The Capital Flow from Institutional Investors to Entrepreneurs

Groh, Alexander Peter

doi:10.2139/ssrn.1547791

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The Capital Flow from Institutional Investors to Entrepreneurs

27 Pages Posted: 6 Feb 2010

See all articles by Alexander Peter Groh

Alexander Peter Groh

Luiss Guido Carli University - Luiss Business School; EMLYON Business School

Date Written: February 4, 2010

Abstract

This is a practitioner oriented paper. It deals with the two-staged capital allocation process from institutional investors to entrepreneurs. I first describe our knowledge about institutional investors’ criteria when they search promising countries for their venture capital investments. Next, I document research results on their selection of particular funds. This is followed by the discussion of the second step of the capital flow from the venture capital funds to entrepreneurs. I discuss literature on venture capitalists’ sorting criteria for entrepreneurial ventures and provide concluding remarks. The paper contributes to the understanding of the asset class and financial resource venture capital. It points to the selection process of the agents in the intermediary relation and documents the responsibilities of the delegated managers. Risk capital seeking entrepreneurs will benefit from the knowledge of their investors’ constraints and of the investment determinants for capital, directed from institutions to young ventures.

Keywords: Institutional Investor, Asset Allocation, Venture Capital, Entrepreneurial Finance

JEL Classification: G11, G24

Suggested Citation: Suggested Citation

Groh, Alexander Peter, The Capital Flow from Institutional Investors to Entrepreneurs (February 4, 2010). Available at SSRN: https://ssrn.com/abstract=1547791 or http://dx.doi.org/10.2139/ssrn.1547791