Question

2. Explain the relationship between capital and entrepreneurs.

Answer 1

On the basis of preliminary interview and survey data, evidence suggests that venture capitalists (VCs) are less involved with their affiliated new venture organizations than may be necessary for long term survival. The dual core model of innovation that emphasizes the need of a technical and administrative core for continued innovation is used as the foundation of this perspective. In the post investment relationship between the venture capitalist and the new venture, it is expected that the new venture has a well developed technical core. However, the administrative needs are often ignored by the new venture entrepreneurs. Therefore, it is recommended that VCs become more involved in the administrative component of the new venture organization (NVO) through either direct involvement or through the recruiting of key personnel. As the NVO moves through its life cycle the addition of an administrative component to its technical core provides for continued innovation necessary for long term survival and growth.