Reducing Uncertainty for Technology Start-Ups

Posted: 20 Sep 2006

See all articles by Allan Afuah

Allan Afuah

University of Michigan, Stephen M. Ross School of Business; University of Michigan at Ann Arbor - Corporate Strategy and International Business

Rosa Grimaldi

University of Bologna - Department of Management

Date Written: April 2005

Abstract

We investigate the extent to which the signal and intrinsic value of a founder's endowments and relationships can reduce the uncertainty that a venture capital (VC) firm has for an academic startup and help the startup obtain VC funding to exploit a university-generated technology. Our study suggests that a founder's endowments of scientific publications, patents, relationships and stock of technological knowledge are positively related to a venture's ability to secure VC funding. The study also suggests that, beyond these endowments, there is something else about surrogate founders that allows their startups to be more likely to secure VC funding than their inventor counterparts.

Keywords: Capabilities life cycle (CLC), uncertainty reduction, signal and intrinsic value, surrogate founder, scientific publications, network and social ties, and venture capital financing

Suggested Citation

Afuah, Allan and Grimaldi, Rosa, Reducing Uncertainty for Technology Start-Ups (April 2005). Available at SSRN: https://ssrn.com/abstract=931530

Allan Afuah (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

University of Michigan at Ann Arbor - Corporate Strategy and International Business ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States

Rosa Grimaldi

University of Bologna - Department of Management ( email )

Piazza Scaravilli 1
Bologna, Bologna 40126
Italy

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