We introduce an extension to the current theory of incomplete and asymmetric information by presenting an argument for the role of contacts of the market participants in mitigating the informational asymmetries in transactions of ownerships of entrepreneurial firms. On one hand, direct contacts to the markets offer credible certification for the quality of the venture. On the other hand, the broader the reach of the indirect contacts of the actor, the higher the diffusion of information among the potential investors, and the higher the increase in the investor recognition.

To test our theoretical arguments we formulate a set of hypotheses concerning the impact of direct and indirect foreign VC ties on the selection of exit market and exit mode. We hypothesize that the role of direct ties (foreign VCs) in providing certification is emphasized in IPOs, while the indirect ties (the contacts of domestic VCs to foreign VCs) create both diversity and reach that enhance the diffusion of information, thus enabling the identification of potential investors for trade sale exits.