Florian Brinkmann, Dominik K. Kanbach

• Prior research has indicated that hypercompetition exists in the venture capital (VC) market. However, it remains poorly understood what implications arise from hypercompetition on VCs' strategies and operational activities and how VC funds can capitalise their competitive advantages and signal investor quality to start-ups and limited partners. To fill this knowledge gap, we use inductive qualitative research and grounded theory as a research strategy. Our results offer evidence that hypercompetition requires strategic and operational adaptability to new market dynamics and a strong need to develop competitive strategies and improve fund capabilities. We harness the different VC fund strategies from our sample to derive dynamic fund strategies to support quality signalling and exploitation of competitive advantages. The six fund strategies differ based on fund size, capabilities and degree of adaptability. Our study contributes to the literature by addressing the topic of fund strategy formulation and competitive advantages in high-competitive market dynamics.