Main Characteristic of Entrepreneurial Venture-backed Firms in Different Stages of Growth

Document Type : Research Paper

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Abstract

The purpose of this article is to study real cases of startup and venture-backed firms to recognize aspects of growth in them, thereby investors can design contracts in different stages of firm’s development. Challenges between venture capitals and entrepreneurs are studied in the theoretical framework of agency theory (reducing information asymmetry and mitigating conflict of interest). Also the most relevant approach to the firm's growth is configuration perspective to growth. Using Grounded Theory procedure for analyzing data gathered from semi-structured interviews with entrepreneurs and their investors, it is perceived that the product, its market, entrepreneur’s abilities and business risks differs in every stage of growth and changing the investment approach is needed in regard. So, an investment approach to gain entrepreneur’s companion, best fits with firm's characteristics in seed stage. In startup stage, investors should use more monitoring and controlling tools. Finally, in growth stage, partnership aspects will depend on firm’s ownership.
Entrepreneurial venture-backed Firms, Stages of Growth, Venture Capital, Grounded Theory, Agency Theory 

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References

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