Organization and Finance of Entrepreneurial Ventures: Looking Beyond the Surface
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In this paper we examine the association between the organization and the mode of financing of entrepreneurial ventures. By means of a mixed-method study, we show that after receiving outside equity from professional investors, entrepreneurial ventures’ top management teams becomes larger and more specialized. The presence of outside equity investors also influences the extent of the delegation of decision authority within the team. However, this effect varies depending on the type of investors. When ventures are backed by corporate investors, the level of delegation increases. By contrast, when ventures receive outside equity investors from independent venture capital investors and business angels, they tend to centralize authority over key strategic decisions in management committees. This organizational arrangement is instrumental to the wish of the outside investors to exercise greater control over these decisions.