EFFECTS OF INNOVATIVENESS AND VENTURE STAGE ON VENTURE CAPITALIST-ENTREPRENEUR RELATIONS

Innovative new ventures constitute a disproportionately large source o f economic growth, and the amount of venture capital flowing into such ventures is increasing. A key component in the success of venture-cap ital-backed firms is the relationship between the lead venture capital ist (VC) and the venture's founding entrepreneur (E). We examined the impact of innovativeness and venture stage on VC-E relations in 51 ven ture-capital-backed firms and found: (1) greater marketing innovativen ess in ventures associated with greater openness in VC-E pairs, (2) gr eater technological innovativeness in ventures associated with greater conflict in VC-E pairs, and (3) more frequent VC-E interaction in ear lier stage ventures. We found that the relationship between technologi cal innovativeness and openness of VC-E relations depended upon the ve nture's stage.