Trust and reputation in new ventures: insights from an Indian venture capital firm

Abstract

Purpose

This article aims to explore the importance of trust and reputation in new ventures that are raising venture capital.

Design/methodology/approach

The article is based on an interview with founding partners of an eminent Indian venture capital firm, conducted by an independent interviewer.

Findings

Venture capitalists are moving from a more formal approach for investing to a more relational one. Other than traditional methods of selecting and protecting their investments, the venture capitalists are resorting to trustworthiness of entrepreneurs and reputation as vital deterrence mechanisms.

Practical implications

The findings can be utilized to reduce contracting costs and develop a more efficient venture capitalist‐entrepreneur relationship.

Originality/value

The article proposes new criteria which the entrepreneurs should be aware of before trying to raise venture finance.

Citation

Panda, S. and Dash, S. (2013), "Trust and reputation in new ventures: insights from an Indian venture capital firm", Development and Learning in Organizations, Vol. 27 No. 4, pp. 9-11. https://doi.org/10.1108/DLO-02-2013-0003