Against the backdrop of an ever-changing financial landscape
sometimes characterized by an abundance of funding and start-up
opportunities, but usually characterized by down rounds and
decreasing valuations (leading to funding, investment and liquidity
gaps), ""venture capital"" has taken on a new uncertainty and
complexity. In this review, we suggest that venture capital should
not exclusively - or even primarily - be defined in terms of
providing risk capital (and advise) to founder-entrepreneurs. Such
an approach to venture capital, which is often described in terms
of a ""venture capital cycle"", seems to represent the conventional
wisdom in most recent discussion. According to this perspective,
the solution to the funding, investment, and liquidity gaps is for
new sources of capital - be they government, corporate or crowd -
to step in and provide founder-entrepreneurs with money, capacities
and connections that allows them to start, scale, and grow their
businesses. These ingredients are necessary but not sufficient to
maximize the economic potential of start-ups. Clearly we need
something more. Recently, alternative forms of finance and a new
breed of venture capital providers have emerged which focus more on
collaborations and the process of building long-term relationships
constructed around sharing, mutual trust and respect (partnering)
than making money (venturing). Online platforms, such as AngelList,
play an important role in encouraging these collaborative models.
Some investors have labeled this process as ""venture capital
2.0"". We explore the view that reforms that relax rules and
regulations governing initial public offerings should attract new
""venture capital 2.0"" investors and high volumes of business.
However, the growth rates for new segment listings in Europe and
the United States have stalled recently, casting doubts on the
usefulness of the of the IPO route for both young firms and
investors. We suggest that a renewed focus on private IPOs,
followed by a trade-sale or public IPO, is necessary to accommodate
the preferences of entrepreneurs and investors.
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