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Conflict between the VC and entrepreneur: the entrepreneur's perspective

Author

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  • Andrew Zacharakis
  • Truls Erikson
  • Bradley George

Abstract

In this study, the effects of conflict on confidence in partner cooperation are explored. While the literature on VC--entrepreneur interactions is well developed, viewing the impact of conflict within the dyad is less developed. The data are based on a survey of 57 entrepreneurs who have received venture capital investments. Whereas past research finds that VCs view task conflict favorably, the current study finds that entrepreneurs do not, which leads to reduced confidence in partner cooperation. Furthermore, intragroup conflict within the entrepreneurial team increases conflict between the entrepreneurial team and VC. The implications of the findings suggest that it is important for the entrepreneurial team to build cohesion both within the team and with the VC so that if conflict arises, it doesn't lead to lower overall performance.

Suggested Citation

  • Andrew Zacharakis & Truls Erikson & Bradley George, 2010. "Conflict between the VC and entrepreneur: the entrepreneur's perspective," Venture Capital, Taylor & Francis Journals, vol. 12(2), pages 109-126, March.
    • Handle: RePEc:taf:veecee:v:12:y:2010:i:2:p:109-126
    DOI: 10.1080/13691061003771663
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    Citations

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    Cited by:

    1. Alqatawni, Tahsen, 2013. "The Relationship Conflict between Venture Capital and Entrepreneur," MPRA Paper 48005, University Library of Munich, Germany.
    2. Regan Stevenson & Sean R. McMahon & Chaim Letwin & Michael P. Ciuchta, 2022. "Entrepreneur fund-seeking: toward a theory of funding fit in the era of equity crowdfunding," Small Business Economics, Springer, vol. 58(4), pages 2061-2086, April.
    3. Siw M. Fosstenløkken, 2016. "Systemic instruments for regional intervention in practice: the facilitation of an inventor-investor matchmaking process," International Journal of Innovation and Regional Development, Inderscience Enterprises Ltd, vol. 7(1), pages 57-75.
    4. Daniel Appelhoff & René Mauer & Veroniek Collewaert & Malte Brettel, 2016. "The conflict potential of the entrepreneur’s decision-making style in the entrepreneur-investor relationship," International Entrepreneurship and Management Journal, Springer, vol. 12(2), pages 601-623, June.
    5. Cyrine Ben-Hafaïedh & Alessandra Micozzi & Pierpaolo Pattitoni, 2018. "Academic spin-offs’ entrepreneurial teams and performance: a subgroups approach," The Journal of Technology Transfer, Springer, vol. 43(3), pages 714-733, June.
    6. Waldron, Theodore L. & McMullen, Jeffery S. & Petrenko, Oleg V. & Tribble Trudell, Lori & Aronson, Olivia, 2022. "Entrepreneur-investor rivalry over new venture control: The battle for Balcones Distilling," Journal of Business Venturing, Elsevier, vol. 37(4).
    7. Wang, Lei & Zhou, Fangzhao & An, Yunbi, 2017. "Determinants of control structure choice between entrepreneurs and investors in venture capital-backed startups," Economic Modelling, Elsevier, vol. 63(C), pages 215-225.
    8. Tarek Miloud & Arild Aspelund & Mathieu Cabrol, 2012. "Startup valuation by venture capitalists: an empirical study," Venture Capital, Taylor & Francis Journals, vol. 14(2-3), pages 151-174, February.
    9. Kalyanasundaram Ganesaraman & M. H. Bala Subrahmanya, 2022. "How Conflicts Cause Technology Startups to Fail in India? An Empirical Analysis," International Journal of Global Business and Competitiveness, Springer, vol. 17(1), pages 40-52, June.
    10. Claire Champenois & Michel Devigne & François-Régis Puyou, 2016. "How Can Venture Capitalists-Owner Managers Conflicts Be Managed? If You Want Peace, Agree to Keep the Peace," Post-Print hal-01398988, HAL.
    11. Bolzani, Daniela & Fini, Riccardo & Napolitano, Simone & Toschi, Laura, 2019. "Impact: Entrepreneurial Teams: An Input-Process-Outcome Framework," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 15(2), pages 56-258, May.
    12. Bonini, Stefano & Capizzi, Vincenzo & Zocchi, Paola, 2019. "The performance of angel-backed companies," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 328-345.
    13. Edmée van Dijk & Leon Schrevel & Rosalie van Stormbroek-Burgers & Robert Jan Blomme, 2014. "How to Create an Effective Venture Capitalist–Entrepreneur Relationship," SAGE Open, , vol. 4(4), pages 21582440145, October.
    14. Hai Long & Jianzhi Zhao & Xiaochen Lin & Lanyong Liu, 2022. "Does Venture Capital Reputation Contribute to Pre-IPO Performance of Entrepreneurial Firms in the Chinese Context?," SAGE Open, , vol. 12(4), pages 21582440221, November.
    15. Tarek Miloud & Mathieu Cabrol, 2011. "Les facteurs stratégiques influençant l'évaluation des start-ups par les capitaux-risqueurs," Post-Print hal-00951565, HAL.
    16. Pengda Fan & Kazuo Yamada, 2020. "Same bed different dream composition of IPO shares and withdrawal decisions in weak market conditions," Small Business Economics, Springer, vol. 55(4), pages 955-974, December.
    17. M. Nesij Huvaj, 2020. "A Co-opetition View of the Entrepreneur–Investor Relationship: Modelling Entrepreneurial Exit Pathways," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 29(2), pages 365-394, September.
    18. Pengda Fan & Kazuo Yamada, 0. "Same bed different dream composition of IPO shares and withdrawal decisions in weak market conditions," Small Business Economics, Springer, vol. 0, pages 1-20.

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