Venture Capitalist Induced Relational Fit and New Venture Performance: a Dutch biotech comparative case analysis

Abstract

Venture capitalists contribute financially as well as non-financially to new venture development. Their non-financial support consists of both direct strategic advice and indirect advice via networking. But the effectiveness of this advice is more dependent on its acceptance by a new venture than on its nature. The acceptance of the advice of a venture capitalist by a new venture is demonstrated to depend on the latter’s perception of fairness in its relationship with the venture capitalist (Busenitz et al., 2004). In this study it is demonstrated that more dimensions of relational fit than only the perception of fairness of a new venture in its relationship with a venture capitalist play an important role in their relational fit, i.e. goal congruence and complementarity of competences and cognitions. Additionally, this study shows that a venture capitalist can improve its relational fit to a new venture and thereby new venture development by taking some fit improving measures like bonding and avoiding forced decisions and a too large overlap of knowledge.