Start-up entrepreneurs are often commercially inexperienced. In giving managerial advice, venture capitalists can importantly enhance the success of innovative but highly risky ventures. The supply of experienced venture capitalists is not easily increased, however. When the rate of business...

This paper studies the contracting choices between an entrepreneur and different kinds of venture capitalists in a portfolio context. The optimal contract for the entrepreneur features investor choice, share of investment, and equity dilution as a function of her bargaining power. In our...

This paper surveys empirical and theoretical studies of various control mechanisms embedded in venture capital contracts. These mechanisms mitigate incentive problems and opportunistic behavior arising in the uncertain environment of financing young hightechnology enterprises that predominantly...

Purpose - The purpose of this paper is to model asymmetric information and study the profitability of venture capital (VC) backed initial public offerings (IPOs). Our mixtures approach endogenously separates IPOs into differentiated groups based on their returns' determinants. We also analyze...

I study the relation between venture capitalists' (VCs) presence and real activities manipulation (RM). I find that compared to non-venture-backed companies, venture-backed companies show significantly less RM in the first post-IPO fiscal year. The results are robust after controlling for the VC...

We take a portfolio approach to analyze the investment strategy of a venture capitalist (VC) and show that portfolio size and scope affect both the entrepreneurs' and the VC's incentives to exert effort. A small portfolio improves entrepreneurial incentives because it allows the VC to...

We provide causal evidence that venture capitalists (VCs) improve the performance of their portfolio companies by replacing founders. Augmenting a database of U.S.-based, VC-backed startups founded from 1995-2008 with hand-collected information regarding turnover, we exploit shocks to the supply...

This paper analyses the Business Angel (BA) portfolio of the European Angels Fund (EAF), an initiative of the European Investment Fund, which engages in co-investment relationships with experienced business angels across Europe. It uses EIF’s proprietary database to shed light on a specific...

This study examines if and how does venture capital's experience, as measured by venture capital age, specialization and historical investment influence post-IPO performance and growth of firms. We find that venture capital experience has significant positive effects on long-run performance...

This paper surveys empirical and theoretical studies of various control mechanisms embedded in venture capital contracts. These mechanisms mitigate incentive problems and opportunistic behavior arising in the uncertain environment of financing young hightechnology enterprises that predominantly...