Goal Incongruences in the Venture Capitalist-Entrepreneur Relationship

This qualitative study examines the motivations for venture capitalists and entrepreneurs to act opportunistically toward one another. Structured interviews with 14 employees and 5 investors in a venture capital-funded start-up revealed that venture capitalists expect opportunistic behaviour from entrepreneurs during investment rounds but largely trust entrepreneurs between financing rounds. Both venture capitalists and entrepreneurs reported that venture capitalists act opportunistically towards the entrepreneur and other venture partners during all stages of start-up development. These findings have important implications for entrepreneurship research, most notably the applicability of agency theory as a theoretical perspective from which to view the complex relationship between venture capitalists and entrepreneurs.