VENTURE CAPITALIST GOVERNANCE AND VALUE-ADDED IN 4 COUNTRIES

The rapid internationalization of markets for venture capital is expan ding the funding alternatives available to entrepreneurs. For venture capital firms, this trend spells intensified competition in markets al ready at or past saturation. At issue for both entrepreneurs and ventu re capital firms is how and when venture capitalists (VCs) can provide meaningful oversight and add value to their portfolio companies beyon d the provision of capital. An important way VCs add value beyond the money they provide is through their close relationships with the manag ers of their portfolio companies. Whereas some VCs take a very hands-o ff approach to oversight, others become deeply involved in the develop ment of their portfolio companies. Utilizing surveys of VCs in the Uni ted States and the three largest markets in Europe (the United Kingdom the Netherlands, and France), we examined the determinants of interac tion between VCs and CEOs, the roles VCs assume, and VCs' perceptions of how much value they add through these roles. We examined the strate gic, interpersonal, and networking roles through which VCs are involve d in their portfolio companies, and we analyzed how successful such ef forts were. By so doing we were able to shed light on how and when VCs in four major markets expend their greatest effort to provide oversig ht and value-added assistance to their investment companies. Consisten t with prior empirical work, we found that VCs saw strategic involveme nt as their most important role, i.e., providing financial and busines s advice and functioning as a sounding board. They rated their interpe rsonal roles (as mentor and confidant to CEOs) as next in value.