Opening the Black Box of the Venture Capital-Entrepreneur Relationship

Abstract

This chapter aims to explore in-depth the relationship between the venture capitalist and the venture-backed company and account for how this relationship unfolds over time. To achieve this, the authors present evidence from three process case studies. The field study presented in this chapter is partly retrospective and partly in real time and is based on two rounds of focused interviews with the entrepreneurs and the venture capitalist. The findings show that several factors play a role, with confidence in the VC (Venture Capital) being essential to beginning the relationship and trust between the parties being essential to continuing it successfully. This relationship is a learning experience for both parties: while the entrepreneur becomes acquainted with the tools for daily, as well as strategic management, the venture capitalist learns how to effectively scout new attractive business ideas.