Is venture capital the ideal funding option for early stage high tech companies?

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ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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ABSTRACT

Venture capital investor can bring capital according to the entrepreneurial venture. Venture capital can be defined as the equity financing which is provided by the investors who fund on behalf of the large institution or have their own pool of capital. The aim of the study is to determine if venture capital is the ideal funding option for early stage high tech companies. In the recent times, the entrepreneurs face numerous challenges which include the match of the business prospects and company's stage of development with the capital sources which are appropriate. Companies can benefit from raising venture capitals since the financial resources which are additional help in accelerating growth and provide competitive advantage. The data collected for the study was based on Primary and Secondary data. Primary data was collected through conducting interviews in high technology companies who have used venture capital as a funding option. The findings of the study determined that since high tech firms require huge investments therefore there are many risks associated with it. The main factors which should be considered for future study include the spin-offs.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the Study1

Aim of the Study1

Significance of the Study2

Problem Statement2

CHAPTER 2: LITERATURE REVIEW3

History of venture Capital3

Overview of Venture Capital4

Venture Capital Components8

Fund-Raising9

Deal origination9

Screening10

Due diligence11

Contracting13

Monitoring15

Staging15

Governance16

Syndication17

Risk associated with venture Capital19

Effectiveness of venture capital for high tech firms22

Factors associated with venture capital24

Poor Performance of Venture Capital Industry24

CHAPTER 3: METHODOLOGY28

Data Collection29

Primary Research29

Interviews29

Sample30

Informed Consent30

Confidentiality30

Ethical Consideration31

Secondary Research31

Research Plan32

CHAPTER 4: ANALYSIS AND DISCUSSION34

Interview Analysis34

Do you consider venture capital as an effective funding option for high tech companies?34

Is there any risk involved in venture capital for high tech companies?34

What are the external and internal factors which can impact venture capital funding for high tech companies?35

Discussion35

Risk involved in venture capital35

Effectiveness of venture capital for high tech companies36

Factors affecting venture capital37

CHAPTER 4: CONCLUSION AND RECOMMENDATION40

Conclusion40

Future Studies42

REFERENCES44

BIBLIOGRAPHY48

APPENDICES50

Interview Questions50

CHAPTER 1: INTRODUCTION

Background of the Study

Venture capital creation remains a controversial topic. Venture capital investor can bring capital according to the entrepreneurial venture. Venture capital helps in facilitating the development of venture and it helps in hitting the market opportunities in a timely manner. Venture capital can also help in bringing wealth of company governance and operating through it (Pratch, Jacobowitz, 2004, 8). It helps in connecting with suppliers, customer's potential executive hires and partners. Venture capital can have negatives when as a result of the experience of the entrepreneurial companies. Therefore, due to this reason venture capital involvement is beneficial in the balance of ...