The Origin of the Network Positions of New Organizations: How Entrepreneurs Raise Funds

Abstract

This dissertation examines the mechanisms by which entrepreneurs successfully raise venture capital. Although there has been substantial research on the benefits of having venture capital, how entrepreneurs successfully raise venture capital has received scant attention. I address this gap using two complementary methodologies. First, I develop hypotheses from two competing theoretical logics, one based on founder network ties and status and the other based on accomplishments, that I statistically test in a study of venture capitalists and corporations investing in 92 Internet security ventures. Second, building on a number of detailed interviews with the entrepreneurs at and investors in nine of these ventures, I induct a theoretical framework describing the actions that entrepreneurs used to successfully raise venture capital. In both portions of the dissertation, I find that there are strategies which allow even relatively unknown and poorly-connected entrepreneurs to successfully raise venture capital. (Note: This is a summary of the dissertation intended for a general audience. Please contact the author for the described working papers.)

Keywords: Venture Capital, Entrepreneurship, Social Networks

JEL Classification: G24, M13