Abstract
What kind of smart capital relational investors actually supply, especially in a bank-based financial system such as the German one, is still an open question. We divide smart capital into single components and conduct a survey with 85 German suppliers of start-up finance. The results show that the degree of ‘smartness’ is determined by the financial product used and partly also by the financiers' institutional background and business strategy, the expected time-horizon of the investment and the stage of development of the firm financed. However, we find that all types of financiers offer smart capital, at least up to a certain level.
Notes
1. In this paper, VC is defined as the provision of equity and equity-linked products to start-ups and young companies. It is separated from private equity that is focused on buyouts and later stage turnaround financing.
2. The cooperation with BAND appears to be the only reasonable way of finding respondents who are active angel investors during the period when the interviews were carried out.
3. We have to note that the information about the financiers counts solely for the interviewed departments or branches and not for the whole companies.
4. First steps in this direction have been made by De Clercq and Sapienza (Citation2006) who analyse the perception of performance of venture capital firms in combination with the relational capital.