Several sources have emphasized the importance of the entrepreneurial economy, and the role venture capitalists (VCs) plays as financiers. VCs are often actively and personally involved in their portfolio companies, but the cost of governance is high and they therefore have to select when to be active participants. Four different risks are identified in this paper: agency risk, business and market risk, coalition risk, and conformity risk. Weak support is found for the categories of agency and business and market risk. The data speak in favor of VCs getting more involved when the portfolio companies experience some kind of trouble. Their activity level increases when the portfolio companies have an inexperienced CEO, when the companies are in an early stage of their development, are young, have a weak board of directors, and/or a weak performance.

This paper relies on a theoretical framework of psychology, decision theory and behavioural economics to explore determinants of the entrepreneur's resistance to external financing. The aim of our study is to shed light on whether variables, connected to risk and control, are related to attitudes to external financing. These variables refer to risk propensity, the tendency to feel anticipatory regret in decision-making and preferences to choose situations associated with a high level of control. The study showed that risk attitude of the entrepreneur and the extent of regretful thinking only explained a trivial amount of the attitudes to financing. However moderate, the correlation between self-efficacy and attitude to venture capital revealed the strongest relationship among the variables of risk and control in this study. We also investigated whether the expectation from external financing and other business related variables might explain attitudes to external sources of financing. For instance, it was found that the entrepreneurs with higher expectations from external equity financing and those using external equity financing tended to hold more positive attitudes. Moreover, the entrepreneurs tended to perceive the consequences of external financing to be small.