Jovanovic, Boyan; Szentes, Balàzs - National Bureau of Economic Research (NBER) - 2007
We provide a model that links the high return to venture equity to the impatience of the VCs. VCs are scarce, and hence, they have market power and a high return on their investments. As a result, VCs are eager to terminate non-performing ventures so they can move on to new ones. The scarcity of...