Abstract

http://ssrn.com/abstract=946671
 
 

References (54)



 
 

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The Size of Venture Capital and Private Equity Fund Portfolios


Gennaro Bernile


Singapore Management University - Lee Kong Chian School of Business

Douglas J. Cumming


York University - Schulich School of Business

Evgeny Lyandres


Boston University

2007

Journal of Corporate Finance, Vol. 13, pp. 564-590, 2007

Abstract:     
We propose a model that examines the optimal size of venture capital and private equity fund portfolios. The relationship between a VC and entrepreneurs is characterized by double-sided moral hazard, which causes the VC to trade off larger portfolios against lower values of portfolio companies. We analyze the structural relations between the VC's optimal portfolio structure and entrepreneurs' and VC's productivities, their disutilities of effort, the value of a successful project, and the required initial investment in a venture. We also test the model's predictions using a small proprietary dataset collected through a survey targeted to VC and private equity funds worldwide.

Number of Pages in PDF File: 55

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Date posted: November 22, 2006 ; Last revised: November 12, 2013

Suggested Citation

Bernile, Gennaro and Cumming, Douglas J. and Lyandres, Evgeny, The Size of Venture Capital and Private Equity Fund Portfolios (2007). Journal of Corporate Finance, Vol. 13, pp. 564-590, 2007. Available at SSRN: http://ssrn.com/abstract=946671

Contact Information

Gennaro Bernile
Singapore Management University - Lee Kong Chian School of Business ( email )
50 Stamford Road
Level 4
Singapore, 178899
Singapore
+65-68085478 (Phone)

Douglas J. Cumming
York University - Schulich School of Business ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
HOME PAGE: http://www.venturecapitalprivateequitycontracting.com/
Evgeny Lyandres (Contact Author)
Boston University ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
617-3582279 (Phone)
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