The Venture Capital Deformation: Value Destruction throughout the Investment Process

Description

In spite of the robust development of venture capital that has occurred over the last three decades, returns from venture capital have been declining. This book focuses on a simple question: why? The answer lies in the context of multiple deformations that have occurred throughout the venture capital process. The book critically assesses the ways in which interactions between different stakeholders in the venture capital ecosystem change (or "deform") venture capital, decreasing its value. Klonowski also reveals that venture capital actually has few benefits—and some outright disadvantages—for entrepreneurs, and it can create a self-perpetuating cycle of investment and loss for the entire venture capital industry. This is especially true as corporate governance and compensation structures may create significant misalignments, incongruities, and conflicts of interest between general and limited partners. Front Matter ....Pages i-xix Front Matter ....Pages 1-1 Venture Capital: A Closer Look Behind the Curtain (Darek Klonowski)....Pages 3-32 Maturation, Segmentation, and Competition in the Venture Capital Industry (Darek Klonowski)....Pages 33-63 Front Matter ....Pages 65-65 Fund Formation: Structural and Operational Deformations in Venture Capital (Darek Klonowski)....Pages 67-115 Deal Generation: Optimal Modes of Entrepreneurial Value Creation (Darek Klonowski)....Pages 117-143 Screening and Evaluation: Misguided Investigation of Entrepreneurial Firms (Darek Klonowski)....Pages 145-182 Deal Completion: Inequitable Agreements in Venture Capital Contracting (Darek Klonowski)....Pages 183-219 Monitoring: The Venture Capital Barren Toolbox for Entrepreneurial Firms (Darek Klonowski)....Pages 221-257 Exiting: Distressed Value Realization in Venture Capital (Darek Klonowski)....Pages 259-273 Front Matter ....Pages 275-275 Venture Capital: “Subprime” Returns and the Value Chain Analysis (Darek Klonowski)....Pages 277-309 Improving the Substandard Venture Capital Model (Darek Klonowski)....Pages 311-324 Back Matter ....Pages 325-331