Navigating the Risks: A Systematic Literature Review of Financial Risk Management Practices in Venture Capital

DOI

10.2991/978-94-6463-817-2_50How to use a DOI?

Keywords

Financial Risk Management; Risk Mitigation; Risk Strategies; Risk Tools; Venture Capital

Abstract

This systematic literature review examines financial risk management practices within the venture capital (VC) industry, comprehensively assessing strategies and tools to mitigate investment risks. The study seeks to answer the question: How do venture capital firms manage financial risks, and what are the most effective strategies and tools used to address these risks? Through a structured SLR methodology, this review analyzed scholarly articles published between 2013 and 2023, highlighting the primary risk management strategies employed by VC firms: staged financing, financial contracting, active governance, and diversification. Staged financing enables VCs to align capital disbursements with company milestones, reducing exposure, while financial contracting, including convertible securities, aligns investor and entrepreneur interests. Active governance practices like board participation allow VCs to maintain oversight, and diversification spreads risk across sectors or stages. Despite the critical role of financial risk management in venture capital, there is a noticeable gap in academic reviews that holistically address these practices. This study consolidates existing literature, identifies key trends, and pinpoints areas needing further exploration, offering a nuanced understanding of financial risk management within venture capital and guiding future research and practice.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Zufrial Aristama
AU  - Afriska Yuni Anggraini
AU  - Ika Putera Waspada
PY  - 2025
DA  - 2025/09/12
TI  - Navigating the Risks: A Systematic Literature Review of Financial Risk Management Practices in Venture Capital
BT  - Proceedings of the 9th Global Conference on Business, Management and Entrepreneurship (GCBME 2024)
PB  - Atlantis Press
SP  - 410
EP  - 417
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-817-2_50
DO  - 10.2991/978-94-6463-817-2_50
ID  - Aristama2025
ER  -