Exploring the relationships between entrepreneurs and venture capitalists: Control and trust

Few studies have investigated the relationships between entrepreneurs and venture capitalists in Lebanon. This blind spot motivated us to examine how venture capital works from the entrepreneurs' perspective. Based on the agency and exchange theories, the study analyzes the Venture Capital (VC) state, the main reasons behind its bottlenecks, and the complex relationship between the entrepreneurs and the venture capitalists. Based on a quantitative methodology, a survey, addressed to 50 active entrepreneurs in the tech and digital industry, reveals that obstacles are mainly related to governance, risk, and information asymmetry. It also reveals that the actors are playing by a different set of strategy rules, and that the greater the level of trust, the greater the rewards. However, concerns around the firm control and ownership negatively affect the relation of reciprocity. We conclude that such a relationship cannot only be motivated by the expected returns and outcomes ; but rather, by solidarity, compassion, and morality. To note that the evolution of the deals can pave the way to international investors. Stimulating venture capital activities in the country can foster innovation, acquire new technologies, maintain the country's economic competitiveness, enhance overall job creation, and decrease brain drain.