Toward a Process Model of Venture Capital Emergence: The Case of Botswana

46 Pages Posted: 21 Aug 2009

See all articles by Evan Gilbert

Evan Gilbert

Stellenbosch University

David C. Lingelbach

Stevenson University; Johns Hopkins University

Date Written: August 21, 2009


Venture capital (VC) is concerned with seed, startup, and early stage investing in firms involved with innovative products or processes. Existing variance studies of VC provide an incomplete understanding of VC emergence, emphasizing either macro-level enabling conditions or the efficient fund-level operation of the VC cycle. Following Tsoukas and Chia (2002), our study focuses on the non-prototypical portion of the VC phenomenon, which is found in weak institutional environments characteristic of many developing countries. In these contexts, VC is more likely to be an unstable organizational form and hence subject to change. As a consequence, new VC forms and emergence processes may arise in these environments, providing data in support of a more complete, processual model of VC emergence. This paper reports findings of an exploratory case study of the VC emergence process in Botswana. Our main contribution is to develop a multi-stage process model of VC emergence. Our model consists of four processes: simultaneity (enabling), coproducing (bonding), diffusing, and replicating via the VC cycle. This model suggests that the establishment of appropriate simultaneity conditions - capital, entrepreneurs and specialized financial institutions - enables the diffusion of VC models and related institutions from other populations. In the presence of an equity gap, government investors and private fund managers need to then cooperate to fill the equity gap, creating the signal necessary for replication of VC funds through the operation of the VC cycle. We also contribute to the VC literature by showing that the diffusion of VC models and related institutions from other populations plays an intermediate role in the emergence process, following the establishment of simultaneity conditions, paralleling coproduction between government investors and fund managers, and preceding the operation of the VC cycle. The resulting model provides a more complete understanding of the VC emergence process and augments existing theoretical perspectives by emphasizing emergence as a dynamic change process. Our model should dampen policymaker enthusiasm for VC as a 'silver bullet' in the entrepreneurship development process, suggests the importance of sequencing in the design of government programs supporting VC development, calls attention to the limits of engineering coproduction in stimulating VC emergence in emerging markets contexts, and highlights the importance of an economy’s status as a limited access order in facilitating VC emergence. Fund managers and high-potential entrepreneurs can play a vital role in facilitating VC emergence through more careful pre-planning and the establishment of innovation associations.

Keywords: Venture capital, emergence, diffusion, Botswana

Suggested Citation

Gilbert, Evan and Lingelbach, David C., Toward a Process Model of Venture Capital Emergence: The Case of Botswana (August 21, 2009). Available at SSRN: or

Evan Gilbert

Stellenbosch University ( email )

Private Bag X1
Stellenbosch, Western Cape 7602
South Africa

David C. Lingelbach (Contact Author)

Stevenson University ( email )

100 Campus Circle
Owings Mills, MD 21117
United States

Johns Hopkins University ( email )

720 Rutland Avenue
Baltimore, MD 21205-2196
United States

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