Organizing Venture Capital Under Uncertainty: Imaginaries as Intermediating Devices
Organization scholars have long examined how intermediaries connect apparently incompatible actors, processes, and evaluation regimes by resorting to translations and standardizations. Such devices, however, are often insufficient in contexts characterized by high uncertainty, but which nevertheless require the intervention of intermediaries. How do the latter manage to organize then? I argue that they resort to imaginaries as informal organizational devices that enable intermediations when translation and standardization are insufficient. I examine venture capital investments as a case of intermediating under high uncertainty. Venture capitalists navigate three fundamental tensions: securing capital vs unpredictable investment outcomes; competing with other investors vs collaborating with them; valuing new ventures vs evaluating the founders behind them. These tensions cannot be reconciled only through formal metrics, standardized procedures, legal agreements, or translations. Yet, bridging these tensions is central to how venture capital operates and exerts influence. Drawing on ethnographic research within venture capital ecosystems around blockchain and AI, I examine how venture capitalists use imaginaries in order to organise and align capital and startups. Imaginaries (1) rationalize and legitimate couplings for the involved parties; (2) anchor personal connections between parties and intermediaries; (3) configure intermediary identities; (4) mobilize heterogeneous groups toward future action. VC imaginaries couple capital capture to profit rewards, competition to collaboration, and valuation to evaluation, without merely translating them into one another or standardizing them. Control over imaginaries gives VCs exclusive control over the processes of intermediation, which reinforces and entrenches VCs' privileged positions within the speculative startup investment space. By conceptualizing imaginaries as organizational devices of intermediation, I contribute to organization studies by extending theories of intermediation under uncertainty.
Note: the empirical research has been conducted together with David Chen (Lingnan University) and Ruowen Xu (Warwick Business School). Research has been supported by the General Research Fund of the Research Grants Council Hong Kong, nr. 13608124.