Entrepreneur-investor rivalry over new venture control: The battle for Balcones Distilling

Entrepreneurs and investors sometimes battle for control of new ventures when their relationships deteriorate, a phenomenon that we describe as entrepreneur-investor rivalry. Theoretical accounts of entrepreneurs' and investors relationships preclude the potential for true rivalry, battles where either side can emerge with venture control, yet such rivalry can and does happen. To address the disconnect between theory and practice, we develop an initial theory of entrepreneur-investor rivalry from the in-depth, qualitative analysis of a battle to control a renowned craft distillery. Our theory elaborates why entrepreneur-investor rivalry can occur, how it can unfold, and how it can conclude, attending to contextual factors and interaction dynamics that shape the outcomes of three sequential stages and the overall rivalry process. In conceptualizing the features of entrepreneur-investor rivalry, we improve extant theory's capacity to explain such rivalry, provide practical prescriptions to mitigate or avoid it, and till fertile ground on which to invigorate its study. Most importantly, we provide a theoretical foundation to invigorate research on entrepreneur-investor rivalry and other relational dynamics of importance to venture resource mobilization, moving beyond assumptions that we “know all there is to know” about these relationships.