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Start-up investment with scarce venture capital support

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  • Kanniainen, Vesa
  • Keuschnigg, Christian

Abstract

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 eas-ily increased, however, when the rate of business formation accelerates. As the entrepreneurial sector expands, the incumbent venture capitalists tend to include more firms in their portfolio which dilutes the quality of advice, making project risks excessively high in the short-run.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 28 (2004)
Issue (Month): 8 (August)
Pages: 1935-1959

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Handle: RePEc:eee:jbfina:v:28:y:2004:i:8:p:1935-1959

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Web page: http://www.elsevier.com/locate/jbf

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