Exploring Entrepreneurs' Perceptions of Venture Capitalists' Added Value

Recent research on the marketing-entrepreneurship interface has highlighted the importance of understanding the relationships between various actors that enable entrepreneurial activity. Entrepreneurs often depend on VCs not just for funding, but also for their expertise in environmental scanning, innovation, and strategic direction. This study takes the perspective of entrepreneurs as consumers of the value offered by VC firms and uses a broad survey of entrepreneurs to understand the factors that could affect long term relationships between these actors. The results show that entrepreneurs select VCs primarily on their perceptions of the fairness of the contract, reputation, and startup valuation. We also find evidence that entrepreneurs are uniformly disappointed in their experiences with VCs when comparing their pre- and post-financing views. Our findings contain important implications for a creating a balanced macromarketing view of the VC-entrepreneur relationship and holds practical implications for venture capitalists, entrepreneurs, and policy makers.