What Matters in Venture Capital - Evidence from Entrepreneurs’ Stated Preferences
44 Pages Posted: 17 Aug 2009
Date Written: August 16, 2009
Abstract
We study how entrepreneurs evaluate the ability of different U.S. venture capitalists (VCs) to add value to start-up companies. Analyzing a large dataset on entrepreneurs’ stated preferences on VCs, we show that entrepreneurs view independent partnership VCs more favorably than other VC types (e.g. corporate, financial, and government-sponsored VCs). Although entrepreneurs are able to correctly identify the VCs with better track record, they do not believe that such VCs have a higher ability to add value. We also find that an entrepreneur’s rankings are affected by his or her overall exposure to VCs, emphasizing the role of experiential learning in the venture capital market.
Keywords: venture capital, entrepreneurship
JEL Classification: G24, M13
Suggested Citation: Suggested Citation
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