Hochberg, Yael V.; Ljungqvist, Alexander; … - In: Review of Financial Studies 27 (2014) 1, pp. 102-152
Why don't VCs eliminate excess demand for follow-on funds by raising fees? We propose a model of learning that leads to informational holdup. Current investors learn about skill whereas outside investors observe only returns. This gives current investors holdup power when the VC raises his next...