Past work has shown that failure tolerance by principals has the potential to stimulate innovation, but has not examined how this affects which projects principals will start. We demonstrate that failure tolerance has an equilibrium price ― in terms of an investor's required share of equity...

The study of venture capital exit has started gaining momentum since the last decade. Though valuation and pricing still remain the important areas in decisions relating to exit, other factors like the selection of appropriate timing, optimal exit route, etc. too are being studied extensively....

We study the impact of independent limited partnership venture capital funds' (VC) limited lifespan on the timing and outcome of their portfolio firms' exit events. We find that portfolio firms backed by funds approaching maturity experience quicker initial public offerings and selloffs,...