Networks in the early stage risk capital market.

Despite the wide interest in the role of social capital theory in entrepreneurship, there is scarce literature which uses this theoretical framework to study venture capital finance. Indeed, this literature, aiming at describing the investor’s due diligence process, has used methodologies and theoretical framework which most of the times have not considered the sociological aspect. Therefore, the purpose of this study is to investigate how entrepreneurial network theory could be used in the field of entrepreneurial finance. To achieve this, this thesis is made up of three papers which investigate different research questions regarding venture capital finance literature by drawing on sociological theory and entrepreneurial network theory and by using statistical model (Exponential Random Graph Model) and software (R and UCINET). By using this integrated approach, this study explains the importance of network in the early stage equity market both for investors to reduce the uncertainty of the investment, and for the entrepreneurs to increase new venture’s chance to get resources and to survive. This thesis provides a meaningful pathway for future research and insights to practitioners.