Resource Consistency Theory Of Ventur Crowd Financing

2.2.2. VENTURE CAPITAL

Venture capital funding includes investments from various sources like venture capital firms, corporate venture capital units of large industries and investment banks who are interested in gaining equity stakes in entrepreneurial ventures which has high growth potential. Only a very small portion of entrepreneurs meet their funding criteria’s because venture capitalists only support high growth enterprises that needs large amount of initial capital. As a result the funding by venture capitalists represents only a small percentage of total capital invested in entrepreneurial business. Venture capital finance is an expensive solution for new entrepreneurs due to their high agency costs associated with due diligence. Because of this only a limited number of

This is largely used in charity. The corner stone of crowd financing is the collective co-operation of cash/resources from large number of individuals. This individuals network themselves for a worthy cause. Crowd sourcing helps entrepreneurs to replace taking large loans with high interest from banks or selling the equities to public to raise the capital. This source of financing is suitable for entrepreneurs with solid set of goals and principles but failed to raise the

FINANCIAL MUNIFICENCE

In order to obtain resources companies establish relationship with other companies. This theory called as resource dependence theory was modeled by Pfeffer and Salancik(1978). The companies establish a relationship with other companies, which are in lesser or greater control based on the character of the resources within their control. An organization acquires the external resources by modifying its power with other organization. The power balance is depended upon the size of the organization6

2.7. BOOT STRAPPING THE STARTUP