Venture Capital Contracting in the Information Age

44 Pages Posted: 4 Aug 1998  

D. Gordon Smith

Brigham Young University - J. Reuben Clark Law School

Abstract

Most venture capitalists provide services to their portfolio companies beyond capital investment. Although these services form an important part of the bargain between the venture capitalists and the entrepreneur, they are rarely specified or even capable of specification in venture capital contracts. This article examines the moral hazard and adverse selection problems facing entrepreneurs who "hire" venture capitalists to provide value-added services and describes the role of the market for venture capitalist reputation in addressing those problems. Further, the Article speculates about whether advances in information technology - specifically, the World Wide Web - are likely to improve the efficiency of the market for venture capitalist reputation.

Suggested Citation

Smith, D. Gordon, Venture Capital Contracting in the Information Age. Journal of Small & Emerging Business Law, Vol. 2, p. 133, 1998. Available at SSRN: https://ssrn.com/abstract=10559 or http://dx.doi.org/10.2139/ssrn.10559

D. Gordon Smith (Contact Author)

Brigham Young University - J. Reuben Clark Law School ( email )

422 JRCB
Provo, UT 84602
United States
801.422.3233 (Phone)
801.422.0390 (Fax)

Paper statistics

Downloads
478
Rank
46,739
Abstract Views
3,040