What Matters in Venture Capital - Evidence from Entrepreneurs’ Stated Preferences

44 Pages Posted: 17 Aug 2009

See all articles by Ola Bengtsson

Ola Bengtsson

Lund University School of Economics and Management; Research Institute of Industrial Economics (IFN)

Frederick Wang

Cornell University, Samuel Curtis Johnson Graduate School of Management

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

Bengtsson, Ola and Wang, Frederick, What Matters in Venture Capital - Evidence from Entrepreneurs’ Stated Preferences (August 16, 2009). Available at SSRN: https://ssrn.com/abstract=1455483 or http://dx.doi.org/10.2139/ssrn.1455483

Ola Bengtsson (Contact Author)

Lund University School of Economics and Management ( email )

P.O Box 7080
Lund
Sweden

HOME PAGE: http://www.olabengtsson.com

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Frederick Wang

Cornell University, Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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