Analysis of the non-financial value creation mechanisms of venture capitalists for start-up companies

Document Type : Original Article

Authors

1 Ph.D. Candidate in Technology Management, Allameh Tabatabai University, Tehran, Iran

2 Assistant Professor, Accounting and Management Department, Financial Management Faculty, Islamic Azad University, Eslamshahr Branch, Tehran, Iran

3 MSc. Master of Business Administration (MBA), Faculty of Economics and Management and Administrative Sciences, Semnan University, Semnan, Iran

10.30495/ijfma.2023.73656.2022

Abstract

In their interactions with start-up companies, venture capitalists do more than just provide financial resources; they also create value for these companies. Using the case study method, the current study investigated six venture investments made between 1393 and 1400 through 23 semi-structured interviews with people involved in venture capital and start-up companies. Furthermore, it has used axial coding and qualitative content analysis of interviews to look into the mechanisms that lead to the development of non-financial values. The findings of this study demonstrate that the creation of non-financial values by venture capitalists has two general orientations, external and internal. As a result, the ability and focus of the venture capitalist as well as the need acknowledged by start-up companies for the creation of non-financial value impact the overall strategy and efficacy of value-creation mechanisms. According to the findings, not all venture capitalists are capable of generating non-financial value in every field. As a result, these capitalists must consider the balanced, simultaneous development of non-financial value creation capabilities in their long-term approaches and select start-up companies that are consistent with their overall strategy. To avoid potential conflicts in interactions with this type of capitalist, start-up companies should take special care when selecting a venture capitalist and determining their expectations from their investment.

Keywords

References

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International Journal of Finance & Managerial Accounting
Volume 10, Issue 36
January 2025
Pages 232-242

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