An Empirical Study on the Structural Model of Trust between Entrepreneurs and Venture Capitalists

Abstract

This empirical research investigates the complex dynamics underlying the establishment and maintenance of trust between entrepreneurs and venture capitalists (VCs) in the context of startup financing. Through a mixed-methods approach combining quantitative surveys and qualitative interviews, the study seeks to unravel the multifaceted nature of trust-building processes and identify the key factors that shape the trust relationship between entrepreneurs and VCs. Drawing upon social exchange theory, agency theory, and relational contracting literature, the research conceptualizes trust as a multidimensional construct encompassing cognitive, affective, and behavioral components. The study explores how factors such as prior relationship experience, reputation, communication effectiveness, shared goals, and perceived integrity influence trust formation and development over the course of the entrepreneurial venture lifecycle. Additionally, it examines the role of contextual factors such as industry dynamics, market conditions, and institutional environments in shaping trust dynamics between entrepreneurs and VCs. By employing structural equation modeling (SEM) and qualitative data analysis techniques, the research aims to develop a comprehensive structural model of trust that captures the interdependencies among various trust dimensions and their implications for investment decisions, contractual arrangements, and long-term collaboration between entrepreneurs and VCs. The findings offer valuable insights for entrepreneurs, venture capitalists, and policymakers seeking to enhance trust-based relationships and facilitate successful outcomes in the venture capital ecosystem.