New Venture Teams and the Quality of Business Opportunities Identified: Faultlines between Subgroups of Founders and Investors

Abstract

New venture teams (NVT) often comprise idea–conceiving founders and equity–based investors. These subgroups represent a faultline whose magnitude influences the quality of business opportunities. We propose that the faultline strength formed between founders and investors is influenced by structural factors (ownership equity, membership change, preexisting tie strength) and cognitive factor (mental models of the venture). Finally, we address how the faultline strength impacts interaction processes (relationship conflict, task conflict, knowledge exchange) and their subsequent impact on the quality of entrepreneurial opportunities. Our theoretical model provides insight into how informational resources inherent in new venture teams can be more effectively leveraged.

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