The added value of venture capital in Mexico

Abstract

Venture capital provides resources to startups with high growth potential managed by entrepreneurs who seek not only money to finance its investment project but also the support provided by the financial intermediary to develop the company. Although it is known that these non-monetary contributions from the venture capitalist have an impact on the development of the company, little is known in Mexico as of the nature of these contributions, the roles of the venture capitalist and the entrepreneur, the critical aspects of their relationship, and their practice in general. This research reports a proposed substantive theory that explains how the venture capitalist contributes to the development of the company that finances in Mexico. The theory arises from interviews with nine venture capitalists and nine entrepreneurs whose data were analyzed using a grounded theory methodology and the constant comparative method. The finding of this research has important practical implications for entrepreneurs in Mexico looking for venture capital financing, and for those who currently have a relationship with a venture capitalist. In addition, the findings provide a knowledge base that could motivate the advance of research on venture capital in the country, promote educational developments, and allow the design of public policies