The Effects of Venture Capital Firms on Entrepreneurial Firms’ Strategic Alliances and Liquidity Events

Abstract

This chapter aims to provide a succinct review of the state-of-the-art academic literature on the topic of venture capital firms and their involvement in entrepreneurial ventures. Specifically, the chapter focuses on the relationship between the presence of VC firms and two key entrepreneurial outcomes: (a) strategic alliances, defined as the formation of cooperative agreements with strategic partners for the purpose of advancing the entrepreneurial firm’s competitiveness, and (b) liquidity events, defined as the sale of ownership to the general public through an initial public offering (IPO), or to a specific buyer through an acquisition. The chapter also highlights some key questions that remain unanswered, as well as a few areas of inquiry that challenge our common wisdom and give rise to controversy.