556 ENTREPRENEURSHIP
20, 2005. Retrieved from the Web
September 20, 2005, http://www.nytimes.
com.- N. Heikens, “Software Firm Bets Future on
Artificial Intelligence,” Indianapolis Business
Journal, October 11–18, 1993; A. J.
Schneider, “CID Cashes In Again; New Firm
Goes Public,” Indianapolis Business Journal,
March 27–April 2, 1995. - These are based on the research of T. Tyebjee
and A. Bruno, “A Model of Venture Capital-
ist Investment Activity,” Management Science
30, no. 9, 1984: 1051–66. Others have con-
firmed these findings, most notably:
I. Macmillan, R. Siegal, and P. N. Subba-
Narasimha, “Criteria Used by Venture Capi-
talists to Evaluate New Venture Proposals,”
Journal of Business Venturing 1, 1985:
119–28; C. Hofer, W. Sandberg, D.
Schweiger, “The Use of Verbal Protocols in
Determining Venture Capitalists’ Decision
Processes,” Entrepreneurship: Theory and
Practice13, no. 2, 1988: 8–20; R. Hisrich
and A. Jankowicz, “Intuition in Venture
Capital Decisions: An Exploratory Study,”
Journal of Business Venturing5, 1990: 49–62. - Hisrich and Jankowicz, 1990. In a study
employing a small sample, it was found that
management was the most important of three
factors. The others were opportunity and
return. - Jack Gill, personal conversation and class
presentation, November 2002. - See chapter 3 of R. Alterowitz and J. Zon-
derman, New Corporate Ventures(New York:
John Wiley, 1988). - Timmons, 1990.
- Adapted from V. Fried and R. Hisrich,
“Venture Capital Research: Past, Present and
Future,” Entrepreneurship: Theory and Practice
13, no. 1, 1988: 15–28. - L. Bransten, “Venture Capitalists Find Cash,
But Few Great Ideas,” The Wall Street Jour-
nal, October 22, 2000: C18. - The most comprehensive directory is in S.
Isenstein and J. Morris, eds., Pratt’s Guide to
Venture Capital Sources (New York:
Thompson Financial, 2003). - A. Lashinsky, “Bright Lights, Big Money,”
Fortune,March 6, 2006: 49. - R. Buckman, “Silicon Valley Start-Ups See
Cash Everywhere,” The Wall Street Journal,
March 20, 2006: C1. - R. Buckman, “How Venture Capital Is
Trying to Get Down with Young CEOs,” The
Wall Street Journal,July 8, 2006: A1.- This section follows J. Blakey and H.
Hoffman, “You Can Negotiate with Venture
Capitalists,” Harvard Business Review65, no.
2, 1987: 7–11. - H. Landstron, S. W. Manigart, C. Mason,
and H. Sapienza, “Contracts Between
Entrepreneurs and Investors: Terms and
Negotiation Processes,” Frontiers of
Entrepreneurship Research (Wellesley, MA:
Babson College, 1998). - “Note on Financial Contracting,” 1987.
Harvard Business School Publishingreprint 9-
288-014. Revised June 22, 1989. - This example was suggested by Stevenson et
al., 1989. - Bank lending on cash flow is improbable
without collateral, a guarantor, or a relative
on the bank’s board of directors. Therefore,
this example should be considered hypotheti-
cal. - J. Barney, L. Busenitz, J. Fiet, and D. Moesel,
“Factors Underlying Changes in Risk Per-
ceptions of New Ventures by Venture Capi-
talists,” Frontiers of Entrepreneurship Research.
(Wellesley, MA: Babson College, 1996). - To see this, discount the total cash flow line
by 50 percent. This figure is approximately
$2,510,000. Divide the $2 million needed by
this figure for 79.9 percent. - The source of this example is W. Sahlman,
“Aspects of Financial Contracting,” Journal of
Applied Corporate Finance,1988: 25–36. - This example follows the one provided in the
Duncan Field case (9-392-137) by R. O. von
Werssosetz and H. I. Grousbeck, and ac-
companying Teaching Note (5-385-074) by
M. Roberts (Cambridge, MA: Harvard
Business School, 1982). - D. Gullapalli, “A Piece of the Action,” The
Wall Street Journal, November 29, 2004:
R10. - The field of negotiations and negotiating
strategy has many good books and materials
for the entrepreneur. For example: “Harvard
Business Essentials Guide to Negotiation,”
Harvard Business School Publishing, 2003;
R. Lewicki, D. Saunders, and B. Barry,
Negotiation, 5th ed. (New York: McGraw-
Hill/Irwin, 2005); R. Fisher, B. Patton, and
W. Ury, Getting to Yes: Negotiating Agreement
Without Giving In (Boston: Houghton-
Mifflin, 1992).