Role of Non Monetary Services of Venture Capitalists on Entrepreneurial firm Performance

Abstract

Venture Capital (VC) has gained attention in recent years specifically in Indian context. VC newlineis risk equity investment by professional investors who are actively involved in providing newlinenon-monetary services through representation on board of directors. This study endeavoured newlineto explore the relationship between non-monetary services by Venture Capitalists (VCs) and newlineentrepreneurial firm performance. Most of the literature on role of non-monetary services is newlinein context of developed countries. The non-monetary role of VCs in developing countries is newlinemore relevant due to the institutional voids faced by such countries. newlineA comprehensive framework of non-monetary services including monitoring, advising on newlinerecruitment, advising on strategic management, business networking, and social networking newlineis being proposed in this study. The model is extended to include the moderating role of newlinefrequency of board meeting, growth stage of firm, and entrepreneurs prior business newlineformation experience. A structured questionnaire was administered to evaluate the impact of newlinerole of non-monetary services on entrepreneurial firm performance. The quantitative survey newlinewas complemented by qualitative survey to substantiate the results. For qualitative survey, newlinefour entrepreneurs were approached and multiple rounds of semi-structured interviews were newlineconducted to generate responses. newline newlineThe findings described a positive relationship relation between non-monetary services and newlineentrepreneurial firm performance. The frequency of board meeting moderates the effect of newlinemonitoring, advising on strategic management, business networking, and social networking. newlineThe growth stage of firm moderates the effect of business networking on entrepreneurial firm newlineperformance. The entrepreneurs prior business formation experience moderates the effect of newlinebusiness networking on entrepreneurial firm performance. The results emphasized the newlineimportance of non-monetary services of VCs for entrepreneurial firm performance.