Tyzoon T. Tyebjee

The entrepreneur's search for capital

Abstract The popular media have been inundated with stories of the spectacular success of start-up companies whose very existence, let alone their meteoric growth, would not have been possible without the infusion of venture capital. By comparison, there is a dearth of scientific research on the topic of venture capital. In this article we take a systematic look at entrepreneurs in search of risk capital. This inquiry is based upon five data bases including surveys of venture capitalists and entrepreneurs. We have tracked 193 ventures which were denied venture capital, surveyed 179 new high-technology companies in Northern California, and reviewed the Dun & Bradstreet credit reports of 145 new ventures in California in SIC codes related to the high tech sector with follow-up interviews of 86 of these 145 start-ups.

A model for the selection of interdependent R&D projects

The R&D project selection model provides for three types of project interrelationships: overlap in project resource utilization, technical project interdependence, and the project interaction with respect to value contribution. It also provides an input structure that should help diverse people in the organization communicate their knowledge and opinions to the R&D planning process.

Behavioral biases in new product forecasting

Abstract The new product planning process generates an upward bias in the forecast of a products performance. Three sources of such bias are discussed: (1) the post-decision audit bias reflects a regression-to-the-mean phenomenon since only those products that are forecasted to do well, including those with the most upward biased forecasts, are brought to market; (2) the advocacy bias reflects the tendency of product planners to champion their project by overpromising on forecasts; (3) the optimism bias results from the act of participating in planning activities. Two role-playing experiments found that persons who were more deeply involved in a planning exercise were more optimistic about the outcome of the plan than those who were less involved. A third role-playing experiment demonstrated that one reason for the optimism bias is that during the planning process the illusion of control over the environment leads the planner to change assumptions about uncontrollable events which are likely to affect the outcome.

Retail trade incentives: how tobacco industry practices compare with those of other industries.

OBJECTIVES This study compared the incentive payments for premium shelf space and discounts on volume purchases paid to retailers by 5 types of companies. METHODS Merchants were interviewed at 108 randomly selected small retail outlets that sell tobacco in Santa Clara County, California. RESULTS Significantly more retailers reported receiving slotting/display allowances for tobacco (62.4%) than for any other product type. An average store participating in a retailer incentive program received approximately

Venture capital in Western Europe

3157 annually from all sampled product types, of which approximately

Venture capital: Investor and investee perspectives☆

2462 (78%) came from tobacco companies. CONCLUSIONS Future research should assess the impact of tobacco industry incentive programs on the in-store marketing and sales practices of retailers.

A Typology of Joint Ventures: Japanese Strategies in the United States

Abstract Western Europe is in the process of an entrepreneurial renaissance. An integral part of this renaissance is the emergence of a venture capital industry in Europe. Although the venture capital institution in Europe is very much modeled along the lines of its American counterpart, it is significantly smaller in size both in absolute terms as well as in relation to the size of the economy. Substantial differences in venture capital activity are also found to exist within Europe,it is most prevaient in the United Kingdom, France, and Netherlands. Surprisingly, it is less developed in West Germany, particularly given the size of this countrys economy. Venture capital in Western Europe shares some characteristics with that in the United States. Its investment focus is in high technology, and syndication between funds is common. Unlike the United States, however, banks are a major source of venture capital funds. Surprisingly, in spite of the economic integration to which the European Community aspires, the mobility of venture capital across national boundaries is low. The authors try to explain differences in venture capital activity in several countries of the European Community by examining four aspects of each countrys environment. In particular, the size of the technology sector, the cultural influence on entrepreneurial risk-taking, the governments policy to stimulate risk capital and entrepreneurship. and finally, the ability of venture-backed firms to turn to publicly traded markets as a source of future financing. One common factor shared by the three countries with the highest level of venture capital activity is the presence of a secondary stock market geared to the needs of a small, relatively new venture contemplating an initial public offering. The Unlisted Securities Market in the United Kingdom, the Seconde Marche in France, and the Parallel Market in the Netherlands serve these needs and provide the mechanism by which venture capitalists can liquidate their equity position after the venture is quoted on these financial markets. To the venture it provides access to public financing for funding continued growth. In the United Kingdom and Netherlands, the business enterprise has historically been regarded as a tradeable entity and hence the concept of ownership by passive investors is well accepted. In France, where this is a relatively recent phenomenon, the government has played a strong role in stimulating an interest in stock market investing in general. It has also created some extremely attractive fiscal incentives for investors in venture capital funds.

The risk of investment in technological innovation

Abstract The venture capitalist plays a crucial role in, the startup and growth phases of entrepreneurial firms. Yet, the burgeoning but still relatively modest venture capital research literature continues to be characterized by isolated studies of how venture capitalists raise capital and select investments; little effort has been made to consolidate and integrate these findings. In particular, little is known about the impact of the venture capitalists decision upon the entrepreneurial process. This paper has two objectives: The first is to review the available material and literature on venture capital decision-making and its impact on entrepreneurship. The second objective is to elucidate a research methodology which involves three different units of analysis as they relate to venture capital decision-making: the venture capitalist, the deal which was funded, and the proposal which was denied. Results from these three inter-related studies by the authors are reported.

Negotiating Venture Capital Financing

The last decade has seen an upsurge in Japanese foreign direct investment in the U.S. manufacuring sector. A substantial number of these investments have been joint ventures with American partners. These joint ventures are of four types. The first type involves a Japanese firm acquiring an equity position in an entrepreneurial hightechnology company that needs expansion financing. The second type occurs when a Japanese firm assumes an equity position in an ailing division of a large American firm. The third type is the case of two parents which together spawn a new separate entity, typically as a venture in some incipient market. The fourth type are those which evolve out of a buyer-supplier relationship. In-depth interviews with top managers in twenty-one joint ventures found that these four types of joint ventures differ in terms of the relative size of the partners, their relative power in the relationship, the strategic contribution each partner makes, and the territorial constraints placed on the joint ventures marketing activities.

The Sense and Nonsense of Consumer Product Testing: How to Identify Whether Consumers Are Blindly Loyal?

It is shown that the prevalent view that investment in technological innovation is particularly risky is incomplete. Specifically, while such investments may be very risky when viewed from the perspective of a project manager, they are less so when viewed from the perspective of top management (or the firm), and they are no more risky than average when viewed from the perspective of investors.