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THE ROLE OF A LOCAL INVESTOR
| Content Provider | CiteSeerX |
|---|---|
| Author | Mäkelä, Markus M. Maula, Markku V. J. |
| Abstract | Cross-border venture capital investments and syndication have emerged as important phenomena during the recent years in the venture capital industry. However, there is little prior research addressing the international aspects of venture capital finance, and no papers focusing on the formation of cross-border syndicates. We focus on the role of domestic venture capital investors in the creation of cross-border syndicates. In the emergence of cross-border venture capital syndicates, local venture capitalists often enter the venture first, followed by co-investments from foreign venture capital investors in later rounds. In this inductive study of nine cross-border venture capital syndicates, we develop a grounded model, which posits that a local venture capitalist has important roles in the syndicates in providing advice for operational management and in contributing contacts and market knowledge in the local environment, increasing the venture’s cross-border investment readiness. The importance of the two roles is mitigated if the entrepreneurial team possesses strong entrepreneurial experience. The latter effect is also mitigated if the home market is not crucial for the growth of the enterprise. The prominence of the local investor has signaling value to the cross-border venture capitalist about to make an investment decision. Finally, international social capital of the local investor facilitates the formation of cross-border syndicates. |
| File Format | |
| Access Restriction | Open |
| Subject Keyword | Local Investor Cross-border Syndicate Local Venture Capitalist Cross-border Venture Capital Syndicate Local Environment Important Phenomenon Cross-border Investment Readiness International Aspect Later Round Home Market Investment Decision Venture Capital Finance Domestic Venture Capital Investor Entrepreneurial Team Cross-border Venture Capital Investment Little Prior Research Market Knowledge International Social Capital Latter Effect Strong Entrepreneurial Experience Grounded Model Inductive Study Foreign Venture Capital Investor Operational Management Cross-border Venture Capitalist Venture Capital Industry |
| Content Type | Text |
