The Effects of Early Stage Venture Capitalist Actions on Eventual Venture Disposition

This study examines the relationship between venture capitalist actions and the eventual disposition of a venture through an IPO, which is the most profitable exit strategy. The actions included in this study were ( 1) altering the amount of their investment; ( 2) securing a concentrated equity position; ( 3) diversifying their syndicate investments; and ( 4) introducing their investees to other sources of financing. After five years, this study found a positive relationship between IPO exit and ( 1) the amount of their investment; and ( 2) the diversification of their VC syndicate. However, it found only mixed results for ( 1) venture capitalist concentrated equity position; and ( 2) introductions to other sources of funding. Finally, implications for future research are discussed.