TY - UNPB

T1 - Attitudes of venture capital investors towards entrepreneurs with previous business failure, Belfast (June)

AU - Cope, J P

AU - Cave, F D

AU - Eccles, S A

PY - 2004

Y1 - 2004

N2 - Business failure represents a significant outcome of entrepreneurial activity and yet remains an underdeveloped area of research. This article focuses on the attitudes of VC investors towards entrepreneurs with a previous failure experience. It illustrates that VCs recognise the complex, contextual nature of failure and do not necessarily perceive the entrepreneur to be the primary cause of the venture's demise. Consequently, the article differentiates between 'business', 'entrepreneurial' and 'venture capitalist' failure. The article demonstrates that VCs often adopt a tolerant, flexible and open-minded attitude to failure and are keen to understand the circumstances in which it occurred. The majority of the VCs in the study emphasise that their decision to invest in an entrepreneur is not negatively affected to any significant degree by a previous experience of failure. A number of influential factors are presented, such as a high quality concept, which can offset this aspect of the entrepreneur's track record. The article concludes that business failure is not automatically considered a 'black mark' by VCs. It is important for entrepreneurs involved in business failure to be aware of these positive and sympathetic attitudes when considering putting forward new proposals to the VC community.

AB - Business failure represents a significant outcome of entrepreneurial activity and yet remains an underdeveloped area of research. This article focuses on the attitudes of VC investors towards entrepreneurs with a previous failure experience. It illustrates that VCs recognise the complex, contextual nature of failure and do not necessarily perceive the entrepreneur to be the primary cause of the venture's demise. Consequently, the article differentiates between 'business', 'entrepreneurial' and 'venture capitalist' failure. The article demonstrates that VCs often adopt a tolerant, flexible and open-minded attitude to failure and are keen to understand the circumstances in which it occurred. The majority of the VCs in the study emphasise that their decision to invest in an entrepreneur is not negatively affected to any significant degree by a previous experience of failure. A number of influential factors are presented, such as a high quality concept, which can offset this aspect of the entrepreneur's track record. The article concludes that business failure is not automatically considered a 'black mark' by VCs. It is important for entrepreneurs involved in business failure to be aware of these positive and sympathetic attitudes when considering putting forward new proposals to the VC community.

KW - business failure

KW - investor attitudes

KW - decision criteria

M3 - Working paper

T3 - Entrepreneurship and Enterprise Development Working Paper Series

BT - Attitudes of venture capital investors towards entrepreneurs with previous business failure, Belfast (June)

PB - Institute for Entrepreneurship and Enterprise Development

CY - Lancaster University

ER -