University of Oulu

How Finnish entrepreneurs select business angels and venture capitalists

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Author: Liikanen, Aatu1
Organizations: 1University of Oulu, Oulu Business School, Department of Management and International Business, International Business
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 0.6 MB)
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Language: English
Published: Oulu : A. Liikanen, 2018
Publish Date: 2018-04-06
Thesis type: Master's thesis
Tutor: Sipola, Sakari
Reviewer: Puhakka, Vesa
Sipola, Sakari
During recent decades, venture capital has been an important source of financing of high-growing ventures. Many studies have focused on the question that how venture capital investors select their investment targets. However, there is little attention to the issue that how entrepreneurs select investors. When entrepreneurs select the right investors, the venture’s chances of success improve and thus, this issue is also important to study. The successful relationship between entrepreneurs and venture capital investors is indeed a strong indicator of the venture’s success. The purpose of this study is to contribute the research knowledge of how Finnish entrepreneurs select business angels and venture capitalists. The literature review conducts the fundamentals of firm growth and venture capital financing. The empirical data was gathered in five semi-structured interviews from four case companies that have raised venture capital. First, the empirical analysis describes the fundraising process of entrepreneurs. Second, it is discussed that how entrepreneurs select investors in different stages of the process and what is their selection criteria. The results of this study indicate that Finnish entrepreneurs in early-stage ventures cannot afford to refuse a good offer from the investors. However, the investors should fill certain requirements in order that entrepreneurs view the offer to be good. In fact, this study finds seven issues that entrepreneurs consider important when they are seeking venture capital: valuation, terms and conditions, personal compatibility, trust, ability to invest in future, amount of money invested and value-added services. Entrepreneurs do not value these criteria equally and they are more flexible with certain criteria. This study extends of research on entrepreneurs’ selection process and criteria to a new geographical and cultural context, as this study focuses on Finnish entrepreneurs and the venture capital market in Finland. Overall, this study encourages the future researchers to study the entrepreneur’s side of the venture capital market. The understanding of it is still limited.
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