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Ther term ‘Venture Capital’ (VC) denotes resources that specialized investors provide to start-ups in order to help them commercialize their mainly high-technology ideas. The early stage character of these projects makes VC investments exceedingly vulnerable to information asymmetries ex-ante and ex-post to the investment decision.

This section introduces the rationale of VC financing and builda the theoretical basis for the following considerations. First, the necessity of VC funding for start-ups will be outlinsed by contrasting an emerging company’s need for capital with its limited access to traditional funding. Then, this chapter addresses the questions of how VC fills the financing gap of start-ups and what motives the different participants pursue with their engagement in VC. The VCF’s expectations towards venture investments are discussed in particular. This chapter concludes in distinguishing different types of VC investors.

After chapter two has outlined the emergence of VC and the principal process patterns that underline VC investements, this chapter concentrates on the exit as the final step in VC investments. Initiallu, this chapter analyzes common instruments such as contractual agreements, exit vehicles and the general exit process patterns from the VCF’s perspective. Thereupon, this chapter examines the present challenges VCFs face at exit. The insights from this analyses guide the development of the research model in the subsequent chapter.

On the basis of the literature and advancements of theoretical models, this chapter develops the research model that underlies the empirical analysis. The research model relates information asymmetries between inside and prospective outside investors about the business and eventual departures of entrepreneurial team members as well as VCFs’ abilities to resolve uncertainties of prospective investors to the VCF’s exit strategy. Initially, this chapter sets out the relevant literature and the theoretical constructs underlying the research model. Then, this chapter derives 20 hypotheses on how VCFs react to information inefficiency at exit. This chapter concludes with adjusting the hypotheses to the findings from four qualitative pilot-studies in which the research model is pre-tested.

This chapter sketches the empirical design that underlies this study. First, it set out the operationalization of the dependent, independent and control variables. Second, this chapter describes how the data samples are gathered. Thereupon, this part contrasts the data samples and outlines possible shortcomings as regards the survey samples’ representativeness. Finally, the empirical methods that are employed are introduced.

Throughout this section, the research model is tested for its validity on the basis of the survey data sample and the original data sample if applicable. After discussing the research model and the interrelations between the endogenous variables, this section aims at identifying structures in the survey sampl that have not bee foreseen in the research model but influence the VCF’s exit strateggy as well. Therefore, an investigative technique — the cluster analysis — is employed.

This chapter summarizes the findings of the present study. It sets out the implications from a scientific perspective and for practical use. Then, this chapter identifies the weaknesses and limitations of the present analysis. Finally, it addresses further need for research emanating from this dissertation.