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How do bank-affiliated venture capitalists do deals? Towards a model of multiple investment logics

How do bank-affiliated venture capitalists do deals? Towards a model of multiple investment logics This paper aims to investigate German bank-affiliated venture capitalists’ investment practices and the emergence of their investment logics. Most studies focus on the investment behaviour of independent venture capitalists and little is known about dependent venture capitalists’ investment behaviour. The present study contributes to filling this gap in entrepreneurial finance literature.Design/methodology/approachThe paper uses an exploratory qualitative research approach based on 27 semi-structured interviews with the top management of German bank-affiliated venture capitalists and industry experts to develop a conceptual model that explains the investment logics of bank-affiliated venture capitalists. A large amount of archival data has also been collected and used for the analysis.FindingsThe results indicate that bank-affiliated venture capitalists either follow an autonomous, contingent or hybrid investment logic. A bank-affiliated venture capitalist’s isomorphic focus – whether they feel isomorphic to the external venture capital environment or the internal parent bank’s environment – explains the emergence of multiple investment logics.Practical implicationsThe paper encourages banks to get a better understanding of how the venture capital industry works and what they need to do to compete again independent venture capitalists. Banks and their affiliated venture capital units can improve their deal flows by recognising that they need to get accepted as an on-par investor in the venture capital environment.Originality/valueThe current study is the first of its kind investigating multiple investment logics by focussing on the link between different isomorphic habits and the specific context of bank-affiliated venture capitalists. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Qualitative Research in Financial Markets Emerald Publishing

How do bank-affiliated venture capitalists do deals? Towards a model of multiple investment logics

Qualitative Research in Financial Markets , Volume 13 (4): 42 – Jul 27, 2021

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1755-4179
DOI
10.1108/qrfm-07-2020-0137
Publisher site
See Article on Publisher Site

Abstract

This paper aims to investigate German bank-affiliated venture capitalists’ investment practices and the emergence of their investment logics. Most studies focus on the investment behaviour of independent venture capitalists and little is known about dependent venture capitalists’ investment behaviour. The present study contributes to filling this gap in entrepreneurial finance literature.Design/methodology/approachThe paper uses an exploratory qualitative research approach based on 27 semi-structured interviews with the top management of German bank-affiliated venture capitalists and industry experts to develop a conceptual model that explains the investment logics of bank-affiliated venture capitalists. A large amount of archival data has also been collected and used for the analysis.FindingsThe results indicate that bank-affiliated venture capitalists either follow an autonomous, contingent or hybrid investment logic. A bank-affiliated venture capitalist’s isomorphic focus – whether they feel isomorphic to the external venture capital environment or the internal parent bank’s environment – explains the emergence of multiple investment logics.Practical implicationsThe paper encourages banks to get a better understanding of how the venture capital industry works and what they need to do to compete again independent venture capitalists. Banks and their affiliated venture capital units can improve their deal flows by recognising that they need to get accepted as an on-par investor in the venture capital environment.Originality/valueThe current study is the first of its kind investigating multiple investment logics by focussing on the link between different isomorphic habits and the specific context of bank-affiliated venture capitalists.

Journal

Qualitative Research in Financial MarketsEmerald Publishing

Published: Jul 27, 2021

Keywords: Bank-affiliated venture capital; Investment logics; Investment practices; Institutional theory; Isomorphism

References