Erik P. M. Vermeulen / Erik PMVermeulen / Joseph A. McCahery / Joseph AMcCahery
Venture Capital 2.0: From Venturing to Partnering provides a better understanding of the alternatives to bank financing for SMEs and entrepreneurs and examines a range of ’new’ external financing providers, including crowdfunding platforms, the new breed of venture capital firms, and corporate venture capitalists. The authors assess the likely impact of each of the different financing options available to SMEs and high growth companies and ask whether they can, with greater network resources, improve the selection of investments and access to follow-on funding in later stages of a start-up’s development. These new breed of capital providers have introduced ’collaborative models’ which appear to play an invaluable role in the selection of the right mix of portfolio companies, and can also offer the access to new technologies as well as possible exit opportunities. Simultaneously, the authors explore the role of government equity co-investment programs that provide funding and advice through public-private partnerships. The research suggests that as long as these government programs add value to the collaborative venture capital models, they can play an important role in funding innovative projects. Following an introduction, Section 2 discusses how governments can encourage entrepreneurship and the launch of start-up companies and influence the development of SMEs. Section 3 provides an overview of the traditional venture capital cycle and focuses on the funding, investment and liquidity gaps in this cycle. Section 4 examines some of the developments recently introduced in practice that have proven to be an effective step in bridging the gaps in this cycle. The goal of this analysis is to show that the new breed of ’venture capital providers’ no longer think of their function as simply providing a source of capital in the expectation of financial return. This section illustrates that the task is to build an open and collaborative relationship with ’their’ portfolio firms. Some investors have labelled this trend as ’venture capital 2.0’. Section 5 presents the authors conclusions.
