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In this study, we investigated idiosyncratic preinvestment process characteristics that influence the dismissal of management team members of venture capital‐backed firms in the postinvestment phase by analyzing sixty‐three portfolio firms. We considered two salient perspectives within the literature on governance of interfirm relationships: contractual and relational governance, which are related to positional and collaborative negotiation styles. Our findings indicate that positional bargaining in the preinvestment phase may be a reliable indicator that there is a greater risk that new venture team members will be dismissed when things get tough in the post‐investment period.

As a consequence of the paradigm shift from an industrial society to an information society, the role of the entrepreneur ought to change from being an inventor of product/services to become a value creator. Hence, the focus of entrepreneurial ventures should be shifting towards creating viable business models rather than superior product/services. One major implication of the shift of entrepreneurial endeavour from product/services towards creating new business models is that hands on investors behind companies' have to be involved closer to the inception of new ventures in order to contribute to their portfolio companies.

This paper examines the expectations and post-investment perceptions of value added activities from venture capital funds. Exploring the perspective of the company that is backed by venture capital, the deviation between expectations and post-investment perceptions are analysed. Insight from resource-dependence theory is employed as a theoretical point of departure. The empirical results show that significant gaps exist between the expectations of entrepreneurs and what they perceive to be the contributions from their venture capital backers. Indeed, the venture capitalists (VCs) do not even meet the entrepreneurs' modest expectations of their potential contribution. The difference between expectations and perceived outcome from the venture capitalist's involvement may be due, either to the overselling of their competence by venture capitalists, or to the limited amount of time that they allocate to each venture on account of their large investment portfolios.

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