Factors associated with early firm performance: Human capital, social capital, and initial firm strategy

The focus of this dissertation is on the nascent venture capital firm (VCF), asking which firm characteristics and environmental variables are associated with initial VCF success. While there has been considerable research assessing the structure of VCFs, the role, duties and compensation of venture capitalists (VCs), and how VCs make investment decisions, most research focuses on the behavior of long established VCFs. In contrast, there is a dearth of published research on nascent VCFs, even though the number of new VCFs has grown 10 percent, year-over-year (YOY), between 1980 and 2005.;Prior research has noted that VCFs have two key objectives. The first is raising capital from a pool of potential investors. The second is investing this capital, such that it earns an appropriate return. This ordering is especially important for the nascent VCF. This dissertation assesses the resources and strategies that best enable the nascent VCF to accomplish both of these important objectives. The second chapter of this dissertation identifies which founding conditions are most correlated with nascent VCF fundraising success. Independent variables include the founders' human capital and the initial investment strategies chosen. The third chapter of this dissertation uses the same set of independent variables to assess early investment performance in the VCF's first fund. The fourth chapter of the dissertation then explores VCF syndication strategies, and asks how these strategies may differ based on the age, size and status of the VCF. The fifth chapter discusses themes and findings across chapter two through four.