This paper examines optimal equity split between an entrepreneur (E) without capital and a venture capitalist (V) under double-sided moral hazard with a two-stage investment in a project. The first-stage investment explores project profitability and the final output is a Cobb-Douglas production...

This paper examines optimal equity split between a penniless entrepreneur (E) and a deep-pocketed venture capitalist (V) with a two-stage investment in a project under unobservable project inputs. The first-stage investment explores project profitability, and the final success probability is a...