More Than Money: The Complex Dynamics of Capital and Power in Entrepreneur–Investor Relationships

Power, the capacity to influence outcomes in positive or negative ways, is rooted in capital. Scholars and practitioners pervasively believe that financial capital—such as equity—affords profound influence over organizations. Perhaps nowhere is this belief more foundational than in extant thinking about new ventures, where owners—entrepreneurs who found them and investors who are brought on to fuel growth—remain intimately involved in venture affairs. However, uncritically accepting that power requires financial capital limits attention to one part of a more complex story, one where non-financial capital—such as knowledge and reputation—also underpins influence. Our aim is to build awareness of the multiple power sources, dynamics, and outcomes at play among new venture owners. Framed by a primer on power from organization theory and entrepreneurship research, we show how diverse forms of capital equivalently and dynamically empowered an entrepreneur and his investors toward unique and unexpected outcomes. Then, informed by our exploration of this relationship, we discuss some pragmatic insights for both entrepreneurs and investors, as well as other stakeholders and interested parties. We hope to highlight that a holistic view of capital accounts for power dynamics that are overlooked and unexpected by conventional wisdom.