Abstract

http://ssrn.com/abstract=299808
 
 

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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

February 2002

NBER Working Paper No. w8764

Abstract:     
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.

Number of Pages in PDF File: 52

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Date posted: February 7, 2002  

Suggested Citation

Kaplan, Steven N. and Strömberg, Per, Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses (February 2002). NBER Working Paper No. w8764. Available at SSRN: http://ssrn.com/abstract=299808

Contact Information

Steven Neil Kaplan (Contact Author)
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
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm
Sweden

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