Why Do Entrepreneurs Refuse Venture Capital?

Despite the evidence on the positive effect of venture capital (VC) on portfolio firm performance, such evidence badly pulls up alongside the non-negligible number of entrepreneurial firms that chooses to refuse VC. This is the first study that investigates the determinants behind the missed realizations of VC investor-investee dyads by focusing on the Italian VC market. We theorize and empirically document that entrepreneurs’ human capital background and venture-specific characteristics influence the decision to accept or refuse VC. Specifically, our findings show that technically literate founders decrease the likelihood to refuse VC while family linkages in the ownership structure increase the likelihood to refuse VC.

Keywords: venture capital, high-tech entrepreneurship, human capital, family ownership

JEL Classification: G24, L21, L25, L26, M13, M21

Suggested Citation: Suggested Citation

Croce, Annalisa and Grilli, Luca and Murtinu, Samuele, Why Do Entrepreneurs Refuse Venture Capital? (June 27, 2018). Industry and Innovation, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2747949 or http://dx.doi.org/10.2139/ssrn.2747949