Do Venture Capitalists Stifle Competition?

This study of the annual reports of the Illinois Central Railroad (IC) from the 1850s supports a conclusion that the statements, as to form and content, were developed to serve the needs of two classes of investors and to inform the general community of the activities of the company. The need to report to the public as to the success of the company's role in its “social contract” to develop the state required details of a demographic nature, which were provided by the land commissioner. Operating results provided evidence of the ability to service the debts held by European investors and to inform British venture capitalists of the extent of the company's operations. This communication with the distant capital providers was a new development in financial reporting as the capital-intensive railroads experienced management and ownership separation on a scale not seen before. In summary, the IC provided annual reports more detailed and informative than those of other corporations of the period because of a need to provide European investors with evidence of management's activities.

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Collaboration Among Silicon Valley Venture Capitalists

The Oxford Handbook of Entrepreneurship and Collaboration ◽

10.1093/oxfordhb/9780190633899.013.38 ◽

2019 ◽

pp. 200-219

Author(s):

Lyda Bigelow ◽

Jennifer Kuan ◽

Kyle Mayer

Keyword(s):

Venture Capital ◽

Regulatory Focus ◽

Regional Differences ◽

Silicon Valley ◽

Psychological Effects ◽

Venture Capitalists ◽

Regulatory Focus Theory ◽

Industry Clusters ◽

Entrepreneurial Ventures ◽

Point Of Entry

Regional differences among industry clusters have long been a puzzle, especially when performance differences are significant. This chapter examines the case of venture capital investing, in which Silicon Valley differs from the rest of the world despite attempts to imitate its model. The point of entry in this chapter is the contract between venture capitalist and entrepreneur. Although such contracts have been analyzed in other research, this chapter argues that the psychological effects of different contract styles are of primary importance to innovative outcomes of entrepreneurial ventures. Thus, it argues that regulatory focus theory, which considers the psychological effects of contracting, is essential to understanding differences in practice and outcomes in venture capital clusters.

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