Attitudes of venture capital investors towards entrepreneurs with previous business failure.

Cope, J., Cave, F. and Eccles, S., 2004. Attitudes of venture capital investors towards entrepreneurs with previous business failure. Venture Capital, 6 (2/3), pp. 147-172.

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DOI: 10.1080/13691060410001675965

Abstract

Business failure represents a significant outcome of entrepreneurial activity and yet remains an underdeveloped area of research. This article focuses on the attitudes of VC investors towards entrepreneurs with a previous failure experience. It illustrates that VCs recognise the complex, contextual nature of failure and do not necessarily perceive the entrepreneur to be the primary cause of the venture’s demise. Consequently, the article differentiates between ‘business’, ‘entrepreneurial’ and ‘venture capitalist’ failure. The article demonstrates that VCs often adopt a tolerant, flexible and open-minded attitude to failure and are keen to understand the circumstances in which it occurred. The majority of the VCs in the study emphasise that their decision to invest in an entrepreneur is not negatively affected to any significant degree by a previous experience of failure. A number of influential factors are presented, such as a high quality concept, which can offset this aspect of the entrepreneur’s track record. The article concludes that business failure is not automatically considered a ‘black mark’ by VCs. It is important for entrepreneurs involved in business failure to be aware of these positive and sympathetic attitudes when considering putting forward new proposals to the VC community.

Item Type:Article
ISSN:1369-1066
Additional Information:This article originally apeared as part of Lancaster University's Managment School series.
Uncontrolled Keywords:business failure, investor attitudes, decision criteria
Subjects:Social Sciences > Communication, Cultural and Media Studies
Social Sciences > Commerce
Group:Media School
ID Code:1048
Deposited By:INVALID USER
Deposited On:23 Apr 2007
Last Modified:07 Mar 2013 14:35

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