Venture capital and high technology entrepreneurship

Venture capital clearly plays an important role in high technology entrepreneurship. The purpose of this article is to explain the differences among various venture capital complexes focusing on where venture capital is important to innovation and entrepreneurship and conversely where it is not. We do so through an empirical and historical examination of the seven most important venture capital complexes: California (San Francisco/ Silicon Valley), Massachusetts (Boston), New York, Illinois (Chicago), Texas, Connecticut, and Minnesota (Minneapolis).We establish a three-part tripartite typology for explaining the differences between these venture capital complexes: 1) technology-oriented complexes are located close to concentrations of high technology intensive businesses, invest most of their funds locally, and are net attractors of capital; 2) finance-oriented complexes are located around financial institutions and export their capital; and 3) hybrid complexes mix characteristics of both technology and finance-oriented venturing.Our findings have a series of important practical implications. Although venture capital is not absolutely necessary to facilitate high technology entepreneurship, well-developed venture capital networks provide tremendous incentives for entrepreneurship by lowering the difficulties of entering an industry. Venture capitalists use both their experience and their contacts to reduce many of the information and opportunity costs associated with new business formation. The importance of contact networks and information to both deal flow and investment monitoring goes a low way toward explaining why venture capitalists cluster tightly together. The availability of venture capital also attracts entrepreneurs and high quality personnel to a region creating a virtuous circle of new enterprise formation, innovation, and economic development.Private, nonprofit, and subsidized public efforts aimed at providing venture capital and stimulating high technology entrepreneurship must confront the fact that venture capital alone will not magically generate entrepreneurship and economic development. It is important that such efforts recognize the nonfinancial side of venture investing and attract experienced personnel who can tap into established entrepreneurial networks and secure coinvestors. More significantly, establishing public venture funding in an area lacking the requisite entrepreneurial climate or technology infrastructure may create a “catch 22” situation where locally oriented funds invest in bad deals or where venture capital is simply exported to established high technology regions.     

Josh Lerner: recipient of the 2010 Global Award for Entrepreneurship Research

This article describes the academic contributions of the 2010 recipient of the Global Award for Entrepreneurship Research, Professor Josh Lerner of the Harvard Business School. Lerner’s empirical research on the inter-relationship between venture capital, innovation and entrepreneurship has greatly extended and improved our understanding of one of the major drivers of growth in modern economies. The first part of this article explains Lerner’s contributions as regards the structure and organization of the venture capital industry. Later, his most important publications on entrepreneurship, innovation and intellectual property rights are surveyed. Several aspects of Lerner’s policy-oriented work are then outlined, before the article closes with a brief conclusion.     

The future of public efforts to boost entrepreneurship and venture capital

The promotion of new high-potential business ventures and venture capital is of critical importance to economic growth. Well-considered policies can profoundly influence such opportunities, but many public initiatives are misguided. This article reviews the evidence behind these claims, as well as the criteria that can delineate appropriate and inappropriate policies towards the promotion of venture capital and high-potential entrepreneurship.     

The informal venture capital market: Aspects of scale and market efficiency

Risk capital is a resource essential to the formation and growth of entrepreneurial ventures. In a society that is increasingly dependent upon innovation and entrepreneurship for its economic vitality, the performance of the venture capital markets is a matter of fundamental concern to entrepreneurs, venture investors and to public officials. This article deals with the informal venture capital market, the market in which entrepreneurs raise equity-type financing from private investors, (business angels). The informal venture capital market is virtually invisible and often misunderstood. It is composed of a diverse and diffuse population of individuals of means; many of whom have created their own successful ventures. There are no directories of individual venture investors and no public records of their investment transactions. Consequently, the informal venture capital market poses many unanswered questions.The author discusses two aspects of the informal venture capital market: questions of scale and market efficiency. The discussion draws upon existing research to extract and synthesize data that provide a reasonable basis for inferences about scale and efficiency.Private venture investors tend to be self-made individuals with substantial business and financial experience and with a net worth of $1 million or more. The author estimates that the number of private venture investors in the United States is at least 250,000, of whom about 100,000 are active in any given year. By providing seed capital for ventures that subsequently raise funds from professional venture investors or in the public equity markets and equity financing for privately-held firms that are growing faster than internal cash flow can support, private investors fill gaps in the institutional equity markets.The author estimates that private investors manage a portfolio of venture investments aggregating in the neighborhood of $50 billion, about twice the capital managed by professional venture investors. By participating in smaller transactions, private investors finance over five times as many entrepreneurs as professional venture investors; 20,000 or more firms per year compared to two or three thousand. The typical angel-backed venture raises about $250,000 from three or more private investors.Despite the apparent scale of the informal venture capital market, the author cites evidence that the market is relatively inefficient. It is a market characterized by limited information about investors and investment opportunities. Furthermore, many entrepreneurs and private investors are unfamiliar with the techniques of successful venture financing. The author's scale and efficiency inferences, coupled with evidence documenting gaps between private and social returns from innovation, prompt questions about public as well as private initiatives to enhance the efficiency of the informal venture capital market.The article concludes with a discussion of Venture Capital Network, Inc. (VCN), an experimental effort to enhance the efficiency of the informal venture capital market. VCN's procedures and performance are described, followed by a discussion of the lessons learned during the first two years of the experiment.     

Formal institutions, culture, and venture capital activity: A cross-country analysis

Why does the level of venture capital activity vary across countries? This study suggests that the variation can be attributed to the different levels of formal institutional development. Further, this study proposes that venture capitalists respond differently to the incentives provided by formal institutions depending on different cultural settings. Analysis of VC activity for 68 countries during the 1996-2006 period shows that formal institutions have a positive effect on the level of venture capital activity, but this effect is weaker in more uncertainty-avoiding societies and in more collectivist societies. This study has useful theory and policy implications for venture capital and entrepreneurship development.     

The Diana Project: pioneering women studying pioneering women

The 2007 winner of the International Award for Entrepreneurship and Small Business Research is the Diana Project team (Candida Brush, Nancy Carter, Elizabeth Gatewood, Patricia Greene and Myra Hart). The Diana Project builds on the vast experience of the team in the field of entrepreneurship in general and women entrepreneurship, business growth and venture capital in particular. The Diana Project has investigated the supply and demand side of growth capital for women entrepreneurs. The research contributes to entrepreneurship theory as well as to practice, filling a void in knowledge on growth-oriented women entrepreneurship. In this article we present and discuss the research contribution of the Diana Project, in the areas of entrepreneurship, women entrepreneurship and venture capital. We specifically discuss the value of researching a specific group of women entrepreneurs, those who want to grow their businesses, that very clearly demonstrates the positive potential of female entrepreneurship. The Diana Project has also moved research on women’s entrepreneurship forward since its framework does not treat women entrepreneurs as “other,” i.e., the project does not presuppose that women’s entrepreneurship is similar to or different from men’s entrepreneurship. It assumes that women’s entrepreneurship is entrepreneurship and studies it from that point of view. Carin Holmquist is professor at Stockholm School of Economics and member of the Prize Committee for The International Award for Entrepreneurship and Small Business Research. Sara Carter is professor at University of Strathclyde. Both have written extensively in several of the areas covered by the Diana Project. The prize is awarded by the Swedish Foundation for Small Business Research (FSF) and the Swedish Board of Industrial and Technical Development (NUTEK). An important aim with this prize is to attract broader attention to this research field. A precondition for choosing the winner of the award is that the research for which the award has been granted is a significant contribution to the theory and empirical understanding of entrepreneurship and the importance of entrepreneurship, new firm formation and small businesses in economic development. Besides the honor, the prize consists of SEK 0.5 million (roughly USD 80,000). It has been awarded annually since 1996. More information about the prize and previous winners is available at .     

Network Support and the Success of Newly Founded Business

The "network approach to entrepreneurship" is a prominent theoretical perspective within the literature on entrepreneurship. This literature assumes that network resources, networking activities and network support are heavily used to establish new firms (network founding hypothesis). Further, those entrepreneurs, who can refer to a broad and diverse social network and who receive much support from their network are more successful (network success hypothesis). Based on a study of 1,700 new business ventures in Upper Bavaria (Germany), the article gives an empirical test of the network success hypothesis. It is argued that one reason, why previous studies did not consistently find positive network effects, may be that social capital (network support) is used to compensate shortfalls of other types of capital (human capital and financial capital). This compensation hypothesis, however, does not find empirical confirmation. On the other hand, however, the network success hypothesis proves to be valid in our analyses, i.e. network support increases the probability of survival and growth of newly founded businesses.     

Entrepreneurship ecosystems and women entrepreneurs: a social capital and network approach

This study investigates the effects of venture typology, race, ethnicity, and past venture experience on the social capital distribution of women entrepreneurs in entrepreneurial ecosystems. Social network data from two municipal ecosystems in Florida, USA (Gainesville and Jacksonville), suggest that network connectivity and the distribution of social capital are significantly different for men and women entrepreneurs. This difference is contingent on the venture type. Male entrepreneurs show higher comparative scores of bridging social capital in aggressive- and managed-growth venture networks, while women entrepreneurs surpass their male counterparts’ bridging capital scores in lifestyle and survival venture networks. Lastly, experienced women entrepreneurs that self-identified as white showed a higher degree of network connectivity and bridging social capital in the entrepreneurial ecosystem than less experienced non-white female entrepreneurs. Implications for entrepreneurship practice and new research paths are discussed.

     

Venture capital in Western Europe

Western Europe is in the process of an entrepreneurial renaissance. An integral part of this renaissance is the emergence of a venture capital industry in Europe. Although the venture capital institution in Europe is very much modeled along the lines of its American counterpart, it is significantly smaller in size both in absolute terms as well as in relation to the size of the economy. Substantial differences in venture capital activity are also found to exist within Europe,it is most prevaient in the United Kingdom, France, and Netherlands. Surprisingly, it is less developed in West Germany, particularly given the size of this country's economy.Venture capital in Western Europe shares some characteristics with that in the United States. Its investment focus is in high technology, and syndication between funds is common. Unlike the United States, however, banks are a major source of venture capital funds. Surprisingly, in spite of the economic integration to which the European Community aspires, the mobility of venture capital across national boundaries is low.The authors try to explain differences in venture capital activity in several countries of the European Community by examining four aspects of each country's environment. In particular, the size of the technology sector, the cultural influence on entrepreneurial risk-taking, the government's policy to stimulate risk capital and entrepreneurship. and finally, the ability of venture-backed firms to turn to publicly traded markets as a source of future financing. One common factor shared by the three countries with the highest level of venture capital activity is the presence of a secondary stock market geared to the needs of a small, relatively new venture contemplating an initial public offering. The Unlisted Securities Market in the United Kingdom, the Seconde Marché in France, and the Parallel Market in the Netherlands serve these needs and provide the mechanism by which venture capitalists can liquidate their equity position after the venture is quoted on these financial markets. To the venture it provides access to public financing for funding continued growth.In the United Kingdom and Netherlands, the business enterprise has historically been regarded as a tradeable entity and hence the concept of ownership by passive investors is well accepted. In France, where this is a relatively recent phenomenon, the government has played a strong role in stimulating an interest in stock market investing in general. It has also created some extremely attractive fiscal incentives for investors in venture capital funds.     

Social capital of venture capitalists and start-up funding

How does the social capital of venture capitalists (VCs) affect the funding of start-ups? By building on the rich social capital literature, we hypothesize a positive effect of VCs?? social capital, derived from past syndication, on the amount of money that start-ups receive. Specifically, we argue that both structural and relational aspects of VCs?? social networks provide VCs with superior access to information about current investment objects and opportunities to leverage them in the future, increasing their willingness to invest in these firms. Our empirical results, derived from a novel dataset containing more than 1,500 first funding rounds in the Internet and IT sector, strongly confirm our hypotheses. We discuss the implications of our findings for theories of venture capital and entrepreneurship, showing that the role and effect of VCs?? social capital on start-up firms may be more complex than previously argued in the literature.     

Entrepreneurship education in the nineties

Bringing entrepreneurship education into the community support infrastructure poses one of the more important economic development issue for the 1990s. Aspart of the new strategy for job creation, entrepreneurship education holds promise as an integral component in a community's venture support system along with incubators, innovation centers, technology transfer offices, science parks, and venture capital operations. Since new venture success is foremost a function of entrepreneurial knowledge and know-how, entrepreneurship education may be the most promising of these economic development mechanisms. Unfortunately, it may be the most difficult to implement.Generally the extent and nature of education required by modern aspiring entrepreneurs is not well understood. Many would see entrepreneurship education as strictly an add-on to current education in management or engineering. Such is the option of minimal use. The real promise or entrepreneurship education will be realized when it is strategically organized for economic development and job creation. This article traces the recent history of entrepreneurship education before proceeding to deal with a number of questions facing those who would use entrepreneurship education as part of a modern economic development strategy:

1. 1.1. Why is entrepreneurship education important?
2. 2.2. How should it be distinguished from related programs?
3. 3.3. How will success be measured?
4. 4.4. Who will be the students?
5. 5.5. How will the subject be taught?
6. 6.6. What will be the curriculum?
7. 7.7. Who will be the teachers?

     

Financing, Regulatory Costs and Entrepreneurial Propensity

In this paper, we compared the availability of different types of financing sources to address the issue of capital availability to entrepreneurial propensity and we scrutinise the influence of business costs by utilising a new composite index using data from the World Bank’s Doing Business Database. The availability of three types of financing sources was analysed: traditional debt financing, venture capital financing, and informal investments. The study’s findings show that only informal investments have statistically significant influence on entrepreneurial propensity. Regulatory business costs were found to deter opportunity driven entrepreneurship, but had no impact on necessity entrepreneurship. Final version accepted on October 2006.     

The structure of the investment networks of venture capital firms

Venture capital firms are linked together in a network by their joint investments in portfolio companies. Through connections in that network, they exchange resources with one another. The most important of those resources are the opportunity to invest in a portfolio company (good investment prospects are always scarce), the spreading of financial risk, and the sharing of knowledge. All venture capitalists operate in very uncertain environments, none more so than the one confronting high innovative venture capitalists, HIVCs,¹ that specialize in investing in high innovative technology companies. The most uncertain of all their investments is a high-technology start-up with nothing more than a product in the head of the founder. There is uncertainty about the talent of the entrepreneur, the market need for the product, the development of a saleable product, the raising of second-round financing for working capital and expansion; the manufacturing of the product, competitors' responses, and government policies such as capital gains tax and ERISA rules, to name some of the major components. It is a formidable list. Indeed, it is hard to name a segment of any other industry that bears more uncertainty than HIVCs.A venture capital firm copes with uncertainty by gathering information. This research shows that the amount of coinvesting by a firm depends on the degree of uncertainty it faces. The greater the uncertainty, the greater the degree of coinvesting.By examining how venture capital firms were connected by their joint investments, it was found that the top 21 HIVCs comprise a tightly coupled network. And of that group, none is more tightly bound than the nine HIVCs located in California. In contrast, the group of top 21 firms that invest mainly in low innovative technology companies, LIVCs, is more loosely bound. HIVCs are more tightly bound together because they shoulder more uncertainty and therefore have a greater need to share information with one another.The practical implications of this study are as follows: Venture Capitalists. It is vital to be well-connected to other venture capital firms. They are important sources of information and investment opportunities. For HIVCs, the California group is central in the network, so links to them are valuable. Communications in a tightly coupled system are swift, so it is likely that information is disseminated very quickly among members of the group. It probably facilitates the setting of a market rate for venture capital. A disadvantage of a tightly bound system is that information flowing among the members has a redundancy and sameness about it, so to ensure a supply of fresh information, members should have as many links as possible to other organizations and individuals besides venture capitalists. Entrepreneurs. When entrepreneurs submit a proposal for funding to venture capital firms, they can assume that news will spread fast to other firms. Thus, they should not use a bird-shot approach; rather, they should select their targets with rifle precision. The proposal should be submitted to a few firms that are known to specialize in the type of product or service that the entrepreneur is planning to make. Entrepreneurs should be concerned about more than the price of the deal. When the top 61 firms invest in a portfolio company, they bring information, contacts, and “deep pockets” to the companies in which they invest. Those factors are significant in nurturing a growing company. Policy Makers. The networks of HIVCs and UVCs are quite different. The HIVCs cluster around oases of high-technology entrepreneurship in the northeast and California, whereas the LIVCs are more evenly spread throughout the U.S.A. HIVCs are located almost exclusively in the so-called “bi-coastal regions of prosperity.”This study found cliques among the venture capital firms. But it found no evidence that the top 61 firms exclude other venture capital firms from their coinvestments of first-rounds of capital. More research is needed before conclusions can be drawn about the power and influence of the top firms. Researchers. In a recent article, Granovetter (1985) suggests that if we are to explain economic behavior, we must understand the networks in which transactions are embedded. This research shows that the networks formed by the syndicated coinvestments of venture capital firms may help us to explain their behavior. A general model for coinvestment networks that is developed in this article is applicable to analysis of syndicated coinvestments not only of venture capital firms, but of investors and lenders in general.     

The double impact of institutions: Institutional spillovers and entrepreneurial activity in the solar photovoltaic industry

We investigate whether and when institutional spillovers, i.e., institutional effects across national borders, drive domestic entrepreneurial activity. Drawing on data on venture capital (VC) investments in the solar photovoltaic industry, we provide evidence for institutional spillovers and demonstrate that they are moderated by the presence of domestic institutions and the institutional distance between domestic and foreign policy schemes. By showing that domestic institutions not only influence entrepreneurial activity directly, but also facilitate spillovers, our findings demonstrate a double impact of institutions. Overall, we contribute to the literatures on the drivers of VC investments, institutions and entrepreneurship, and environmental entrepreneurship.     

对中小企业技术创新项目风险投资的博弈分析

在中小企业对技术创新项目进行融资的过程中,风险投资是其融资的一个重要途径,而风险投资人与风险企业之间会因利益的分配展开博弈。通过建立风险投资人与风险企业之间的博弈模型,可以看出风险企业对利润率高的技术创新项目进行风险融资的可行性并不高,所以风险投资人应谨慎选择风险企业进行投资,以降低资金风险。     

大力发展风险投资加快培育战略性新兴产业

战略性新兴产业是新兴科技和新兴产业的深度融合.发展战略性新兴产业,是我国立足当前渡难关、着眼长远上水平的重大战略选择,不仅会对我国当前经济社会发展起重要的支撑作用,还将引领我国未来经济社会可持续发展的战略方向.在危机中得以历练和发展的风险投资行业,将成为促进我国战略性新兴产业发展最活跃的一支力量.要大力发展创业投资引导基金,创新财政资金投入方式和运作机制,引导社会资金投向政府有意重点发展的高新技术等关键领域或处于种子期、成长期的创业企业,引导民间资本进入专业化、规范化的投资运作渠道;要推动风险投资中介组织发展,加强行业自律和行业监管;要积极探索发展场外交易市场,有效拓宽风险投资进入与退出渠道;要贯彻实施创业风险投资人才培养和储备战略,培养一大批具有复合技能的风险投资家.     

The entrepreneur's mode of entry: Business takeover or new venture start?

We extend the well-known occupational choice model of entrepreneurship by analyzing the mode of entry. Individuals can become entrepreneurs by taking over established businesses or starting up new ventures from scratch. We argue that the new venture creation mode is associated with higher levels of schooling whereas managerial experience, new venture start-up capital requirements and industry level risk promote the takeover mode. A sample of data on entrepreneurs from The Netherlands provides broad support for these hypotheses, and also bears out a prediction that entrepreneurs whose parents run a family firm tend to invest the least in schooling. We go on to discuss the implications for researchers, entrepreneurs and public policy makers.     

Emerging strategies in the venture capital industry

This article reports a study of the future direction of the venture capital industry by examining the basic strategies and strategic assumptions of a broad sample of venture capital firms. There are three main sets of results:First, the once homogeneous venture capital industry is rapidly dividing into several different “strategic groups.” Members of these “groups” are increasingly distinguishing themselves from other groups on four basic dimensions followed by member firms: 1. Financial Resources—Equity capital comes from a greater variety of sources (five major sources) resulting in fundamentally different demands on the mission of the receiving venture capital firm. 2. Staff Resources—The way venture capital firms use staff resources, particularly regarding investee management assistance, is becoming increasingly varied across different groups. Some firms provide fewer than 2-days per year, while others provide up to 450 man-days per year per client. 3. Venture Stages—While the overall industry retains a primary interest in stage 1,2, and 3 investment, specific firms vary considerably in the distribution of investment emphasis across these three stages. 4. Use of Financial Resources-Firms in the industry are becoming increasingly differentiated in the size of minimum investments they make ($100 M to $1000 M) and in their role as a direct investor versus a “broker” for institutional funds. Practicing venture capitalists should make use of this first set of findings in two ways. First, they may find it useful to compare their firm's orientation along these four strategic dimensions with those of the firm's that comprised this study. Second, they may seek to use these four strategic dimensions as a basis on which they might examine, clarify, and/or redefine the marketing strategy pursued by their firm.A second set of results identified three goals and priorities of venture capital firms that have neither changed over time nor across increasingly different strategic groups. Annualized, after-tax return on investments of between 25% and 40% remain the most common objective across all firms. A 5-to-6 year investment time horizon and a major emphasis on the quality of the management team in evaluating new deals were universal priorities across diverse venture capital firms.A third finding in this study was that venture capital firms profess greater “certainty” about the future direction of the venture capital industry than the direction of their firm. The most notable example of this is a strong sense that industry-wide rates of return are headed downward yet few senior partners expect their firm to experience this decline.Practicing venture capitalists may be interested to peruse these results to see what trends are predicted within the venture capital industry by this subsample of that industry. Second, they should consider the finding that industry-wide rates of return are headed downward in light of the first two sets of findings to develop their own opinion about the future performance of different strategic groups within the industry.It is important to note that the sample of venture capital firms on which this study was based did not include most of the larger, older funds. Some of these funds would be characterized as “industry leaders, pace-setters, and innovators.” The sample provides a solid representation of the “broad middle” of the venture capital industry and newer entrants into the industry. While larger, older funds are under represented, their impact on future trends and strategies in the industry is captured to some extent in the set of questions about “future direction of the venture capital industry.“Finally, the emerging strategic groups in the venture capital industry that were identified by this study may be useful information for investors as well as users of venture capital. For investors, the opportunity to participate in venture capital activity should become more clearly understood and varied. Basically, this study should help investors differentiate the strategic posture of different venture capital firms and funds on four factors rather than simply industry/geographic considerations.For users of venture capital, the results of this study suggest a possibility for multiple options that are both more accessible and more catered to specific needs. Users of venture capital should find a clearer basis on which to differentiate venture capital firms in terms of venture stage priorities, staff utilization orientations, sources and uses of financial resources. This should make for more informed “shopping” among different venture capital sources and provide a basis on which to “shop” for the most compatible firm.     

Syndicated investments by venture capital firms: A networking perspective

The networking of 464 venture capital firms is analyzed by examining their joint investments in a sample of 1501 portfolio companies for the period 1966–1982. Some of the factors that influence the amount of networking are the innovativeness, technology, stage, and industry of the portfolio company. Using the resource exchange model, we reason that the relative amount of networking is explained primarily by the degree of uncertainty associated with an investment rather than by the sum of money invested.Among the findings of our study about venture capitalists are the following:The top 61 venture capital firms that managed 57% of the pool of venture capital in 1982 had an extensive network. Three out of four portfolio companies had at least one of the top 61 venture capital firms as an investor. Those top 61 firms network among themselves and with other venture capital firms. Hence they have considerable influence.Sharing of information seems to be more important than spreading of financial risk as a reason for networking. There is no difference in the degree of co-investing of large venture capital firms—those with the deep pockets—and small firms. Furthermore, where there is more uncertainty, there is more co-investing, even though the average amount invested per portfolio company is less. That, we argue, is evidence that the primary reason for co-investing is sharing of knowledge rather than spreading of financial risk. Venture capital firms gain access to the network by having knowledge that other firms need.It is likely that there will be increasing specialization by venture capital firms. Knowledge is an important distinctive competence of venture capital firms. That knowledge includes information such as innovations, technology, and people in specific industry segments. Among the portfolios of the top 61 venture capital firms are ones with a concentration of low innovative companies, others with a concentration of high innovative technology companies, and others with a no particular concentration. As technology changes rapidly and grows more and more complex, we expect that venture capitalists will increasingly specialize according to type of companies in which they invest. Only the largest firms with many venture capitalists will be like “department stores,” which invest in all types of companies. The smaller firms with only a few venture capitalists will tend to be more like “boutiques” which invest in specific types of companies, or in specific geographical regions around the world.We think that the networking of venture capital firms has the following implications for entrepreneurs:Entrepreneurs should seek funds from venture firms that are known to invest in their type of product. It speeds the screening process. If the venture capital firm decides to invest, it can syndicate the investment through its network of similar firms. And after the investment has been made, the venture capital firms can bring substantial expertise to the entrepreneur's company.Entrepreneurs should not hawk their business plans indiscriminately. Through their networks, venture firms become aware of plans that have been rejected by other firms. A plan that gets turned down several times is unlikely to be funded. Thus it is better to approach venture capital firms selectively.The extensive network of the leading venture capital firms probably facilitates the setting of a “market rate” for the funds they invest. The going rate for venture capital is not posted daily. Nevertheless, details of the most recent deals are rapidly disseminated through venture capitalists' networks. Hence, that helps to set an industry-wide rate for the funds being sought by entrepreneurs.Lastly, we give the following advice to strategic planners:Venture capital firms share strategic information that is valuable to others outside their network. Since they often invest in companies with emerging products and services, venture capitalists gather valuable strategic information about future innovations and technological trends. Thus, strategic planners should tap into venture capitalists' networks, and thereby gain access to that information. It is sometimes information of the sort that can revolutionize an industry.     

风险投资退出风险及其控制

风险投资退出是风险投资过程中最后一步也是最关键的一步,风险投资的退出存在风险,但风险并非仅存在退出这一个阶段,从选择投资项目开始就存在风险。从风险投资的项目选择、风险资本注入企业后的管理、风险投资退出时机和风险投资退出方式的选择四个方面来阐述对风险投资退出风险的控制。