Strategic Risk Management in Start-up Funds
Topic: Venture Capital
Duration: since 10/2012
Project Lead: Prof. Dr. Michael Schefczyk
Scientific Employees:
Nicholas Bost, M. Sc., LL. M. oec.
Dipl.-Wi.-Ing. Johannes Paul
Website: research.gruenderlehrstuhl.de
In cooperation with leading German early stage funds, we are leading an academic study of strategic risk management, in order to research insights into fund management and capital acquirers. In a collaborative research project with Prof. Dr. Pinkwart (Handelshochschule Leipzig), nine early phrase funds and more than 139 technology companies were already studied. The academic approach promises high academic relevancy, because it is based upon a multi-perspective analysis in comparison with previous studies and simultaneously integrates a longitudinal period analysis. At the same time, the study focuses on a practical gain of knowledge for the risk, networking, and technology management of start-ups and implications for the management of early stage funds.
The research project differentiates itself from previous studies, as it will be oriented towards content perspectives in place of the phase-oriented venture capital business model. Therefore, we want to direct the studies towards established perspectives handled in various disciplines. The six perspectives – interpersonal relationships, networking, features of technology, management support, risk management, and internationalization – are solidified into knowledge of risk assessment (decision points) and risk management (investment processes) in start-up funds.
In empirical research concerning early stage financing, it has been customary to carry out moment analyses upon the basis of a particular source of information . For example, the success of financing is reflected in the features that the investment manager documented and perceived at the beginning, insofar as he can reproduce these again within a survey performed a ta later date. In order to overcome the obvious limitations of this estimate, multiple sources of information are combined. At the core, there are the files for the decision (business plan, due diligence, decision papers) and the running reports (qualitative and quantitative reports, milestones, budgets), with which analysis based on spans of time instead of points in time is possible. This objective view is completed through standardized surveys of investment managers and portfolio companies, in order to summarize simultaneously two subjective perspectives into one investment holding.
Through its innovative methods, the provided course of investigation can be of extensive academic and practical value. The results of multi-researcher analysis could more closely and permanently illuminate early stage financing, public-private partnership funds, detailed corporate developments and fund operations, which have not been thoroughly researched up until this point, thereby smoothing the way for efficient trading. In this respect, the survey gives reason to suspect extensive implications for research.
Our research efforts and previous gains of knowledge were presented conceptually at this year’s symposia IECER in Regensburg and the G-Forum in Potsdam. These preliminary research papers and presentations show the previous project advances: