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Of acting principals and principal agents: goal incongruence in the venture capitalist-entrepreneur relationship

Author

Listed:
  • Esben Christensen
  • Robert Wuebker
  • Rolf Wustenhagen

Abstract

This qualitative study examines the motivations for venture capitalists and entrepreneurs to act opportunistically toward one another. Structured interviews with 14 employees and five investors in a VC-funded startup revealed that venture capitalists expect opportunistic behaviour from entrepreneurs during investment rounds, but largely trust entrepreneurs between financing rounds. Both the venture capitalists and entrepreneurs reported that venture capitalists act opportunistically towards the entrepreneur and other venture partners during all stages of the startup development. These findings have important implications for entrepreneurship research, most notably, the applicability of agency theory as a theoretical perspective from which to view the complex relationship between venture capitalists and entrepreneurs.

Suggested Citation

  • Esben Christensen & Robert Wuebker & Rolf Wustenhagen, 2009. "Of acting principals and principal agents: goal incongruence in the venture capitalist-entrepreneur relationship," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 7(3), pages 367-388.
    • Handle: RePEc:ids:ijesbu:v:7:y:2009:i:3:p:367-388
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    Citations

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    Cited by:

    1. Simone Aresu & Luigi Rombi & Andrea Cardia, 2019. "Management accounting systems in venture capital-backed start-up companies," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2019(3), pages 35-58.
    2. Arena, Marika & Bengo, Irene & Calderini, Mario & Chiodo, Veronica, 2018. "Unlocking finance for social tech start-ups: Is there a new opportunity space?," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 154-165.
    3. Arslan Kulanov & Assiya Issakhova & Olga Koshkina & Parida Issakhova & Alma Karshalova, 2020. "Venture Financing and the Fuel and Energy Complex: Investing in Alternative Energy," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 531-538.
    4. Veroniek Collewaert, 2012. "Angel Investors’ and Entrepreneurs’ Intentions to Exit Their Ventures: A Conflict Perspective," Entrepreneurship Theory and Practice, , vol. 36(4), pages 753-779, July.
    5. Liping Li & Qisheng Chen & Ximeng Jia & Jin Chen & Enrique Herrera-Viedma, 2024. "The collusion behavior of venture capitalists and entrepreneurs based on “guanxi”: evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.

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