The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities

Stefano Bonini, Vincenzo Capizzi

Research output: Contribution to journalReview articlepeer-review

78 Scopus citations

Abstract

The last decade has seen the emergence of alternative sources of early-stage finance, which are radically changing and reshaping the start-up eco-system. These include incubators, accelerators, science and technology parks, university-affiliated seed funds, corporate seed funds, business angels–including “super-angels”, angel groups, business angel networks and angel investment funds–and both equity- and debt-based crowdfunding platforms. In parallel with this development, large financial institutions that have traditionally invested in late-stage and mature companies, have increasingly diversified their investment portfolios to “get into the venture game”, in some cases, through the traditional closed-end funds model and, in other cases through direct investments and co-investments alongside the closed-end funds. This paper reviews the main features, investment policies and risk-return profiles of the institutional and informal investors operating in the very early stage of the life cycle of entrepreneurial firms. It concludes that traditional closed-end venture capital funds continue to play an important role in early stage finance because of their unique competences (e.g. screening, negotiating and monitoring) in what has become a wider and more complex financing ecosystem.

Original languageEnglish
Pages (from-to)137-175
Number of pages39
JournalVenture Capital
Volume21
Issue number2-3
DOIs
StatePublished - 3 Jul 2019

Keywords

  • Venture capital
  • business angels
  • equity crowdfunding
  • startup financing

Fingerprint

Dive into the research topics of 'The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities'. Together they form a unique fingerprint.

Cite this