Venture Capital Investment Duration
41 Pages Posted: 12 Dec 2008 Last revised: 20 Jan 2009
Date Written: December 1, 2008
This paper examines cross-country evidence on the duration of venture capital (VC) investment. We formulate a theory of VC investment duration based on the idea that venture capitalists exit when the expected marginal cost of maintaining the investment is greater than the expected marginal benefit, and thereby relate VC investment duration to entrepreneurial company characteristics, investor characteristics, deal characteristics, and institutional and market conditions. VC investment duration data in Canada and the US lend strong support to the theoretical predictions developed herein.
Keywords: Venture Capital, Duration, Exits, Initial Public Offerings, Write-offs, Public Policy
JEL Classification: G23, G24, G28, G32, G38, K22
Suggested Citation: Suggested Citation