Venture Capitalists Investment Incentives Under Public Equity Schemes
This paper analyses the impact of public equity schemes on venture capitalistÂ’s incentives to finance start-up enterprises and to support the management teams. In a double-sided moral hazard model, it is shown that experienced venture capitalists, who have already financed start-up enterprises, reduce their intensity of management support under public equity schemes. However, public equity offers inexperienced venture capitalists, who have not yet financed start-up enterprises because of insuf-ficient experience, incentives to enter the venture capital market so that they can start to accumulate experience.
|Date of creation:||Jul 2002|
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