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Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Per Strömberg

Swedish House of Finance

January 2002

CRSP Working Paper No. 536

We study the investment analyses of 67 portfolio investments by 11 venture capital (VC) firms. VCs consider the attractiveness and risks of the business, management, and deal terms as well as expected post-investment monitoring. We then consider the relation of the analyses to the contractual terms. Greater internal and external risks are associated with more VC cash flow rights, VC control rights; greater internal risk, also with more contingencies for the entrepreneur; and greater complexity, with less contingent compensation. Finally, expected VC monitoring and support are related to the contracts. We interpret these results in relation to financial contracting theories.

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Date posted: January 15, 2002  

Suggested Citation

Kaplan, Steven N. and Strömberg, Per, Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses (January 2002). CRSP Working Paper No. 536. Available at SSRN: http://ssrn.com/abstract=296956 or http://dx.doi.org/10.2139/ssrn.296956

Contact Information

Steven Neil Kaplan
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4513 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Per Stromberg (Contact Author)
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm

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