The perception of geographic proximity in the strategies of digital start-ups and venture capital funds

Posté le 14/03/2018 par Hélène Dacoord

Résumé du mémoire de Hélène Daccord - Finaliste du Prix du Meilleur Mémoire 2017 en Intelligence Economique et Stratégie des Organisations

 Venture capital funds are central actors in the New York venture ecosystem. Not only do they provide financial capital, but also select, signal, share strategic information and embed startups in the ecosystem. Given the uncertainty of the venture market in the digital sector, venture capitalists prioritize qualitative criteria to assess startups. Even with the information and communication technologies (ICT), both private equity and venture capital funds take for granted that face-to-face interactions help them better assess the potential of the company they consider funding. Once the deal sourced, venture capital funds tend to be localized close to their backed startups and consider geographic proximity as a way to minimize their monitoring costs and to benefit from the externalities of local anchoring. Based on research interviews, we identify five main perceived benefits of face-to-face interactions (build trust, assist the management, access to specialized and tacit knowledge, accelerate the decision process), which are not equally important for venture capitalists or digital entrepreneurs. On the one hand, venture capital funds are highly selective and do not provide their backed startups with the same resources. On the other hand, although some resources are perceived as stemming from these interactions, they actually stem from knowledge spillovers and are accessible thanks to the venture ecosystem.

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