In this chapter, you will be walked through the concepts of venture capital and private equity funds, helping you to understand how they operate, who invests in these funds, and, most importantly, how they make money and why this is important for entrepreneurs.

Venture capital and private equity funds have emerged over the past decades as ideal vehicles for channelling private and public money into the financing of innovation. Since the creation of the American Research and Development Corporation (ADRC) in Boston in 1946 by French immigrant George Doriot, considered to be the first venture capital firm, the industry has evolved to provide risk capital to innovative entrepreneurs in a model that has barely changed and is adapted to the particularities of the underlying asset: startup companies.

This chapter considers the challenges and benefits of developing a proper corporate governance structure and policy while expanding as a venture. Although the public debate over corporate governance seems to focus on public companies, an effective governance structure is equally important for startups and private companies. In fact, given the stronger link between the financing and investment decision in startups as compared to public companies, the question of how to structure agreements between investors and entrepreneurs that ensure that their own benefits and responsibilities are met is particularly relevant.

This chapter considers the challenging yet exciting world of valuing companies. Valuation has always been a key topic in finance, but it is even more relevant in the case of high-growth ventures because of its impact on raising capital. Equity is the main source of financing for startups, which typically have high potential and few tangible assets. In order to come to an assessment, founders and investors need to determine the value of the business or ‘exchange rate’ of money for shares.

Investors in startups need to realize what is going on in the companies in which they have invested. To do so, they engage in monitoring activities to find out whether a portfolio company is developing well or whether it needs support or even corrective action. However, monitoring is only possible if the startup provides investors with the relevant information. Monitoring requires regular reports from the entrepreneurs because they are the ones who see how the startup is doing – at least they should. Generally, business reporting takes place on a monthly basis. However, venture capitalists frequently require weekly reporting and will work with the entrepreneurs to establish daily targets that lead to the achievements of the weekly targets. Additional investor reports on specific issues may complement the regular reporting, as well as meetings and calls to discuss important issues. A business report is the lens through which investors perceive and recognize the progress entrepreneurs achieve. Monitoring by investors will succeed or fail based on the quality of the reporting. This quality, in turn, depends directly on the principles and standards entrepreneurs apply when measuring the economic activities and events affecting their startup.

Business angels are private individuals – predominantly cashed-out entrepreneurs – who invest their own money in new and early-stage businesses and, having invested, then draw on their own business experience to support these ventures in a variety of ways. They are often referred to as informal investors or informal venture capitalists. Whereas the attention of scholars and the media is largely focused on institutional venture capital, business angels actually finance substantially more businesses.

In this chapter we explore how and why venture capitalists (VCs) conduct due diligence. We begin by demystifying due diligence and dissecting its objectives. From screening to final legal scrutiny, we explore the due diligence stages, offering insights from academia, experts, and the tools used by VCs. In doing so we blend academic rigour with the street-smart wisdom of industry experts – both VCs and founders. This delivers insights from both sides of the table on how to navigate the intricate dance of due diligence. Continuing in the spirit of offering real-world insights and tools, we include due diligence scorecards shared by VCs, plus noteworthy tales of successes and failures. The chapter closes with a spotlight on key trends shaping the future of due diligence and a practical checklist of the topics to include, and things to look out for, when doing due diligence.

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book explores why the boldest initiative in the sixty-year quest to achieve a borderless Europe has exploded in the face of the EU. A close examination of each stage of the EU financial emergency offers evidence that the European values that are supposed to provide solidarity within the twenty eight-member EU in good times and bad are flimsy and thinly distributed. The book aims to show that it is possible to view the current difficulties of the EU as rooted in much longer-term decision-making. It examines the different ways in which the European Union seized the initiative from the European nation-state, from the formation of the Coal and Steel Community to the Maastricht Treaty. The book concentrates on the role of France and Germany in the EU.

Germany has risen to assume the leadership of the EU. Although it enjoys immunity from the pain of much of the rest of the eurozone, the future of the single currency and perhaps of the wider Union itself seems largely to be in its hands. For much of the crisis, Germany has wished to direct Europe's financial affairs through a form of eurozone governance that primarily benefits Germany irrespective of the damage done to a mounting list of eurozone countries unable to insulate themselves from it. Europhile leaders may have pioneered a European unification concept in the 1950s which gave the EU momentum until the end of the Cold War. But financial crises from that of the Balkans in the early 1990s to the extended financial one have revealed how deep its limitations are in carrying out its own projects or resolving difficulties arising from chronic design faults.

The single currency was overtly designed to lock a newly united Germany into a common monetary union in which it would act in concert with countries possessing less powerful economies rather than dominate them outright. This chapter focuses on the evolution of the crisis in the eurozone and the shortcomings which have impeded the EU from bringing it under control. The financial sector had not become a protected zone of the eurozone overnight. Ever since the passing of the Single European Act in 1986, its perceived needs had come to shape the concerns of EU decision-makers to an increasing degree. EU decision-makers at the centre of a marathon economic crisis are increasingly insistent that there is no way out except for a union adopting full political and economic standardisation.

Among some of its most fervent advocates, European Monetary Union was meant to bring about the final merging of European destinies into a common political entity. This chapter explores the long term preparations that were made to create a single currency encompassing a large part of the European Union. It shows how the impetus was essentially political, to erode the power of the nation-state and speed up the installation of a supra-national alternative through hurtling towards monetary union. For most of the existence of the European Union, the push towards integration has involved political leaders trying to achieve common ground around a uniform monetary policy for Europe. The euro was exposed as top-down political project in the hands of politicians, functionaries and lobbyists who had lost touch with some essential aspects of political reality. From 2009 onwards, the limitations of the euro were exposed by a deepening financial crisis.