1 Chapter I Introduction The formation and growth of small and medium sized enterprises (SMEs) and startups is recognized as one of the most important factors for economic growth (Storey 1994). Access to risk capital (equity capital) is often emphasized as a critical conditions for SMEs and new venture startups to be able to pursue growth opportunities. Because of a limited life history and a lack of steady cash flows, young firms (such as startups and SMEs) that are in the beginning of a growth phase often have problems accessing traditional debt capital. Financing the firm with the capital of the entrepreneur is generally not an alternative because these resources are usually either already used or too small. Furthermore, fast developing new firms can seldom compound the capital needed for fast development themselves. Finally, equity financing is a more suitable way of financing growing young firms’ investments and expansions than is debt, because the latter has the disadvantage of increasing a firms’ financial risk (mainly due to amortizations and interest rates). The difficulties of finding (or inadequate supply of) growth capital for entrepreneurial firms are often referred to as the equity gap. Venture Capital and Investors presence provides significant role to narrow this equity gap. The growing economic role and the significance of the investors and venture capital markets for creating growth in society is one important argument for performing venture capital research, or as Mason and Harrison (1999, p 13-14) put it: “Venture capital is now recognized globally as playing a key role in innovation, wealth creation and job generation and is increasingly a key element in government efforts at both national and sub-national levels to generate economic growth. It is therefore important that our knowledge of this form of finance increases.”. While investors in general provides vast opportunities to young and growing firms. Amidst the global economic downturn caused by COVID-19, efforts are being made to overcome the economic crisis and adapt to the post-coronavirus era. In this context, startups are gaining attention as significant players in the business 2 ecosystem, offering a new economic model for the future. Startups possess the unique ability to create innovative products and services in highly uncertain circumstances (Ghezzi, 2020). As such, they are emerging as key contributors to economic activities, particularly in a post-coronavirus environment that requires adaptability and flexibility. By developing new business models and exploring new markets, startups play a vital role in revitalizing economic activities (Mele et al, 2020). However, for startups to thrive and grow, financial support is often a critical prerequisite. Based on research conducted by CBInsight (2020), a venture capital research institution, a significant factor contributing to the failure of startups is the lack of funding, which is closely tied to their survival in the early stages. Previous studies have shown that companies that receive venture capital support have a higher likelihood of survival compared to those that do not. Peneder observed that venture capital investments in the 1980s led to an 8% increase in patent applications across industries in the United States (Peneder, 2010).