investments, the main motives for investment by corporate venture capital funds, ways to promote business growth through corporate investment in venture capital funds, the main financial parameters of the sustainability of corporate venture capital. Ukrainian investors appeared in this field literally 5-7 years ago, but their interest in global international startups is already marked. It was established that for Ukrainian businessmen venture investments at the stages of the B+ series are a new stage of expansion of the investment portfolio. The amount of investment depends on the investor's faith in the project and the arrogance and talent of the startup. If «seed» and «angel» investments are calculated on average in hundreds of thousands of dollars, then capital investments in the innovative business are measured in millions and tens of millions. The main goal of corporate venture capital is strategic innovative business development. Activation of activity through corporate venture capital investments in Ukraine is only developing, and much depends on the business reputation and personal characteristics of managers. Ukraine's economy needs integration into global economic processes through the development of corporate venture capital.

Venture Capital and Strategic Development of Innovative Business

One of the most important sources for improving the financial support of innovative activity is venture capital. The development of venture financing in developed countries is one of the defining areas of support for medium and small innovative businesses. The purpose of the article is to identify the key features of venture capital, the selection of structural characteristics of venture capital, and the functional features of venture financing for the strategic development of innovative businesses. The survey is based on the following methods: analysis, systematization, and generalization to identify the key features of venture capital, as well as to select structural characteristics of venture capital, and the functional features of venture financing; tabular representation for the visual display of the results of research and analytical data. The article analyzes the interpretations of venture capital. A significant expansion of the key features of venture capital was noted. The structural characteristics of venture capital for the strategic development of innovative businesses are highlighted, which are systematized according to the following signs: elements of the classic form of venture capital, functions of venture capital, characteristics of the venture capital market, phases of the venture capital investment process, reasons for the refusal to receive venture capital, results from the implementation of venture capital at the macroeconomic level. Functional features of venture financing for the strategic development of innovative businesses must be considered in the context of such features forms of venture financing, types of venture financing, features that are characteristic of venture financing, steps of the venture financing process, stages of venture financing, the most common exit strategy for venture capital investors, principles of venture financing, advantages of venture financing, disadvantages of venture financing. The obtained results are the basis for further scientific research in the part of venture financing of the strategic development of innovative businesses in Ukraine and attracting investments for the development of innovative activity.

Effecsts of Uncertainty on Domestic Private Inevestments in Kenya

Domestic private investment serves as a prerequisite for the development and modernization of any economy. In Kenya, macroeconomic and political uncertainties play a significant role in influencing private domestic investments. This is informed by the fact that these investments allow investors to fund ventures, which creates jobs and increase government revenues through taxation. Hence, it boosts the growth of the economy and improves the living standards of the people. However, private domestic investments are severely affected by both macroeconomic and political uncertainties about how the government formulates political, economic, and regulatory policies that affect the business climate. Investors are risk-averse; hence they base investment decisions on prevailing and future conditions of the business environment. This paper focuses on analyzing the effects of uncertainty on Kenya’s domestic private investments. The study estimated the Autoregressive-Distributed Lag (ARDL) bounds technique which captures both short and long-run dynamics of this relationship among the variables. Time series data from UNCTAD, the World Bank, and the Central Bank of Kenya for the period spanning 1980 to the year 2019 was used. The study results suggest that real GDP (RGDP) and real effective exchange rates (REER) have a significant and positive effect on private domestic investment (PDI). In contrast, inflation (INFL), Real interest rates (RINR), Political uncertainty (PRI), and WUIKEN (economic policy uncertainty and volatility in the stock markets) have a negative and significant effect on private domestic investments. Based on these results, the most significant factors affecting private domestic investments were found to be political uncertainty (PRI), real gross domestic product (RGDP), and WUIKEN (economic policy uncertainty and volatility in the stock markets). Effectively, the study recommends that the government should enact policies that increase the ease of doing business and reduce economic and political uncertainty, such as a reduction in the tax rate, stabilization of the exchange rate, and stable political environment to reduce investor uncertainty and skepticism and also to enhance their confidence.