Abstract
Studies of VCs' investment criteria describe the quality of management team as key determinant of venture financing. We contend, however, that some VCs may be willing to fund ventures headed by poor administrators with the expectation to replace them in the future. We conjecture that VCs with higher risk tolerance, greater involvement in venture governance, and proclivity for trust-based collaboration with coinvestors will be prone to take on financing of robust ventures headed by weak leaders. A survey and interviews with 50 U.S. VCs supported these hypotheses.
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