IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/5345.html
   My bibliography  Save this paper

What do economists tell us about venture capital contracts?

Author

Listed:
  • Tykvová, Tereza

Abstract

Venture capital markets are characterized by multiple incentive problems and asymmetric information in an uncertain environment. All kinds of agency problems are present: moral hazard, adverse selection, hold-up problems, window dressing, etc. Entrepreneurs and venture capitalists enter into contracts that influence their behavior and mitigate the agency costs. In particular, they select an appropriate kind and structure of financing and specify the rights as well as the duties of both parties. The typical features of venture capital investments are: an intensive screening and evaluation process, an active involvement of venture capitalists in their portfolio companies, a staging of capital infusions, the use of special financing instruments such as convertible debt or convertible preferred stock, syndication among venture capitalists, or a short investment horizon.

Suggested Citation

  • Tykvová, Tereza, 2000. "What do economists tell us about venture capital contracts?," ZEW Discussion Papers 00-62, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5345
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/24410/1/dp0062.pdf
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Loane, Sharon & Bell, Jim & Cunningham, Isobel, 2014. "Entrepreneurial founding team exits in rapidly internationalising SMEs: A double edged sword," International Business Review, Elsevier, vol. 23(2), pages 468-477.
    2. Cécile Carpentier & Jean-François L'Her & Jean-Marc Suret, 2008. "Stock Exchange Markets for New Ventures," CIRANO Working Papers 2008s-12, CIRANO.
    3. Martí, José & Menéndez-Requejo, Susana & Rottke, Olaf M., 2013. "The impact of venture capital on family businesses: Evidence from Spain," Journal of World Business, Elsevier, vol. 48(3), pages 420-430.
    4. Timo Fischer & Gaétan de Rassenfosse, 2011. "Debt Financing of High-growth Startups," DRUID Working Papers 11-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    5. Eric Nasica & Dominique Torre & Dominique Dufour, 2011. "Syndication in private equity industry: comparing the strategies of independent and captive venture capitalists," Post-Print halshs-00720785, HAL.
    6. Pontus Braunerhjelm & Simon Parker, 2010. "Josh Lerner: recipient of the 2010 Global Award for Entrepreneurship Research," Small Business Economics, Springer, vol. 35(3), pages 245-254, October.
    7. Hirsch, Julia, 2006. "Public policy and venture capital financed innovation: A contract design approach," CFS Working Paper Series 2006/29, Center for Financial Studies (CFS).
    8. Cécile Carpentier & Jean-Marc Suret, 2004. "Le placement privé et la dimension réglementaire du financement des entreprises," CIRANO Working Papers 2004s-51, CIRANO.
    9. Fairchild, Richard, 2011. "An entrepreneur's choice of venture capitalist or angel-financing: A behavioral game-theoretic approach," Journal of Business Venturing, Elsevier, vol. 26(3), pages 359-374, May.

    More about this item

    Keywords

    Venture Capital; Agency Costs;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:5345. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics). General contact details of provider: http://edirc.repec.org/data/zemande.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.