Bridging the Social Gap – New Research Provides Guidance on How Entrepreneurs can Succeed in Building Relationships with Venture Capitalists in the Age of Physically-Distanced Communication


October 4, 2022


Students on computers and conversing

Venture Capital dynamics might have evolved – significantly – due to COVID-19. Did the physical distancing imposed by the pandemic change the way in which entrepreneurs and VCs now interact?

Shomit Ghose, SCET board member and faculty member at UC Berkeley, recently published a paper, together with two faculty members at the University of San Francisco, studying the dynamics of entrepreneur- venture capitalist interactions in the era of physical distancing. Shomit and his co-authors find that entrepreneur-VC interactions evolved as a consequence of physical distancing, and that new means were established for building interpersonal rapport. Technology decrees that everything evolves, and so too has the process of entrepreneur-VC interaction, a process that was speeded by the COVID-19 pandemic.  How might the current generation of entrepreneurs learn about and adapt to the new model for building relationships with VCs?


The COVID-19 pandemic has led to a “physical gap” between startup entrepreneurs and venture capitalists (VCs) as traditional means of building relationships through in-person interactions have become more limited. To explore the venture capital process in the new environment of physically distanced communication from the perspective of entrepreneurs, we developed a survey based on foundational literature of trust building and entrepreneur-venture capitalist (E-VC) relationships and administered it in online survey of entrepreneurs actively engaged in the fundraising process. We were able to identify and assess the recurring issues expressed by 57 entrepreneurs from 11 countries who were seeking financing during the pandemic to understand the challenges they face and how they sought to surmount them. We found that while online communications have mitigated the geographical constraints in fundraising since the start of the pandemic, fundraising has become more difficult, and the key challenge has been building trusting relationships with VCs. To that end this research attempts to extend the literature of E-VC trust and relationship building from the in-person context to the physically distanced context. Practical implications of this research stem from our findings which suggest that to bridge the physical gap and form new relationships with VCs, entrepreneurs should increase their reliance on personal referrals to investors, emphasize their entrepreneurial team’s bona fides, and offer more detailed technical validation of their startup. Additionally, entrepreneurs should provide more frequent status updates and seek more frequent feedback to maintain existing relationships with their investors. Given that forms of virtualized business may define our new reality, the insights and strategies identified may provide guidance for entrepreneurs, their venture investors, and managers in other virtualizing industries where physical gaps must be bridged. 


Shomit A. Ghose, Sun-Young Park, Mark V. Cannice

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Physical Gap in Entrepreneur – Venture Capitalist Dynamic in the Age of Social Distancing

Read the full paper