The Journal of Private Equity 

About: The Journal of Private Equity is an academic journal. The journal publishes majorly in the area(s): Private equity & Venture capital. It has an ISSN identifier of 1096-5572. Over the lifetime, 590 publications have been published receiving 6190 citations.

Initial Human and Financial Capital as Predictors of New Venture Performance

Abstract: This research seeks to predict the performance of new ventures based on factors that can be observed at the time of start-up. Indicators of initial human and financial capital are considered to determine how they bear upon the probability of three possible performance outcomes: (1) failure, (2) marginal survival, or (3) high growth. Four categories of initial human and financial capital are examined. General human capital, represented here by the entrepreneur's education, gender, and race, may reflect the extent to which the entrepreneur has had the opportunity to develop relevant skills and contacts. Management know-how, embodied in the entrepreneur or available through advisors or partners, reflects management-specific skills and knowledge, without regard to the kind of business. Industry-specific know-how reflects specific experience in similar businesses. Financial capital is one of the most visible resources; it can create a buffer against random shocks and allow the pursuit of more capital-intensive strategies, which are better protected from imitation. The study utilizes a longitudinal study of 1053 new ventures, representative of all industry sectors and geographical regions. The research departs from most previous studies in considering different measures of performance (marginal survival and growth) and in considering explicitly whether the factors contributing to marginal survival differ from those contributing to high growth. It was found that measures of general human capital influenced both survival and growth (except for gender, with women-owned ventures being less likely to grow, but just as likely to survive). Management know-how variables had more limited impact. Having parents who had owned a business contributed to marginal survival, but not to growth. Number of partners contributed to growth but not to survival. Management level, prior employment in non-profit organizations or not having been in the labor force, and the use of professional advisors did not have significant effects. Industry-specific know-how contributed to both survival and growth. Amount of initial financial capital also contributed to both. The usefulness of the model is enhanced by the fact that the resource variables considered are relatively easy to assess and all can be considered at the time of start-up. Although some of the human capital variables cannot easily be changed, the benefits or risks associated with each can be assessed. In some cases, potential problems can be identified so that plans can be modified to improve prospects. Overall it appears that, using a model based upon the initial human and financial capital of the venture, it is possible to predict the performance of new ventures with some degree of confidence.

The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program

Abstract: Government programs that finance small firms have attracted little empirical attention. This article examines the largest U.S. initiative, the Small Business Innovation Research program. Using a unique database, this article shows that SBIR awardees grew significantly faster than matched firms over a decade and were more likely to attract venture financing. The superior performance of awardees was confined to firms in regions with substantial venture capital activity and was particularly pronounced in high-technology industries. Multiple awards did not increase performance. These results suggest that awards played out an important role in certifying firm quality, but also that distortions of the award process do occur.

Knowing What to Do and Doing What You Know: Effectuation as a Form of Entrepreneurial Expertise

Abstract: Entrepreneurship has traditionally been studied either as a set of psychological characteristics or as a residual of environmental structures such as social networks. In line with more recent process views, the authors propose the study of entrepreneurship as a form of expertise—a set of skills, models, and processes that can be acquired with time and deliberate practice. This article delineates the domain of entrepreneurial expertise and demarcates the role of deliberate practice within it, demonstrates the efficacy of effectuation as a theory about entrepreneurial expertise, and develops testable propositions about effectual action in the development of entrepreneurial expertise and firm growth.

Predictors of Entrepreneurship in Family Firms

Abstract: This study investigates the main predictors of entrepreneurship in small and medium-sized family firms. Based upon literature review and a pilot case study, hypotheses are developed, relating several individual and organizational antecedents of entrepreneurship to three different family firm types. Most of the hypotheses are confirmed by an analysis carried out on a large random sample of small and medium-sized Swedish family firms. Further studies addressing the determinants of entrepreneurship in family firms and practitionersņ advice aimed at enhancing entrepreneurship in such companies would hence benefit from targeting their efforts on the specific family firm types they address.

The changing face of the European venture capital industry: Facts and analysis

Abstract: The Survey of European Venture Capital (SEVeCa) is the largest academic study to date on the European venture capital industry, providing information on more than 1,300 investment companies, 400 venture partners, and 150 venture funds. The European venture capital industry is found to be more integrated than previously believed: 27% of all venture firms have an office in a foreign country, and 24% of investments are cross-border. Significant links to the U.S. lead to increasing emulation of U.S. investment practices. However, distinctively European aspects, such as the prominence of bank and corporate investors, do remain. The study also debunks the belief that all European venture capitalists are conservative and “hands-off.” A majority of the deals are early stage, and involvement with portfolio companies is substantial. The experience and education of of venture partners (their “human capital”) is shown to play an important role in promoting an active investment style.