Characteristics of Entrepreneurs, Entrepreneurial Finance, and Growth Paths

Abstract

The aim of this paper is to better understand how entrepreneurial equity finance interacts with the complex growth process of young technological ventures. More specially, we investigate how different growth paths are influenced by the entrepreneurs’ interactions with different categories of private equity investors, namely business angels (BAs) and formal venture capitalists (VCs). Through a comparative case-study contrasting one hyper-growth venture with one moderate growth venture, we show that growth paths depend strongly on the entrepreneurs being more or less able to simultaneously leverage BAs’ and VCs’ financial as well as cognitive resources. The entrepreneurs ‘capability to do so, is shown to be dependent on their specific psychological and cognitive characteristics as well as on their decision making style.

Keywords: Business Angel, Venture Capitalist, Cognitive and psychological characteristics, Cognitive process, Growth trajectory

JEL Classification: M13, G24